Typical Mental Trading Errors
- Refusing to define a LOSS
- Not exiting a LOSING trade even after you know the trades potential is gone
- Getting “locked” into a specific opinion or belief about market direction
- Focusing on the monetary value of a trade, instead of the potential for the market to move based on its behavior and
structure - Revenge Trading-Trying to get back what you lost
- Not following the rules of the trading system
- Anticipating a move but cant pull the trigger because of anxiety or fear of a losing trade
- Establishing a consistent pattern of trading success over a period of time , then giving your winnings back to the market in
a few trades or days, then starting over.
A Traders Mental How-To’s
SUCCESSFUL Trading is a PROFESSIONAL environment- It REQUIRES PRO SKILLS AND A PRO MINDSET - What LEVEL are you again?
Come at the Crypto and Forex market with a MASTERS/DOCTORATE/LAUREATE MINDSET by learning:
HOW-TO structure your beliefs to control your perception of market movement
HOW-TO achieve and maintain a state of objectivity
HOW-TO let go, release feelings of guilt, fear, and all NEGATIVE EMOTIONAL ENERGY from losses
HOW-TO institute a complete disciplined trading approach
HOW-TO adapt to change - NO EGO’s
HOW-TO take losses
HOW-TO prepare to lose…Don’t EXPECT to lose
Tested Mental Strategies
When Jack Schwarger asked Bruce Kovner in “Market Wizards” what advice he would give novice traders, he said, “undertrade, undertrade, undertrade.”
Although the adage, “You have to risk money to make money,” is true of trading, if you risk too much money and risk significant amounts too often, you will more often than not see losing trades, and end up blowing out. And if you blow out, you won’t be able to build up the necessary skills to trade the markets profitably.
It’s better to manage risk, and limit the number of trades you do make. Bruce Kovner believed that novice traders traded three to five times too big. “Whatever you think your position ought to be, cut it in half,” was his advice. But novice traders are often impatient.
They want to make money fast. Behavioral economists Brad Barber and Terrance Odean showed that traders overtrade after a windfall. It’s like playing with the “house’s money” at a casino. When some traders have a big win, they tend tend to believe that they have nothing to lose by risking a large amount of capital. In addition, they may think they are on a hot streak and can take advantage of it to make huge profits. Unfortunately, novice traders are likely to face many more losing trades than winning trades, and will end up mounting significant losses if they don’t control risk. In order to survive in the long term, it is vital to minimize risk.
For example: if you risk only 1-2% on a trade, you can make quite a few losing trades and still continue to learn how to trade.
As a novice trader, your goal should be longevity rather than profits.
Trading takes time, and the longer you can keep trading, the more likely you will be able to build solid trading skills, skills that will ensure that you end up making huge profits in the future. Longevity is necessary to learn any skill.
As a trader, you must learn the conditions under which you work best. By making small, practice trades, you can develop an intuitive feel for the markets. You can learn what it feels like to win and how you handle losses. You can learn about psychological conditions that are necessary to trade with a mental edge.
For example, you might find that you prefer to trade in the middle of the day after you are more alert. Or you may learn that you need extra sleep before you feel alert enough to trade at your best. You may also learn the number of trades you can make per day without feeling stressed out.
There are a variety of things you can learn about you and your trading style by making small trades to get a feel for the markets. Don’t think you need to be an overnight success. Learning how to trade profitably can take years. Rather than blow out too soon, and feel like a failure, it’s better to take your time, hone your skills, and build up your trading ability to the point that you can trade like a seasoned professional.
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