I'm continually flabbergasted by the continual rejection of the topic of trader psychology on various online forums and from so called educators, experienced traders will know that you're trading results will only be as good as the state of your mind.
I'm by no means a professional trader(yet), I only started trading in June 2018, started with a bang, made a killing and then kept losing money and only now (2020) am I beginning to be profitable.
I'm an IT dude, I left my job in 2016, sat at home for two years until I discovered forex, I decided that's what I'll do (who doesnt want financial freedom ? Best part is that you dont have to answer to anyone
). Since I had no job, all I had was forex, I have a lot of time on my hands, I've spent almost 18 + hours a day on my pc, watching charts coding indicator experiments trying to find the fabled holy grail and gain a deeper understanding of what this forex thing is.
Thats all good, however, psychology is a tricky subject and thus difficult to deal with (Psychoanalysis can take years to complete for example), from a young age(10+) , I've been fascinated by the human brain and human behavior, I'm not a psychologist, just a wide reader. Its become second nature for me to probe the psychological reasons and subconscious triggers of why people say what they say and do what they do. This helped me become aware of my own thoughts and reactions to what I perceive and WHY I react that way.
I've always believed that limitations in our lives are almost always psychological and I haven't been proved wrong yet on that point.
So how does this apply to trading, I'll give a few examples from my own experience of psychology at play;
Pain of missing a trade
I missed a trade today on CADCHF and I was very angry with myself despite the fact that I'm already in two profitable trades.
: This piece of news on oil is worse than expected, it affects the price of oil which in turn affects the Canadian dollar inversely.
: Dumb money was also selling when they should be buying.
: The technicals on the 4 Hour with my system, told me I should be looking to long, my system also tells me when I should enter and exit.
I was so focused on managing my other two trade that before I knew it CADCHF had shot up more than 20 pips, I got so mad ! I missed the best spots to enter according to my system.
Why was I angry and why am I still agitated ? What effects can these emotions have on my decision making ?
I'll tell you, I dont trade demo accounts, I do all my trading and testing on live accounts, I dont backtest, neither do I keep a journal, losing because of stupid and ignorant mistakes causes pain which the equivalent of touching fire as a kid. I have been so scarred by the "fire" that even when the impulse to over trade, over leverage or become impatient and open a continuation trade prematurely, creeps up, it just dies down. A few months ago I would have entered a trade because of FOMO with a tight stop and held to long and eventually loose money like a fool.
This is where the proverb "know thy self" comes in, I was angry because subconsciously;
- I believe I shouldn't make mistakes. They make me a fool and imperfect.
- I feel I shouldn't miss any opportunities. I feel less than.
- I feel like I will never make it because I've missed ONE perfect set up so the fear extends to the proceeding trades.
- I feel undeserving and not good enough for anything good in my life just because of on trade
All these beliefs are bogus and illogical.
This perpetual self examination is second nature and automatic on my side, it took years to develop and its still developing.
So how does knowing the limiting beliefs help achieve better results in trading, simple, when you know what you're feeling is based on bogus psychology, it becomes easy to refrain from making bogus money losing choices.
Its imperative for psychological issues to be discussed by those of us who are still learning this business and I believe traders who have "made it" per se , can impart "psychological bug fixes" to those experiencing deep seated psychological issues. Kind of like an AA meeting for traders.
My request to whoever is running this forum is to please add sections specifically dedicated to trader psychology, no doubt you have the largest collection of USEFUL indicators, however, this forum can become better and well rounded, I'm supremely convinced that this will lead to the betterment of every trader who engages in this process.