In life we normally develop repetitive behavior: we wash our faces once we get up (a minimum of I hope you do!), we eat lunch around noon, we wash our hands after meals, and fall asleep at a selected time.
We develop each day routines that help us get through the day.
And as creatures of habit, we also undergo patterns in foreign currency trading.
Over time, we form a routine in the way in which we process and react to information thrown at us.
For instance, some people deceive their partners on impulse even in the event that they did nothing unsuitable simply to avoid a lengthy conversation. Heck, even a child would fib slightly simply to avoid a scolding!
They aren’t really liars by nature, but they’ve already conditioned themselves to reply a certain way given a selected situation.
How does this apply to trading?
I do know this might make you cringe but try taking a look at the worst trade you’ve ever had in your trade journal.
Review the trade setup that you just saw, take into consideration what went unsuitable, and ask yourself, “Why the heck did I ever take that trade in the primary place? What was I pondering?!”
More importantly, “Was I even pondering?!”
You almost certainly just took that trade routinely based on a well-recognized setup. On this case, your decision was a results of your individual way of pondering reasonably than what the market was telling you.
Your worst trade isn’t necessarily the one where you’ve incurred your largest loss.
It may possibly be in the shape of a missed opportunity, if you hesitated to take what could’ve been your trade of the yr, or if you locked in profits too early as an alternative of letting it ride.
You would possibly’ve wimped out due to your fear of losing, even when the markets gave every indication that this next trade could be a winner.
One other negative thought pattern is if you change into absolutely indifferent to losing that you just find yourself blindly taking one trade after one other simply to make up on your losses.
On this case, you retain insisting that you just’re right and you think that you’re going to eventually beat the market. Revenge trading turns right into a nasty habit and will end in large drawdowns if not corrected.
The same old response to bad trades is just shrugging them off.
Very similar to the memory of getting rejected by crushes in highschool (not that it happened rather a lot to me), it’s easier to easily push the memory of a foul trade behind our heads, and falsely reassure yourself that you just’ll prepare higher next time, after which move on to the subsequent trade.
But that’s not enough!
You may have to REALLY dig in into the issue and review the nitty-gritty of your bad trades. Otherwise, you run the chance of repeating your mistakes.
Irrespective of how painful or discouraging the duty is, you have to force yourself to open your trade journal and ask yourself questions like:
“Why did I take the trade?”
“Did I follow valid signals once I closed my position?”
“Is ‘The way you doin?’ really such a foul pick-up line?”
Okay, perhaps the last query is more apt on your Saturday night problems, but you recognize what I mean!
In forcing yourself to discover the emotions you felt if you made bad trading decisions, you may have the opportunity to see a negative pattern in your behavior and take actions to correct it.
Unlearning bad habits and trading practices might be difficult, but they’ll actually bring you one step closer to controlling your emotions and becoming a greater trader.