3.29.21 The psychology of failure in trading Part 3 . 1) If you actually trade You will find yourself in a trading funk from time to time. These are very stressful times when you can't do anything right, and you know down deep that you are uncomfortable with every decision whether it is finding a trade location or a stop, or target. You can even find opportunity because nothing you are doing is working out... and you know it. The thought of one more losing trade is unbearable. You feel no confidence in any aspect of your trading. This can even happen after a long period of conscientious study of the market. It is very demoralizing when you've had a recent history of losing trades and nothing is working out despite all your effort. Personally, I think it's a lot easier to work out of a funk if you've had significant success in the past, but if you don't have a convincing period of time of successful trading, then you haven't really proven to yourself that you are good trader. There are other reasons to stress out over losing trades and one of the most common reasons is insufficient amounts of risk capital.
When you're in a trading funk, you may be conditioning yourself in such a way that it is hard to avoid losing trades, and may be even more prone to make trading mistakes. This is a horrible period of time in your trading. You may find that you will not trade, and you may even choose to change trading systems when the problem is really more related to your personal psychology. The irony of this is that when you're a losing trader, the chances are you will not pick another trading system and actually make money. However, you will look for other systems and never resolved the personal issues about how you analyze the market and that deeply ingrained suspicion that you don't know what you're doing and that trading feels as if it's almost hopeless.
If you don't deal with your personal psychology, you may find that you work very hard after you find another trading system, but at some point you will run into a trading funk and because you have not dealt with your personal psychology you will fail at this system as well. Some trading systems are worse than others, but you'll never really get to that understanding because you never really get to know how markets work, and you've never learned about the things that don't work in trading systems. And it is very hard to find people who actually know what they're doing, and actually make any significant amount of money trading... Other than people who make a lot of money offering trading advice and trading systems, and that is a different business than actually making money trading your own capital.
When you run into a trading funk, you have to to deal with it. You have to stop trading and then analyzing your behavior, and your calculations about the market during these periods of time. You must ask all the questions that need to be answered. This includes asking the question: is this actually a good trade location for me to be a buyer? If your answer is I don't know... Then why are you taking the trade? You do this not just for the entry, but you ask: do I have a reasonable stop? You ask: do I know what a reasonable target is? If you take a trade and you don't know any of this information, you have to ask yourself: why am I thinking about taking a straight? You ask yourself: why am I uncomfortable about everything?
In short, you have to go back to basics. You question everything. You have to be patient and avoid impulsive trading until you feel comfortable with certain patterns and have demonstrated this one a dozen paper trades. It is this set up the accounts. You have to have the market that defines the buyers and the sellers, and the markets that have good stops and enough volatility to drive the market to your target.
Trading fonts can be a disaster and you must reprogram some of the things that you are doing and some of the interpretations that you make about the market which are not correct. Generally, going to an entirely new trading system randomly will not change things for you. You must look at the market in a more "personal" way. I try to do that in the videos.
Professional trading firms spend a boatload of money for their traders to work with some of these principles with skilled professionals because there is so much money at stake they will pay a lot of money for anything they think will help their traders. Professional firms do this so you should expect to include this type of learning in your own trading if highly successful trading firms use these techniques.
When you're in a trading funk, you may be conditioning yourself in such a way that it is hard to avoid losing trades, and may be even more prone to make trading mistakes. This is a horrible period of time in your trading. You may find that you will not trade, and you may even choose to change trading systems when the problem is really more related to your personal psychology. The irony of this is that when you're a losing trader, the chances are you will not pick another trading system and actually make money. However, you will look for other systems and never resolved the personal issues about how you analyze the market and that deeply ingrained suspicion that you don't know what you're doing and that trading feels as if it's almost hopeless.
If you don't deal with your personal psychology, you may find that you work very hard after you find another trading system, but at some point you will run into a trading funk and because you have not dealt with your personal psychology you will fail at this system as well. Some trading systems are worse than others, but you'll never really get to that understanding because you never really get to know how markets work, and you've never learned about the things that don't work in trading systems. And it is very hard to find people who actually know what they're doing, and actually make any significant amount of money trading... Other than people who make a lot of money offering trading advice and trading systems, and that is a different business than actually making money trading your own capital.
When you run into a trading funk, you have to to deal with it. You have to stop trading and then analyzing your behavior, and your calculations about the market during these periods of time. You must ask all the questions that need to be answered. This includes asking the question: is this actually a good trade location for me to be a buyer? If your answer is I don't know... Then why are you taking the trade? You do this not just for the entry, but you ask: do I have a reasonable stop? You ask: do I know what a reasonable target is? If you take a trade and you don't know any of this information, you have to ask yourself: why am I thinking about taking a straight? You ask yourself: why am I uncomfortable about everything?
In short, you have to go back to basics. You question everything. You have to be patient and avoid impulsive trading until you feel comfortable with certain patterns and have demonstrated this one a dozen paper trades. It is this set up the accounts. You have to have the market that defines the buyers and the sellers, and the markets that have good stops and enough volatility to drive the market to your target.
Trading fonts can be a disaster and you must reprogram some of the things that you are doing and some of the interpretations that you make about the market which are not correct. Generally, going to an entirely new trading system randomly will not change things for you. You must look at the market in a more "personal" way. I try to do that in the videos.
Professional trading firms spend a boatload of money for their traders to work with some of these principles with skilled professionals because there is so much money at stake they will pay a lot of money for anything they think will help their traders. Professional firms do this so you should expect to include this type of learning in your own trading if highly successful trading firms use these techniques.