TRADING PSYCHOLOGY
50% of the time. So instead of shifting the blame elsewhere, the key to making a change is accepting responsibility and taking action to deal with it. Heading back to the study, if the average trader doesn’t have a problem finding winning trades, yet 90% of traders never make it past the conscious c o m p e t e n c e stage,
then
what’s holding traders back from success? This question was addressed in the same study and it was found that of the same sample of traders, the average profit per trade was barely half of the average loss per trade.
Knowing this
data, it’s easy for one to come to the conclusion that in order to fix this problem a trader simply has to ensure that each trading opportunity provides them with a positive risk to reward ratio. However, I would assume that most traders are well aware of this, yet the problem still exists. So if not that then what? In my opinion the problem lies, not in
In order to make a change traders must shift what gives them pleasure and pain
Financial gains and losses are a huge trigger for our emotions. Greed, fear, pain, shame, arrogance, anger and depression are all feelings that are directly
associated with the
earning or loss of money. Close your eyes for a second and think about how your last losing streak
the analysis that takes place before the trade, but within the trader’s mind after the order is executed.
“Money is the Root of All Evil”
Many of you have heard this phrase before, and when it comes to trading this is certainly holds true.
FX
made you feel . Were you angry that your hard earned money was taken away from you? Were you scared knowing that you may end up losing more? Were you discouraged, depressed, or even in a state of panic as your account slowly bleed out and you couldn’t seem to make it stop? How about af ter last
your winning
streak, did you become greedy start
and holding
po s i ti o ns past
in attempt to
targets get every
last drop of profit from the market? Did you become overconf ident and start taking trades that you shouldn’t have, believing that you’ve mastered trading and would never lose
Were you scared, knowing that you’ve struggled in
the
again? past
and are now wondering if this current winning streak is simply luck and not ski l l? These are the feel ings and emotions that surround every trader each time they put money at risk.
FX TRADER MAGAZINE April - June 2016 61
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