TRADING PSYCHOLOGY
trading. • Greed is another pitfall. Wanting too much too soon, or trying to make every trade a big winner, are common. Again the key is to assess your strategy, accept that as traders we are in and out of the market over our desired time frame, whilst the market moves both before and aſter we enter and exit. Our aim is to capture profits within the time frame of our system.
• Fear. Tis can come in many forms and may lead to you either not entering the market or getting out too late or too early. Fear of loss, fear of missing out, fear of leaving money on the table are just three possibilities. Managing trading position size, accepting losses as a part of trading, and having confidence in your trading strategy and your own trading ability will all help to reduce or eliminate any fears.
SITUATIONAL
• Situational pressures – slumps, financial pressures, stress outside of trading. Sometimes trading does not go to plan
FX
or you get a period of drawdown that might be extended in time or deep in cost. Likewise, sometimes life outside of trading presents challenges that can have an impact on you. Where these conditions arise, your mindset can oſten be affected; and, as a result, your behaviours can become less disciplined. A typical example is where traders are having financial difficulties either in their trading or outside of work and they start to get into desperation-mode. Teir only goal becomes to make money in any way possible, which immediately moves them away from the discipline of sticking to their strategy.
PERSONALITY
• Some people are by nature not rule-driven, and may live rather by the rebellious axiom that ‘rules are there to be broken’. Others may be impulsive, whilst still others may be sensation-seekers who love excitement and high level risk- taking. In all of these cases there is a potential challenge to discipline, so the key issues become getting the best match of the trader to a trading style that most accommodates their personality and/or working with them to make some
FX TRADER MAGAZINE April - June 2014 35
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