Psychology in trading

This sounds like me when I first started trading a few years back. I had the same problem as you.

I make a couple of hundred pips from the volatile GBPJPY after a few days of trading and lost them all within hours.

For my case, it has to do with something I called the Revenge Trading Method. After having 1 lost trader, I will quickly want to take back the money and then immediately place trades that are of bigger lots hoping to take the money back.

In most cases, this resulted in more losses for me and eventually wipe out all my winnings.

I think the best way to overcome this problem is to walk away from your computer after you have a losing trade so that you can cool down and then enter another trades that is according to your trading plan.

The second thing is I will always let myself know what is the acceptable loss that I can take before I enter any trade and then set it as my stop loss. Since I am able to accept the loss, I will be okay if I lost the money.

Alway plan your trade and trade your plan!

Sometimes when traders discuss a problem with "psychology" (eg "I keep making the same mistakes..") they focus too much on the symptom and not the root cause.

In discussions with many traders, and also in learning from my own experiences a problem with psychology can indeed be just a symptom of an underlying root cause.. so what we see as the visible symptoms are things like:

- lack of patience
- lack of confidence to 'pull the trigger'
- lack of discipline to stick with a good trade or to exit from a bad trade
- not able to stick to the plan

But it is quite possible that the underlying problems associated with these visible behaviours (and feelings) are practical issues within the trading method. For example:

- has the trading method (ok call it "system" if you want to) been properly forward tested and subjected to rigorous analysis, questioning, improvement, and further testing?
- have the assumptions in the trading plan been properly identified and tested?
- Does the trading plan contain a robust risk management strategy?
- etc

Sure, for some people, the 'psychology' of trading might be an issue, but in my experience I see people too often point to pyschology as an 'easy culprit' when in fact there is something far more practical going wrong inside the trading methodology that should be subject to more through questioning and analysis...

No judgements about the circumstances of the original poster - but just caution about not failing into the trap of managing a symptom, when you should get to the root cause... sure, it might be as simple as something like PATIENCE.. but that's for the individual trader to discover..

An excellent post!

When a trader got few losses at a row, he must stop trading for a while.
The market might diverge from his rules of trading.
Market keeps changing.

The reason of their failure in forex trading is emotions and lack of a trading system. The traders who hesitate to take a trade usually do not have any trading system or their system do not give them exact signals to act upon them. Emotions can influence your trading decisions, unless you have a strategy planned in advance, and stick to it, no matter what you think you're seeing at the moment. The keys to success in investing trading are system, analysis and perseverance.

As far as psychology goes, I always find it satisying when I win and dissatisfying when I lose. This is a duh duh statement, but it's far different than saying, "I'm satisfied with 200 pips and I'm dissatisfied with 10."

Enjoy winning, even if it's 5 pips. You've probably covered commission. A profit is a profit. You live to fight another day.

I've lost thousands in the equity market on stupid trades. One short trade I felt I was 100% right on, but I sold for a loss because I was too chicken. The next day the stock gapped down and proceeded to my price target.

I learned that if you are armed with your technical and fundamental analysis, and you make your forecast, STICK WITH IT. Fight those emotions.

The best trading begins, when you clear your mind from emotions and start thinking straight. Dive into forex and forget everything else. Just feel the market, become one. Don't feel sad if you are loosing. Just try to improve. Don't feel proud when you are winning, try to keep it up. I bet budist monks would make great traders

knowing your chances of succes is a boost on a traders psychology .
https://www.dukascopy.com/fxcomm/fx-...n=read&id=1467

Try the following:

1. If you don't have a set of rules get some
2. Journal every day and review your journal each week to spot behaviour patterns.
3. If you don't have a checklist (check for news - trend direction, higher TF direction, any major S/R up ahead etc) you follow before you put on a trade get one.
4. Add a metric to your trading log for compliance. Compliance is following your rules (eg checklist/journal).
5. Measure your compliance rate for every trade - ie if you followed all your rules then trade was compliant, if not then it wasn't.
6. Aim to achieve 95-100% compliance in your trading regardless of P/L- don't pressure yourself to make profit just concentrate on your rate of compliance with plan execution. Work on your ability to follow rules exclusively. There is no reason anyone cannot do this
7. Work on your mindset (thinking in probabilities vs needing to be right - I recommend reading "trading in the zone" by Mark Douglas)
8. Look at your beliefs - see if you have beliefs about trading and money that are causing you to self destruct.

Make it your mission to do all of the above and see if it helps

Dear fellow traders...
I am very, very sorry to not respond to your replies, but I remained silent for a looong time.
A reason is, or hopefully, reason WAS, of course, my psychology, my mind.
Just last night, I sat on our new sofa and around 2 hours at late night I tried to find out what happened to my mind, where is almost all my enthusiasm gone and why I am still not succesfull on the FOREX market. What I found out was an eye opening cos I wrote every my idea and reason down and one of main reason of NONsucces is that I do not follow a plan.
Well, it seems to be very simply to put it like that, but I think that this is a MAJOR prblem of mine.
Another thing that came up with my thinking around, that I feel espetially in last few month, when I definitelly decided not to surrender just get head up and go further to fight my bloody mind was.... A feeling of some kind of inside block... Its like you know what you should to do, when, but some kind of power inside of you manage that at the end of the day you wont open desired trade even according to your plan... (simply : you r too tired, just need to get something else done, u watch a film instead of to analyze a chart and so on). BUT
I feel it like subcontious way to find something else "important" done or, I do not know whether you do understand me, just to AVOID yes, to AVOID to take a sit in front of the screen, take a look, make a decision and go !... And I did not understand what this bloody block came from. I lost some money (never life threating sums) before, and I still did the job, even in wrong way, I never felt this feeling. I really thinking about to go to see a psychologist, cos I do not know how to get rid of it. Get rid of this blocking from inside. Its not like a fear... Its something else.
Just one or two weeks ago I decided to go back to forex after bigger pause and follow one particular strategy, but this stuff I wrote above about just cause procrastination or delaying... to fresh start... So, if anybody felt like that before or experienced something similar go ahead and feel free to write about.

trading psychology plays an important role in the forex trading. Trading with a good trading psychology then we will be able to trade with the maximum. for that we should be able to train psychology of trading by trying to trade with small capital first

Trading is an art. Most traders lost their money because of their wrong trading plan and strategy.

Trading psychology is the most important thing after trading strategy. Even a good strategy can be invalid if we are not psychologically well equipped. Every trader should focus on this aspects.

What advice would you give traders who want to train their psyche for this occupation?

I think mental strength is also the reason for most traders’ failure.

Trading is a game of psychology. It is never possible to make a profit without psychology. So every trader should develop psychology first.

Making mistake is a common thing in forex trading. But if you do your mistakes, again and again, you have some problems in your trading plan. So, improve your plan and practice your strategy on a demo account to increase your profit-making probability

Agreed! And if you are able to overcome the mistakes, then there is a very good path in becoming a better trader. I personally find the mistakes very important process for every traders because it teaches and moulds you to be a better version of yourself.

Psychology plays a huge role in the life of a trader. Since the forex markets are extremely volatile ,a trader mist have a sound mindset and dedication, if he wants to stay in this game for long.

Trading the forex or other markets doesn’t have anything with pain, psychology or improvement: the only law is: if you know, you win, if not you lose!

You who have already lost everything and are looking for a way to get your money back, stay away from all the EA’s, indicators, softwares as Metatrader, Jigsaw, Sierra, Bookmap and all other. Understanding the options on the futures is the only thing that will help you efficiently. You ‘ll never find anything to help you on forex website.

Finally, think about that: universal access to financial markets is a huge opportunity to get rip off millions of naive people! YOU JUST GIVE LIQUIDITY TO THE MARKET MAKERS VIA YOUR BOKER !