Mental Barriers

I’d be very interested in learning from the community some of the mental barriers you had too overcome in order too arrive at the next level in your trading? Is it important being in control of our emotions and how did you slay the dragon of emotions?

If Psychology is important what was your hurtles you’ve overcome? Is it true we are often our worst enemy in terms of trading? Anyway I thank you in advance for your time for responding, I’m beginning too see this issue is very important too long term success in trading.

The Market is always the same. If you're not careful, you change every trade.

IMO the only way you can overcome a mental barrier is by following a system that works for you. This is the only way to be successful in the long run and is probably the only thing that has helped me.

your font is too big.

Here is one mental barrier I've struggled with. MICRO MANAGING.. yes indeed this has cost me a good amount of cash.. MICRO MANAGING is simply playing with your orders just too do sumfin. Makes us feel like we are in control. I will say last year in my equity account I would have hit my goals had I not played around with my stops. Often trades will take time too develop and being impatient we expect the thing too move in our favor out the gate. If I'm willing too take the trade with 1-2% risk then after entry lt might be wise too let the market determine if your right or wrong. Sure MICO MANAGING works in the short term and makes you feel like a hero. then you kick yourself when the thing rockets without you. So I feel long term MICRO MANAGING is counter productive.

One thing that I found massively helped with the psychology was switching to daily time frames and therefore making far fewer trades than I was before. the time commitment is much lower so you may be at less risk of micromanagement. You need to find a good trading plan that works for you and stick to it. Whilst in a trades, set your stops etc and seperate yourself.. go for a drive, clean the house etc.. I find using a strategy that doesn't need to be watched all the time is much better..

I second that. (From my own experience) A system gives you order in the maze and chaos. Gives you discipline and so on. You just need to follow it like a good emplyee.

thanks for the info guys..

After almost 2 years of trading, I can tell you about some of my mental barriers I have successfully overcome:

First of all, was the lie about becoming rich in some few months or weeks. In deed trading any capital market with a significant amount of leverage is very profitable, but, when I stopped trading like if I had a "rush" to live and retire young in the Swiss Alps, then suddenly everything became clearer.

Second, thinking about "destiny is on my side and I will succeed because it's God's will"... actually, God gives a sh... if you succeed in forex or not; only with discipline and study one can become profitable. In forex, miracles don't exist, maybe once or twice yes, but you cannnot rely on them to be profitable.

Third was stop thinking about trading only one single currency; so far I trade 20 forex pairs and I found that a clue to be profitable -at least for me- was diversifying risk among several assets.

Fourth, thinking about trading longer time-frames is riskier; as a matter of fact when you watch longer time-frames (like 4-H, Dailies, and up...) the trends are clearer and I started trading fewer times but more accurately.

Fifth was understanding that the sense of forex is not risking only 1% per trade... I found that you can trade risking more... but of course that does not mean 50%!!! Maybe risking 15% diversified among 20 forex assest -as I do- is not that bad...

Sixth: Learning that here @ FF you can find nice trading strategies and money management rules... a lot of them will IN DEED work very fine; one has to adapt them to our needs.. that's all.. but that takes a long time.

Seventh: NEVER TRADE AS IF YOU WERE IN A COMPETITION AGAINST THE MARKET.. you will lose all your money if you think that way... one will never beat the market.. but we can learn its language and "understand" it.

I guess that is all.

Cheers!

iiivb

hello, i think u mean giving away the BIG trend since u are constantly managaing ur stops...and before you knew it your out of a trade due to a bad correction, only to see price fly away further north.

Correct me if im wrong here.

But if thats the case, then the problem is still mental. Means your strategy is not aligned with your expectations. You see the bigger treshold you have...the lesser winners in trades you get but it also means when you win, you win big due to your huge risk tolerance.

Hey i did become rich after 3 weeks...only to give it all back...including my equities to the market.

hehe... that is why I have no rush... because I am greedy and I don't want to give profits back!!!

jest, yes I did not have a grip on my risk/reward. Now things are starting too look better as I only put on 2% risk and stops get placed right after entry. Now I can get out if I reach my initial risk of 2% or I now call it a free trade and move stop too break even, well break even +1 pip. I've turned off all 5 min charts as I'm just not that good with them and the lowest I step down is 1h. I've also now applied my equities methodology into forex and we shall see how this pans out over time. I was thinking I needed 15 indicators that I have not a clue how they work and this put me in the weeds with a very frustrated outlook and less cash in my account. I then stopped trading live and lowered my lot size too just 1 lot per trade instead of 5-8.. Yep that was crazy. I was on a one way ticket too blowing out my account. I was so pissed off I could not sleep at night.. So was it mental? yep mental adjustment that forced me too get a check up from the neck up if you know what I mean..

So far for me the most hard mental barrier I've overcame was to accept the paradigm "buy high, sell low" or better to say "follow the trend". It was the reading of "Reminiscences of a Stock Operator" about Jesse Livermore that opened my mind where all the other trading books I read before failed at all to convince me on that.
In particular it was a sentence of Livermore that remained in my mind for weeks and eventually unlocked me. It was like: "when I want to buy I want the highest possible price to buy. I don't buy if they are not offering me higher and higher prices."

But there are also a lot of other mental barriers I had and still have to overcome and I have to say that a bunch of them are caused by some bad reading, especially by some books about the psychological aspects of trading. (I think there are some great books about trading and also a lot of good books about psyche, but very few if none about trading and psyche).

Just an example: "revenge trading".
We are teached that revenge trading is one of the most horror thing to do in trading and very often cause of spectacular account blowning in incredible small amount of time. We are teached that this is because when we revenge trade we are under too much pressure and our mind is not able to be clear and under perfect control. Well, this is absolutely deceiving and I first understood it when I had the exeprience I'm going to tell.

Some years ago I went to a course about scalping Nasdaq stocks. The teacher was a great master of this kind of trading and divided the course in two parts. For three days in the mornings he talked about the theory and in the afternoons he traded live some Nasdaq stocks with real money on a live account of his own. He was really a master, but the last day, while he was entering an order, a very beautiful student girl made him a question and he got inattentive. He accidentally entered a zero more than he intended in his order and pressed enter on the keyboard, then, without looking at the screen, went on answering the girl.
We all noted the error and immediately put the teacher on alert. He looked at the screen and noted that he was already losing 7,500 $ with this just opened order. Until that moment he took 3 hours to get up to 2,500 $ gain for that day, and now suddenly he was 5,000 $ under just for a very stupid typo.

He rested very calm and simply closed the position packing 7,500 $ loss in a few seconds. Than he looked at us and said:
"Sorry guys, I need 30 minutes on my own. You can rest here and look, if you prefer, but I cannot talk to you and I cannot explain anything for the next 30 minutes. But please don't worry, I will recover these 30 minutes with you adding them at the end of the session."

There were a series of ahhh, ohhh, uhhh in the classroom. Some students got excited and prepared themselves to enjoy what they felt was going to be a very interesting show, some others called for the teacher being a scam and saying that he was just going to show us how to blow out a trading account with some very stupid revenge trading and that they did not pay for a course that teaches these kind of things.

The teacher ignored all and started to trade on his own. At first he didn't do very well. You could not say he was really nervous or too much frenetic, but indeed he was very speed and
you could feel clear as the daylight coming in by the windows that his tension was very high despite the apparent calmness he was showing. Anyway in few minutes he got to be about 13,000 $ negative and in the classroom started to mount a lot of murmuring, increasing at any new loss the teacher was packing. I clearly remember that at a certain point one guy lifted up and said that he was not going to look at this show anymore, and went out of the classroom with few others. I was puzzled too and also lift up and went out with them.

We started talking about what a scam this teacher was, how at this point it is clear that he would absolutely not recover any loss and instead he will surely lose more and more, when all of a sudden a strong clapping came out from the classroom. We ignored it and started planning how to ask for a refund of the money we paid for the course, but again a new strong applause started in the classrom. Now we could also listen some whistles, someone shouted "Bravo!", others were shouting "Ole!" every few seconds.

We went back in the classroom. What we found inside was not anymore a simple classroom, it was something extremely excited. People were all on their feet shouting and waving their paper notebooks. The blonde beauty was crying "Yeeeeees!" like she was having some very good sex right now in the classroom, and the teacher's P&L was still negative but only about 1,000 $.

Few minutes later his P&L was positive about some tens of dollars, and most of the studends started crying "Stop it now, you did it! You don't need to demonstrate anything more."
But the teacher, now with an almost imperceptible smile on his lips, did not stop trading. He stopped only when he was positive almost exactly the same 2,500 $ he was before the typo. At that point he stopped, looked at his watch and said:
"Ok guys, I'm going to recover 26 minutes for you at the end of the session."

There were almost 10 uninterrupted minutes of clapping in the classroom, but eventually he managed to have us to stop clapping and said:
"But we can also learn two things out of what has just happened:
1) When you make a mistake you MUST close your position IMMEDIATELY, and that is why I packed that 7,500 loss as soon as I noted my error. No matter what. No matter if you are losing or gaining or what amounts. You have to close your position IMMEDIATELY as soon as you understand you made a mistake.
2) Accidents happen. They happen in real life and they happen in trading. You are not going to survive if you think accidents will not happen to you. And you are not going to survive in this career if you are not able to react when accidents happen. No matter what the tension, what the pressure, or what the amounts. Yuo MUST be able to get back your hard earned money as soon as it is possible. Until you are not able to achieve this you have not made it as a trader."

And that's the story.
Now I want to migrate an example from another context of life that I hope would show better why saying that revenge trading is bad because of too much of a pressure and the loss of emotional control we feel when we are losing money is a very stupid and greatly deceiving thing to say to novice traders. The reality is that there are a lot of situations in real life that can and do put us under very strong pressure and more often than not we are not given any chance to escape them if not reacting to them. Surely we usually do try our best to avoid those situations, but, as the teacher said "accidents happen" anyway. So what are you supposed to do when bad things happen? Do you want to react and survive or do you want to succumb? That's the point. There is no doubt that the pressure is strong, that losing our mental control is very possible under some strong situations, but still when you are in a risky business (and trading surely is such a business) you MUST master the ability to react to adverse situations and rest in control of yourself and professionally solve the problems that happened.

The example I want to migrate is from flying. I use to be an hobbist pilot. Flying a plane is certainly not as easy as driving a car, but you can learn how to do it with a bunch of tens of training hours during the course you have to do to get the PPL license. In fact usually after 15-20 hours of training you are ready to do your first "solo flight", and you do it. But after your first solo flight your course is not at all ended, in fact it is just at its real beginning. What you have to master now is to handle all the emergencies, all the problems that could happen during a flight, what do to when the engine suddenly leaves you, or the flaps are broken, and so on. Flying a plane can be mastered, it is not too hard, but it is flying it under extreme conditions, under extreme pressure and fear that is the most important thing for a pilot to become an enough good pilot to get the license. My flight school won't let you do the final exam if you don't do it right the time your trainer closes the fuel without you notice so that you really thing this time its not simulation but the real engine failure! Well, all the books about the psychological aspects of trading say that you have not to trade if you just got some bad losing because you would be too much under pressure and you will not do it right. Well, what I ask them is, what would I do then when the only engine of my plane suddenly breaks while I'm flying it? Do they thing I should simply say to the plane: "Oh, no, sorry, my dear plane. This is way too much pressure for me. I'm not going to fly you if you have a broken engine. Keep me back to the airport, please."

So the real problem of bad revenge trading is the lack of knowledge, training, expertise and practice that a trader has, not surely because of the fact that "no, no, don't do it, it would be too much pressure".

Mental barriers are also what some bad books want us to believe.
Well, maybe in another post I will also tell you what I think about this story of "get rich quick".

Most are saying to go longer time frames, well, that very thing was destroying my trading, my morale, and my account. I started doing well back in June,

http://www.forexfactory.com/showpost...9&postcount=35

since then I didn't do what I found worked. I kept trying to trade longer term.

http://www.forexfactory.com/showpost...4&postcount=47

I lost more and more every month.

Months later, I've come back around. When I saw iandecoker's system, I got very excited. It just made sense to me. I've been taking 5 pips and am doing well again. It's a little premature to say so after so short a time, but time will tell.

The barrier was greed I suppose. I wanted to catch those 100 - 200 pip moves I see every week. I wanted that MORE than I wanted to be consistently profitable, obviously, because I knew back in June what I needed to do and did not do it. It worked then, it's working now.

Which is strange, because, with my IRA I trade very long term, I move money slowly in small chunks over weeks and months. I make 20 - 30 % per year with very little risk. I'm up 23% YTD and have been 70% in cash most of the year. I spend 15 - 20 minutes per week on this system. But my goals are very different for currency trading.

I guess the most important thing is not to treat FOREX as a "get rich quick" scheme, but more as a business where you need to have capital, and also knowledge and experience to grow. So many people open accounts and start trading live without even learning the fundamentals properly, causing them to burn accounts after accounts.

Learn well, start small, and you will succeed =D

Excellent post, ubeee. And flying is such a good analogy.

It's enough, at the beginning, just to fly the plane. But you have so many things to watch and keep track of, so many things you read or learned all going through your head and you don't know which are important at a given time, and can't usually do the correct action in time since all your attention is spread too thin all the time.

Once you know how, you just fly. If something happens, you handle it. You're not constantly worrying about "what if" this and that. You know which things to think about or watch out for at any time.

I'm sure trading is the same, I don't know I'm not there yet!

Also, the pressure thing. In every emergency, with very few exceptions, if a pilot keeps his wits about him, everyone walks away. In the rest of the cases, he makes several successive mistakes under pressure, and everyone dies. It depends on how he reacts to the problem.

Victim or professional? The victim will revenge trade. The pro will fix the problem, even under pressure. It's all in the attitude.

well good story,... if u fly a plan, ... if something is broken,...u can land, get it fix, and fly even higher again,.. or if the weather is bad,..u can wait for good one,...no need to fly in a storm,...if u dont want too...anyway thx

I have to disagree with you here - flying a broken plane is not the same as trading out of a drawdown. For one thing you have no choice but to land the plane whereas you have the choice as to whether or not you'll take a break from trading.

Revenge trading is bad because it means your discipline goes out the window. You end up taking bigger risks than neccesary and compound it with poor money management. I'm a believer in the saying, losing begets losing.

The paradox is that there are no rules in trading but discipline is key.

I enjoyed reading your story though.

I recommed you to read this book "Mind Games of Trading - Stephen J. Mepstead"