The Winning Trading Psychology - sure way for consistent profits

The Winning Trading Psychology - sure way for consistent profits

Beginning

Welcome to the most important and the least focused aspect of trading. Psychology is the behavior of the mind. This behavior is external as well internal, however the deep roots of our behavior originate from our own subconscious mind. We all have been feeding our subconscious from the moment we were born. Today the way you see the world, the way you form opinions , the way you get emotional swings, the way you approach any given problem and the way you expect or hope is deeply grounded into your subconscious. Perhaps you may think what this all has to do with my trading career? Not only trading career, but your psychology marks a big difference in all other aspects of life. The worst attitude we have been wired since ages is “Attached Expectation”. Believe me , this attitude is a slow , sweet and sure killer. We constantly rotate from three major states of mind. They are Positve, Neutral and Negative , only a pinch full percent of people live in the 4th dimension i.e. PEACE. This is the best state of mind you will ever have. Peace is as good as having mind yet not having it! In peace you do not perceive the world as per your views. You just feel the reality , you just enjoy the “ NOW”. In peace state of mind you just do the things, do the “ Process” without the hard expectation of “ Results”. You just enjoy what you do. THIS IS THE HEART OF WINNING PSYCHOLOGY. YOU JUST HAVE PEACE IRRESPECTIVE OF THE RESULTS. IF YOU TRADE WITH THIS WINNING PSYCHOLY , THE CUP IS ONLY YOURS!

We have just scratched the surface of Trading Psychology. Being in peace is the main state of mind when you trade. However there are also many other blocks which you need to dissolve. Only when you dissolve them, the victory is yours. At this stage if you choose to simply log off this page, it’s your unfortunate choise of failure. However if you want to be a real time consistently profitable trader, please do continue to explore the beautiful dimensions of Trading Psychology.

In my early days of trading career, I knew the only way to succeed in markets was having a very high percent trading system. I back tested the charts, sleepless nights were spent to back testing them. I was really excited that I have the world’s most secret edge and nobody could stop me from making billions! But something was inside me which kept on taking me on the wrong trades. The problem was not with the Trading system. The beast was within me. I never tried to tame this best and make it my SWEET INNOCENT PUPPY. The real problem started hitting me. It was that I spent most of my time on charts, the past , back testing , curve fitting , searching for the methods and never thought of training my own mind! Very few hours of week were spent live trading. I think this is the most crucial turn in my trading career than any other trading methods could have made it! I started to spend more time live trading and only a single day of the week for my research and development. I was introduced with the “BEAST” in my own view. I began to read everything on psychology I could. Still the problems weren’t vanishing. Now I started to realize there was actually no problem, I just had to change my perception and integrate or realize the trading psychology. Trading psychology is like enlightenment. You began to have its fruits only when you realize what you learn. This was the turning point in my trading career that I began to realize the trading psychology.


Let us now be more specific in terms of trading psychology. Trading can be seen as MTJ analogy. What is MTJ analogy? MAP – TOUR – JOURNEY. Most of the traders spend their trading life span in the first two aspects i.e. MAP and TOUR. Most of them resign the beginning of JOURNEY.

MAP- in trading terms , it is Analysis whether Technical , Fundamental or any other. Most traders master the MAP. They are good guides. They know the sea route from Pacific to Atlantic. In summary they are very good in formulating their own strategies and plans. If you have traveled through Cruise or via any other Sea route, you know what it is in REAL TIME. You must have seen people fading, people getting scared and you must have experienced the emotion at that moment. Perfecting the MAP and taking a journey are really two contrasting worlds. This is where you must realize that the most important aspect of trading is Journey. I did not say that MAPS are not important. Infact, all three are linked with each other. MAPS (methods) – TOUR (Demo trading) and JOURNEY (LIVE ACCOUNTS) are linked with each other in varying proportion. All the three aspects are very important. A trader can not survive without the lack of any one factor. However, the focus should be on journey.

Tour- this is taking a Demo Account and trying to get a feel of Live account. This aspect is definitely good and also very important before you go live. I know many traders perform very well on demo accounts and hardly few of them earn good out of live accounts. This is because you don’t treat the Demo accounts like live ones. How can you fool yourself! Thus at this stage of trading you have not seen your own enemy- the beast within.


Journey – The real live account. This is where you will battle with yourself. Your conscious and subconscious mind will fight. You will have to face many beasts within you like greed, fear, Ignorance, Arrogance, Frustration and the KING OF THEM “ATTACHED EXPECTATION” Yes you read it right! Your stress to perform, your focus on single trade result and your impatience will throw you out of trading. This is the fact that why most intelligent and most smart people fail in trading business. They will master everything but not the beast within.

If you are still reading at this stage, the odds highly favour for YOUR SUCCESS. You are now very close to meet an INNOCENT, LOVLY PUPPY WITHIN YOU.

Stay Tuned ...............

Best Regards
Winston

I been on the journey for about a year live trading, lost more than 20k I'm still here and yes i come to realize it more about who the person is than the system so im interested in more you have to say.

Hi Jerome,

all the best for your Journey! I hope this thread could attune you and others to the right psychology!

Cheers
Winston

Let us focus on major Trading Psychologies-

1) Personal Psychology
2) Psychology of Money management
3) Trading method psychology

Trader’s Personal Psychology

This umbrella includes all the qualities of your mind- Greed , Fear, Ignorance, Arrogance, Humbleness, Peace etc. Before we continue any further let us know the fact that Greed and fear are same. The only difference is in your perception.

Greed and Fear

Whenever you feel greedy , there is an indirect message into your subconscious that you are also fearful. Thus being greedy will invite fear automatically. Let’s remember the early days when you started trading and hoped that it turned out to be hundreds of thousand dollars winner! You positioned yourself in the market on greed using the depths of leverage you can. Thus you were greedy, but at the same moment you invited fear of losing not only what you have but also gaining in debts. Your this fearful behavior within did put you under immense pressure and finally you landed up in the worst situation.

Thus driving the greed automatically drives the fear within you. Greed is the Action and fear is the Reaction. Treat trading as a BUSINESS. Why you want to double your account every month. Keeping a realist approach of 5 to 10% a month is decent enough to trade for living. The problem with many small players is 5 or 10% a month is BS and thus they want to gear for doubling or tripling the account in a month. But you then invite greed and fear factor. Be realistic about trading. This is not gambling (unless you make it), it’s about surviving. You can only survive here if you treat this as business. You can drive fear and greed completely only when you
1) Realize that trading is a business and 2) Good money management skills. We will deal it more later on.

More on Personal Psych...............later

Cheers
Winston

Interesting topic. I will stay tuned.

I used the NLP tapping technique to great effect.

it took a while to realize that, that's really a hurdle, you have all kind of expectations, from within and from friends/family, you burden yourself with expectations from others ... but it's slowly, you don't pay attention to it until one day you say to yourself: what the fuck, i don't need to live up to their expectation, i can give myself any time i want, i don't need to explain myself, i don't need to give them results, i don't need to make 4% a day forever ...
i realized it was only a burden, it was like tiny needles trying to force something out of me, ... but the market can't be forced, you have to wait for the market to tell you what it wants, and THEN you need to have the guts to follow it, that's the next hurdle, actually doing what you were planning to do, .... and then ... after the trade there are questions, i could have made more, if i could make that everyday, i lost 10% of my account in one week, i can't make it, ... etc. that's all bullshit you loading yourself up with, best is to concentrate on every one trade like it is the only trade, i say to myself before entering: every trade is a good trade (every customer is a satisfied customer), if it wasn't i think about how i could do better next time, what i can learn out of failure (it's not a loss when you can learn something out of it), but at the same time i try to 'reset' before each trade, so that every trade is a trade on its own and for itself, despite wins or losses from previous trades.
and for all the expectations, my view now is of expansion, i don't have a goal like % a week or $ per month or xy$ end of year, crazy as it sounds but i visualize breathing and i breathe more in than i breathe out, so i expand more than i contract (the account) without time or space ($) borders (goals)

hope that makes sense to anybody

In an insane world it makes perfect sense!

i knew someone would understand me

Interesting....I have been doing forex for 2yrs now....and my account is still contracting instead of expanding.

Greed along with the fear are definitely to factors that contribute to my behavior...and more often than not get me into trouble. I close out a trade in loss prematurely because I am afraid I am going to lose more.....then when I let it ride....I lose a fortune
On a winning trade....I close prematurely....to make sure I am getting my profits....coz you never know when it will turn the other way

I keep blaming it on the map....and go back to the drawing board....but still have not come up with a fool proof method.

@silverheat, that has made lot of sense to me!
thank you guys for contributing , i hope this thread could tranform you into a potential trader ahead.........

cheers
Winston

Ignorance

It is the lack to know what you must know! As traders we must constantly realize that markets change. The only unchangeable truth in markets is that it changes all the time on all time frames. You must set aside a day in a week for your own updation of knowledge. You can surf the net, join trading fourms and do everything all you can. When you are aware of the latest developments, Ignorance is automatically dissolved. Thus Trading methods, Broker discussions and other major Fundamental news are really very important. They act like Sugar in Tea. Trading methods are essentially Sugar in Tea. Without it the whole Tea would be bitter. Only a drop of tea in lump of sugar would kill the taste of tea.

Arrogance

It is the overconfidence or The BIG ego coming your way. Many a times you will win in the market consecutively and that is the moment you are on top of the world. It happened with me, others and will also happen to you. But let me assure you that it will take no time for the markets to break your arrogance. Thus, you win or lose just have fun. No feeling of sadness or no arrogance when winning. This is the key to winning trading psychology.

The King of Beast – ATTACHED EXPECTATION

This attitude alone is sufficient to melt you down in almost all the aspects of life. There is noting mystic reason about not having this psychology. The simple and logical reason is FOCUS. Almost all the religious scriptures have stressed the importance of this attitude tons of times. When you start focusing on outcome, it implies that you want the external things behave according to your thought out plan. This means you are controlling the markets if you are attached with the outcome. You want the life to go on according to you. But you hardly realize that life was before you and still be there after you. How could you control the outcome? If you can’t control the outcome how could you have Attached Expectation? They say mind is an Amplifier. It can amplify one thing at a time. When you amplify Results, how can you perform very well? You hardly channel your energy in real performing activity. This is the key reason that you should not have attached expectation. However why would you want to do a thing without any goal. Even I can’t do it? Who can do it purely? Having a Balanced Expectation is the Key to success in any forms of life. In the background I know I want to make money. But when I am trading I just have fun and focus all my energy on the process. Again this could be compared with the Tea –Sugar analogy. Your Sweet Tea is the goal. But if your Tea is full of Sugar, could it taste nice?

I hope that by now, you must have released most of your mental blocks which were restricting you from being a profitable trader. You have now just realized that the animal within you is lovely Pet. But now you have to get friendly with it.


pardon me cuz English is not my first language

Thank to everyone that contributing to this thread I'm some where in the learning stages of mental understanding and realizing nothing is in my control I'm only apart of the whole universe and if I let go of my ridged thoughts and ways I was taught from begining of life and how I believe things suppose to be or I'm suppose to react to any given situation, maybe I'm saying it less stressful to just become apart of the flow of things like the flow of the universe there is a million thing going on at the same time one with out the other cannot produce a certain outcome regardless how big or small of the role is being played, each rain drop is is apart of a body of water (ocean) that generate life for million of animals, people ,plant etc, so if I choose to trade my role is to become apart of the trading market world and not think i can dictate the outcome but let the outcome dictate to me. I'm learning to be in the present moment since it really all I have I'm not sure what the future hold and why dwell on the past when all I have is the now.

The best thing about trading is you can find your true self.

I'll give back as I progress.

Jerome very well said!

one should try to be in tune with the market......as our great Feb says' any entry is just a guess '.

if you are out of tune.......try try try preserving the capital
if in tune.......enjoy the run......

all good to hear, but realising it is very different thing.......

IMHO, trading psychology is something like Self- Realisation path....

Hope this thread acts like Compass for the fruitful journey!

Best Regards
Winston

Well here's my point of view - there is no psychology of trading. No one talks about the psychology of driving a car. They just get on with learning to drive a car. Being a profitable trader is a skill that can be learnt and does not require some special psychology.

It requires a profitable method and the discipline to apply that method consistently over a large number of trades without being concerned over the outcome of any individual trade.

If you want to have a psychology you should have a something like - the psychology of handling loses. But at the end of the day that just boils down to accepting it and saying 'Next'.

is it not psychology?

and yes, i already mentioned that MAP- TOUR - JOURNEY are interlinked.........

Yes it is - but saying you need the right psychology to be a successful trader is not specific enough to help anyone. To be a trader it all boils down to -

a profitable strategy and the self-disciplne to follow that strategy.

There are many threads on FF and books on trader psychology but I just don't think it is any more complicated than the above statement.

If you are not a profitable trader the starting point is to determine why you are not profitable. Most people are unprofitable because they don't have an edge.

@Jerome I really liked your post and will follow in future...

Trader’s Psychology of Money management

Here, we have focused our attention only on management of a trade. Firstly I would recommend you to start a small live account. This will take you on a journey-like experience without much to lose. With small live accounts you can still feel the Liveliness of your friend /enemy within. It does not matter even if you blow couple of live accounts. In fact if you are not blowing your small live accounts in the beginning of your trading career, I would smell it fishy. You must get used to live trading so much that it then becomes a part of your Right Brain. At this stage you start doing things automatically without efforts. Tell me did you try sleeping? What was the result? Remember the last time you had a sound sleep? I bet you can’t remember because you did it effortlessly and without knowing. Same thing applies in trading. The time when things will be automatic in trading, you are on that path of your trading career that hardly anyone gets it!

Some people risk 1%, some 2, 3, 4, 5…10…20….. And some all they have. You still practice the Money Management style unknowingly. Whenever you start risking more than 3 or 5% of your equity, you are automatically inviting the Beast like Greed and Fear within you and I bet they will kill most of you at some point of your trading career. Most Successful traders do not risk more than 1% of their account on single trade. What is important is you should not risk your COMFORT ZONE. (Thanks to Bill M. Williams)

The moment you risk anything more than your Comfort Zone, all the enemies within you wait to kill you at some point. What is a Comfort zone? It is really subjective. Suppose you have 1000$ to start with, 1% risk means 10$ , 2% is 20$ and 10% is 100$ .Some of you may be Comfortable with even 100$ risk. Now , you have One Million$ Live account. 0.5 % risk means 5000$, 1% is 10,000$, 2% is 20,000$ and 10% is 100,000$. I bet many people will go for as less as 0.1% i.e. 1000$ risk if were to handle a one million $ account.

Thus it is not a hard and fast rule that you should risk only x% on your Live Account. Thus your risk should be COMFORT ZONE + TECHNICALLY ALLOWED RISK. Technically allowed risk is not 10% or 5%. It ranges any where from 0.1% to 2%. This is because Trading is a game of Probabilities. Every New hand is independent of the previous hand. You can have and will have at some point of time in your trading career 10 or more consecutive losses.

IF YOU ARE NOT PREPARED FOR THIS DISASTER OF HAVING SUCH CONSECUTIVE LOSES, YOU ARE DESTINED TO BE THROWN OUT OF TRADING. Thus Your Risk is defined as COMFORT ZONE + TECHNICALLY ALLOWED RISK. This is the best gift from money management psychology you can ever present to yourself. Trading with the edge is all what you need. You don’t need to focus on single trade outcome. When you take 100 trades irrespective of outcomes with Comfort Zone risk and a trading method with the edge, winning is sure! Yes you read it right. Give the edge the chance to prove its power. This can be only done when you trade uninterrupted at least for nearly 100 trades!

note- there are many other complex MM strategies, however i have presented the most basic , simple , effective and consistently successful MM style

All the Best
Winston

I am sure at the end the conclusion comes to the MM and much less to the technical s or fundamentals. Good MM skills will eliminate your beast insight you and will protect you when you ll be cocky greedy fearless stubborn... but most importantly I would agree would lead you in peace of mind!

thank you