Trading Psychology - How to Control Emotions on Forex

What can traders learn from poker?


Probably you have heard that there are many kinds of poker. But do you know what is the key difference between them? Do you know that this factor is also one of the key elements of any trading strategy?

So what is it?

A variance!

A variance describes how stable are your results. If you win in any game 5 dollars then your variance is 0 . If half time you win 10 dollars and other times you lose 10 dollars then your variance is higher. The higher is your variance the more unstable are your results.

So which variance is better for good, professional poker players? High or low?

Professionals play better poker than other players. So if a variance is low then their profits almost constantly grow. They don’t have to worry that inexperienced, stupid players win their money. They play correct and they win. So they should like it. Right?

NO!!!!!!!!!!!!!!!!!!!!!!

It is comfortable when you play correct and you win. But professional don’t want comfort. They want to win inexperienced player’s money. But they can do it only if inexperienced players want to play with them.

If the variance is low then inexperienced players almost constantly lose their time. So they have no motivation to stay.

On the other hand if the variance is low then inexperienced players may make stupid moves and win money in the short run. Of course they will lose it in the long run. But they will remember that they won before. They will think that they are great poker players but they had a bad luck . So they will bring more money and play more poker. Professional players will be waiting for them.

What can you learn from it. Don’t be focused on short term results like inexperienced poker players. You lost your last 3 trades? OK, but it is not enough to say that your strategy doesn’t work.

Check last 100 trades. Think and act long term like professional poker players.

New way of dealing with losses

New way of dealing with losses – video transcript



Today I would like introduce you to the new way of dealing with losses on financial markets.

But maybe you ask yourself if you really need this information. If you trade or invest then you sometimes lose. There is not anybody who can make money in any transaction. Of course there is a few per cent of people who make money on financial markets. But even them sometimes lose. So I am sure that if you are an active trader then you made some losses in last month, or maybe in last week or maybe even today.

So what do you feel after loss. You know the answer but I guess that is probably anger, or guilt, fear, frustration or maybe weakness.

How these unpleasant emotions affects your financial performance? Maybe you feel fear and you risk less than you should. If you do it you make less money than could.

Maybe you feel anger and you risk more than you should. If you do it is just a matter of time when you lose all your money.

Or maybe you feel weakness, you think that trading is above your skills and you stop using your strategy. If that happens then of course you stop making money.

OK. So what can you do to deal with this problem? How can you stop these negative emotions decreasing your profits and costing you a lot of money?
The answer is : maintain positive mood and self-esteem DESPITE your losses.

If you do it you will not be focused on negative emotions and you will have less temptation to take actions which usually cost you a lot of money. Because of that your judgment and decisions will be more rational and profitable.

Now you may think that it is impossible or too difficult for you. But it is not true. In fact this solution is very easy and can be done by anyone. I know it because I tested it by myself and it works for me. After that I decided to share it. I am sure that if you apply it you will improve your trading results or maybe even other fields of your life.

OK. So what is the solution? I will not tell you now. Probably this knowledge is new for you and you may need some time to think about it. Because of that I will tell you the exact instructions in the next video.

New way of dealing with losses. Part 2.

Do you need to worry about your trades?


I have been using the same trading strategy for 2 years. But I realized that I still worry about my trades. So I decided to fix it.

Of course if you are an inexperienced trader or you just start using your strategy then you should not be confident about your decisions. You have a little experience and/or poor skills so you sometimes make mistakes. There is no reason to feel guilty because of this but you can’t also ignore it.

But if you have a experience then worrying about trades has no sense.

Why?

Reason 1. Because it makes trading unpleasant

If you worry about something then you focus on some unpleasant scenarios. It makes trading less pleasant. Because of that you your creativity may not support your trading and you may quit trading and find more pleasant way of making money.

Reason 2. Because you waste your time

You may spend one year analyzing a single trading and worrying about it. But it will not make you decisions better. It is proven that people make the best decisions when they are focused on the key issues and use their intuition.

Reason 3. Because it doesn’t improve your decisions

When you are an experienced trader then you focus only on few key issues. You don’t have to worry about other things like inflation or unemployment in Brazil. You know which information is enough to make money.

Reason 4. Because you must sometimes lose

Losing is a part of the game. You can’t always win.

Do you worry that you must pay taxes? No? So stop worrying about your losses.

New way of dealing with losses. Part 3

How to stop worrying about trades?


Last time I told you that there is no sense to worry about your trades. Today I will tell you how to do it.

1. Accept that you are not perfect

Many of traders try to be perfect. Win all trades, always be right. But it is not possible. You are not a robot. You may sometimes make a mistake. If you accept that you will feel a relief, you will be more creative and trading will be more pleasant for you.

2. Accept that you sometimes lose

There is not anybody who can make money in any trade. Even you. You sometimes lose to make more money in future. So accept that you will sometimes lose.

3. Focus on following your plan

Most traders are focused on making money. But you can’t control it in the short run. You can make great analysis and lose. You feel stressed and guilty. But it has no sense. You aren’t responsible of the market movements. You can’t order US dollar or British pound to go up or down. You can only predict but even the best prediction may be wrong.

But you can control whether you follow your plan or not. Fortunately it is enough to make money. So focus on this.

4. Trust your plan

I assume that you have a trading or investment plan. But if you haven’t used it for a long time then you may be worried that it isn’t profitable. This attitude doesn’t support your trading. You only lose energy.

So trust that your plan is profitable. What if it isn’t?

First test your plan on past market data and check if it gave you profit.

Second before you start trading define the level of a drawdown which will alert you that your strategy isn’t profitable. When you get to this level then stop trading and examine if you still can make money by using your strategy. But before this happens believe that your system is profitable.

New way of dealing with losses. Part 4

Do you feel fear, anger or guilt after taking a trading or investment loss? You know that it doesn’t support your results but you think that you must feel in this way? No, you don’t have to! Learn how to stay positive mood and self esteem after taking a trading loss.

3 ways to become a frustrated trader

Using any of these ways will make you frustrated so you can do it only on your own risk.

How to become a stress free trader?

1. Risk only money that you can lose 2. Accept or change your job 3. Accept that you sometimes lose 4. Plan to follow your profitable trading or investment plan.

Why do intelligent investors and traders lose on financial markets?

For example Myron Scholes and Robert Merton, 2 professors which got Nobel Prize in economics in 1997. One year later their hedge fund LTCM went bankrupt. Explanation is based on the results of the scientific experiment made on the University of Amsterdam.

How to stop overtrading?

You trade too much? You lose your money, time and energy? You don’t know how to stop overtrading? Use this easy and natural way

How to trade for 5 years without making any improvements?

Usually if you practice something then you must learning something. But trading is different. You can spend 5 years on trading and don't make any improvements. You just need to follow these easy instructions. But maybe you already follow them?

How to become a perfect trader?


Learn the secret formula which in easy way will make you a perfect investor and trader.

Is a long and hard work enough to make money on financial markets?



Hi investors and traders. I am Michael White from decisiveinvesting.com. Today I will tell you if a long and hard work is enough to make money on financial markets.

Many investors and traders think that they will become rich if they work long and hard. They make long analysis, watch market news, read a lot of posts and commentaries, observe many markets. In nutshell they spend a lot of time, nervous and effort on trading and investing.
Why do they do it? Why do they do all these time consuming activities?

The answer is: because they think like farmers!

How do farmers think? They know from their experience that if you make an effort then you get some results. And if you make a bigger effort then you get more results.

This way of thinking works in agriculture. But does it work also on financial markets?

No! On financial markets bigger effort doesn’t equal to bigger results. If you spend a lot of time on analyzing data which isn’t connected with your trading or investment plan then you make stupid decisions. If you take transactions which doesn’t meet your trading or investment plan then you don’t learn from your mistakes and lose your time and money. If you think that because of your long and hard work you deserve money but you don’t see any results then you become frustrated.

OK, so how should you think to be more efficient on financial markets?

Think like a businessman. Businessmen are focused on effects not on effort. They take only actions which give them effects. They don’t believe that they deserve money because of their effort. They know that they make money only if they take accurate actions.

That’s all but if you want more you can check my website and get free report about trading and investment psychology. I am sure that you will find it useful and get value from it. Take care. I hope you enjoyed today’s video.

Can praying increase your profits?




Hi investor and traders. I am Michael White from decisiveinvesting.com. Today I will tell you if praying can improve your trading and investment results.
Wikipedia says that prayer is an invocation or act that seeks to activate a rapport with a deity, an object of worship, or a spiritual entity through deliberate communication. It is also practiced in Judaism, Christianity, Islam, Buddhism, Hinduism and almost all other religions.

But what will happen if you pray for being a successful and wealthy investor or trader?

First you will visualize your financial goal so you will know what you want and because of that you will be more focused on achieving it.
Second you will ask God for that goal so you will believe that God somehow supports your efforts. Because of that you will be more confident and less distracted by irrelevant factors.

Because of these two factors praying will probably improve your trading and investment results. So I advise you to check it even if you are an atheist. Because even then you can pray to some higher power.

That’s all but if you want to get some more knowledge you can visit my website and free report about trading and investment psychology. I am sure that you will find it useful and get value from it. Have a nice day. I hope you enjoyed today’s video.

What can you learn about trading and investment psychology during holidays in an exotic country?



Last month I have spent in the southern Thailand. Most of the time I relaxed on the beach but I also made some observations which also apply in trading and investment psychology.

1. Prayer helps achieving goals.

In one of my last posts I told you why prayer may improve your results. I checked it by myself.

One day I wanted to get from Prechuap Khiri Khan to the Koh Samui (an island). The best solution was taking a train to Surat Thani and then taking a ferry.

I was afraid that I will come too late to Surat Thani and miss my ferry. The first train was around 12.30 and it should be in Surat Thani around 16.30. But it was late so I arrived around 19.00. The taxi driver told me that the last ferry has gone and I can go only with a very slow and uncomfortable night boat.
I didn’t want that. But anyway I wanted to get from the train station to the city. It was around 14 km so I joined other tourists and took big private taxi. The driver took us to the city and get other passengers to their hotels.

I was confused. I didn’t want to go with an uncomfortable ferry but I also didn’t have any other idea.

There is nothing interesting to see in Surat Thani so I didn’t plan to stay here and I didn’t know any hotel.

So I prayed to the Good for helping me finding a nice hotel. When I started praying I had no idea how to make it. But after few minutes I became calm and the solution appeared in my mind. So I asked the driver to recommend me some hotel. He took me there and it was nice and comfortable.

So like I said in previous video prayer helps you achieving your goals because you must define what you want and you become calmer.

2. It is better to be a relaxed investor or trader.

I noticed that it took me 3 weeks before I became fully relaxed which means that I forgot about my duties and fully enjoyed my holidays. I think that it is a long time. Why did it take me so long? Because I am very serious about my work and trading.

If you are serious about your duties then it is easier for you to achieve your goals. But it also harms your private because you are less eager to spend time with other people and less friendly for them. Additionally work and trading gives you less pleasure and you become less creative.

How to deal with it? Practice relaxation. There are some easy exercises which takes few minutes and makes you relaxed. Do you want some examples? See you in the next posts!

Are you a motivated trader?

Yesterday my friend sent my video to motivate me to be even more successful. When I watched it I realized that it shows my last month in southern Thailand. But maybe it will also motivate you to become a successful investor or trader.

How does your ego cut your profits?



I am sure that you know that one of the biggest obstacles for being a successful investor or trader is need for being right. But probably nobody told you that this need is based on an illusion which is created by your ego.

Continue reading on my blog about trading psychology

Do you waste your time on reading market commentaries?



What do you think about people who go to a fortune teller. Probably that they are stupid or naïve. But do you know that people go to a fortune teller and read market commentaries because of the same reason?

Continue reading on my blog about trading psychology