Trading psychology - Share what has helped you the most

We all know physiology is one of the biggest factors in trading

Share here e-books,video,website etc that has helped you and will hopefully help others in the future.

Ideally illustration and stories like this :

From the great Van Tharp http://www.vantharp.com/about-van-tharp.asp

Worry and Perception All the information obtained through the senses about the world "out there" comes from a set of complex mental operations called perception.
These mental processes interpret and attach meaning to the information the senses detect. For example, one might see a set of black markings on a white piece of paper and “perceive” it as a bar chart with a "head-and-shoulders bottom" or some sort of "resistance" or, to a non-technician, just meaningless lines. Perception is a filtering process, which selects information for conscious, processing. It selects information from the billion of bits impinging on our sensory apparatus, so we can cope with the world. The selection process is not random, but an active process that selects information according to one's expectations. What one sees out there depends on what one expects to see. The investor who expects to see a bull market in stocks will tend to perceive information that supports his expectations. He will "see" bullish technical patterns in his charts and ignore any evidence that might contradict the possibility of a bull market. Worry is a form of perception based on negative expectation. People who worry anticipate negative consequences. Most stressful events are stressful because of the way they are perceived. The event is just an event. It is a person's interpretation of the event that makes it stressful. Winners, for example, have learned how to make it "O.K. to lose." Losers, in contrast, become extremely anxious over losses and, as a result, have difficulty "letting go" of them.

A large loss, or even the potential for a large loss, may devastate the worrier. The person who dwells on the more positive aspects of the situation will view the same event as a lesson or even an opportunity. Suppose for example, the price of soybeans drops 20 cents per bushel. Let's look in detail at the reactions of five commodity investors to this same event.


An old man with a smile on his face had been stopped out of soybeans early in the day. He had a $3,000 loss at the time he was stopped out, but the closing price of the day would have amounted to a much larger loss. He felt good about himself for sticking to his trading plan, so he responded to the news by smiling and telling himself, "Great! You stuck to your system."

*A soybean farmer had sold his crop two months earlier at a much higher price because he was convinced that certain big companies were manipulating the markets down. The 20-cent price drop was, for him, further proof of manipulation. "Damn them," he said to himself as he frowned. He remained in a bad mood the rest of the day.

* An active trader was convinced soybeans were due for a major rally. He had predicted the drop during the day and had used the opportunity to acquire a substantial long position in soybeans. He had a small loss on the day, but he felt a sense of satisfaction because his plan was working well. The only thing he said to himself was, "I'm right."


* A company president phoned his broker in a panic even though he was short in soybeans. He now had a $3,000 profit and he was concerned the market might go against him. His broker had convinced him to enter into the position and now he was afraid that he might lose his profit. "I'll lose again! " he thought as he called his broker to learn if he was still bearish.



*A financial columnist was long in soybeans. He had absorbed the loss because he did not enter a stop with his order. His predominant thought was that he did not stand a chance. If he entered a stop, he was sure it would be picked off by the traders on the floor. If he sold out at a large loss, it would probably be at the low price of the day. If he held onto his position, the market probably would continue to go against him. "Why me?" he thought.


Notice how the same event is a totally different experience for each of these traders. Three traders actually lost money in the market, yet two of them had positive experiences. Two traders made profits, yet both of them were unhappy. Of course, most people are not happy about losses or sad about profits. These examples merely illustrate that profits and losses have nothing to do with experience. People create their own experience by the way they think. Each person experiences life differently because each person's thinking is unique.


PLEASE SHARE STUFF LIKE THIS.LETS NOT BICKER OUT 1% THIS 20% THAT

i use small leverage i guess that what help you so much
all have a nice day

Reading and watching video's will might give you some knowledge about how to deal with these situations, but as long as you do not experience it you will never learn it.

So my advise would be, do not trade demo for too long, just start trading with a small account, like 100$.
Don't try to make to much profit, 1%/day is more than enough!
Find a system which you feel comfortable working with, place the trades (entry, stop loss and take profit) and don't change it.

That's the hardest part, letting the trades run.
Most people make the mistake to let losing trades open for longer time and hope price will return and go in profit.
And when there trades are in profit they close them way to soon because they are afraid to end up loosing again.

Write you're system down on paper, in detail, and follow every word of it.
When things are going wrong again, stop trading for a second and read what you wrote down.
Trade like a robot. Enter a trade and let it go.

haha, 1% a day? that's a 1229% a year. Just crazy these unrealistic expectations.

Patience is the most important psychological trait.

I agree.

Have you read any good books about it so far?

no, just first-hand experience

Nothing has helped me so far - I'm beginning to think either I'm bipolar or I'm a psychopath

And who said you will have winning trades all the time?
My target is 1% with 100 pips.
Doesn't seems so crazy to me?
Maximum loss per month is set to 10%.

So you show me a system with gains around 10-15% per month with a draw down below their monthly target please, there are enough out there.
That's what they call a good money management.

I am not taking huge risks, i have a good system, nice returns and low draw down, if you can't believe that, well, that is not my problem
A lot size 0.5 on a 50.000€ account seems reasonable to me.

learn one or two instruments like the back of your hand, then design a system around those
and then mysteriously all the physiological problems involved around trading can disappear
if someone can handle many more pairs, trade more pairs but is n't required to become rich

Don't be a "Jack of all trades, master of none"

trading to start with can be hard enough without trying to master it all, and is not required to be successful
many genuine trading millionaires just stick to what they are very best at and only trade a few of the very best instruments or pairs

making only 1k a day is 200k after one yr
300-400k+ the next and so on
all can be done with just the one or two instruments or pairs

as they say "Don't make it harder than it needs to be"

I agree with this one.
All tough i must say i do the opposite.

I have mastered one system. No indicators, just reading the charts and price action, placing trades when the market offers me one.
The advance of this way of trading is that it can be used on any pair you want.

I only place trades when candles closes and new candles open (4hr and daily, very few times also on weekly).
So no stress watching the market all the time. I have 5 main pairs which i know i get most entry's from.
Besides that i have maybe 8 other pairs which sometimes give's me good entry's.

So every 4 hour/daily close i analyse my main charts and place trades, after the main charts i'll move on to the other ones and might place some more trades.
When this is done i am done for the next 4 hours.

I added one of my favorite stories about trading physiology and how people think about trading in the first post

Thought this is pretty great posted by him but I first heard about it on a webinar by Jason Stapelton

Hope you guys relate....

The 5 Stages of a Trader

Stage One: Unconscious Incompetence.

This is the first step you take when starting to look into trading. You know that it’s a good way of making money because you’ve heard so many things about it and heard of so many millionaires. Unfortunately, just like when you first desire to drive a car you think it will be easy – after all, how hard can it be? Price either moves up or down – what’s the big secret to that then – let’s get cracking!

Unfortunately, just as when you first take your place in front of a steering wheel you find very quickly that you haven’t got the first clue about what you’re trying to do. You take lots of trades and lots of risks. When you enter a trade it turns against you so you reverse and it turns again… and again, and again.

You may have initial success, and that’s even worse – cos it tells your brain that this really is simple and you start to risk more money.
You try to turn around your losses by doubling up every time you trade. Sometimes you’ll get away with it but more often than not you will come away scathed and bruised You are totally oblivious to your incompetence at trading.

This step can last for a week or two of trading but the market is usually swift and you move onto the next stage.

Stage Two – Conscious Incompetence

Step two is where you realize that there is more work involved in trading and that you might actually have to work a few things out. You consciously realize that you are an incompetent trader – you don’t have the skills or the insight to turn a regular profit.

You now set about buying systems and e-books galore, read websites based everywhere from USA to the Ukraine. and begin your search for the holy grail. During this time you will be a system nomad – you will flick from method to method day by day and week by week never sticking with one long enough to actually see if it does work. Every time you come upon a new indicator you’ll be ecstatic that this is the one that will make all the difference.

You will test out automated systems on Metatrader, you’ll play with moving averages, Fibonacci lines, support & resistance, Pivots, Fractals, Divergence, DMI, ADX, and a hundred other things all in the vein hope that your ‘magic system’ starts today. You’ll be a top and bottom picker, trying to find the exact point of reversal with your indicators and you’ll find yourself chasing losing trades and even adding to them because you are so sure you are right.

You’ll get on forums and live chat rooms and see other traders making pips and you want to know why it’s not you – you’ll ask a million questions, some of which are so dumb that looking back you feel a bit silly.

You’ll then reach the point where you think all the ones who are calling pips after pips are liars – they can’t be making that amount because you’ve studied and you don’t make that, you know as much as they do and they must be lying. But they’re in there day after day and their account just grows whilst yours falls.

You will be like a teenager – the traders that make money will freely give you advice but you’re stubborn and think that you know best – you take no notice and overtrade your account even though everyone says you are mad to – but you know better.

You’ll consider following the calls that others make but even then it won’t work so you try paying for signals from someone else – they don’t work for you either.

You might even approach a ‘guru’ like Rob Booker or someone on a chat board who promises to make you into a trader(usually for a fee of course). Whether the guru is good or not you won’t win because there is no replacement for screen time and you still think you know best.

This step can last ages and ages – in fact in reality talking with other traders as well as personal experience confirms that it can easily last well over a year and more nearer 3 years. This is also the step when you are most likely to give up through sheer frustration.

Around 60% of new traders die out in the first 3 months – they give up and this is good – think about it – if trading was easy we would all be millionaires. another 20% keep going for a year and then in desperation take risks guaranteed to blow their account which of course it does.

What may surprise you is that of the remaining 20% all of them will last around 3 years – and they will think they are safe in the water – but even at 3 years only a further 5-10% will continue and go on to actually make money consistently.


By the way – they are real figures, not just some I’ve picked out of my head – so when you get to 3 years in the game don’t think its plain sailing from there.

I’ve had many people argue with me about these timescales – funny enough none of them have been trading for more than 3 years – if you think you know better then ask on a board for someone who’s been trading 5 years and ask them how long it takes to become fully 100% proficient.

Sure I guess there will be exceptions to the rule – but I haven’t met any yet.


Eventually you do begin to come out of this phase. You’ve probably committed more time and money than you ever thought you would, lost 2 or 3 loaded accounts and all but given up maybe 3 or 4 times but now its in your blood

One day – in a split second moment you will enter stage 3.


Stage 3 – The Eureka Moment

Towards the end of stage two you begin to realize that it’s not the system that is making the difference. You realize that its actually possible to make money with a simple moving average and nothing else IF you can get your head and money management right. You start to read books on the psychology of trading and identify with the characters portrayed in those books and finally comes the eureka moment.

The eureka moment causes a new connection to be made in your brain. You suddenly realize that neither you, nor anyone else can accurately predict what the market will do in the next ten seconds, never mind the next 20 mins.

Because of this revelation you stop taking any notice of what anyone thinks – what this news item will do, and what that event will do to the markets. You become an individual with your own method of trading
You start to work just one system that you mould to your own way of trading, you’re starting to get happy and you define your risk threshold.

You start to take every trade that your ‘edge’ shows has a good probability of winning with. When the trade turns bad you don’t get angry because you know in your head that as you couldn’t possibly predict it, it isn’t your fault – as soon as you realize that the trade is bad you close it.

The next trade or the one after it or the one after that will have higher odds of success because you know your system works.

You stop looking at trading results from a trade-to-trade perspective and start to look at weekly figures knowing that one bad trade does not make a poor system.

You have realized in an instant that the trading game is about one thing – consistency of your ‘edge’ and your discipline to take all the trades no matter what as you know the probabilities stack in your favor.

You learn about proper money management and leverage – risk of account etc – and this time it actually soaks in and you think back to those who advised the same thing a year ago with a smile.

You weren’t ready then, but you are now. The eureka moment came the moment that you truly accepted that you cannot predict the market.

Stage 4 – Conscious Competence

You are making trades whenever your system tells you to. You take losses just as easily as you take wins You now let your winners run to their conclusion fully accepting the risk and knowing that your system makes more money than it loses and when you’re on a loser you close it swiftly with little pain to your account.

You are now at a point where you break even most of the time – day in day out, you will have weeks where you make 100 pips and weeks where you lose 100 pips – generally you are breaking even and not losing money.

You are now conscious of the fact that you are making calls that are generally good and you are getting respect from other traders as you chat the day away. You still have to work at it and think about your trades but as this continues you begin to make more money than you lose consistently.

You’ll start the day on a 20 pip win, take a 35 pip loss and have no feelings that you’ve given those pips back because you know that it will come back again. You will now begin to make consistent pips week in and week out 25 pips one week, 50 the next and so on.
This lasts about 6 months


Stage Five – Unconscious Competence

Now we’re cooking – just like driving a car, every day you get in your seat and trade – you do everything now on an unconscious level. You are running on autopilot. You start to pick the really big trades and getting 200 pips in a day doesn’t make you any more excited that getting 1 pips.

You see the newbie’s in the forum shouting ‘go dollar go’ as if they are urging on a horse to win in the grand national and you see yourself – but many years ago now.

This is trading utopia – you have mastered your emotions and you are now a trader with a rapidly growing account.

You’re a star in the trading chat room and people listen to what you say. You recognize yourself in their questions from about two years ago. You pass on your advice but you know most of it is futile because they’re teenagers – some of them will get to where you are – some will do it fast and others will be slower – literally dozens and dozens will never get past stage two, but a few will.

Trading is no longer exciting – in fact it’s probably boring you to bits – like everything in life when you get good at it or do it for your job – it gets boring – you’re doing your job and that’s that.

Finally you grow out of the chat rooms and find a few choice people who you converse with about the markets without being influenced at all.
All the time you are honing your methods to extract the maximum profit from the market without increasing risk.


Your method of trading doesn’t change – it just gets better – you now have what women call ‘intuition’

You can now say with your head held high “I’m a currency trader” but to be honest you don’t even bother telling anyone – it’s a job like any other.


If you’re thinking about giving up Ask yourself the question “how many years would you go to college if you knew for a fact that there was a million dollars a year job at the end of it?"

This is one of my all time favorites.
Do I seek winning trades or just trade my plan?