The psychological hiccups and barriers to trading are best resolved in the early stage of your trading career. The longer they stay with you, the more delayed your graduation to the "Execution" stage. The "Growth" stage would remain a distant dream till then and that would be disastrous for your "Business of trading".
The problem with these psychological issues, is that they creep into your mind without you becoming aware of their presence. And then they control your thoughts and then your actions. Once your actions start getting driven by your thoughts and not by the events that occur on the trading terminal, you make mistakes, and keep on defending them till the end.
This is a typical "Startup" traders trade that I am narrating now.
The trader is full of enthusiasm as he confronts the terminal and gets ready for his first trade. The market starts and his terminal lights up with candles moving thick and fast. He watches them calmly for some time. But then suddenly a thought crops up and says "Look, just watching the screen ain't going to bring you any money." "Why not take this trade and try it out?" "Maybe you would be first time lucky!". The cheergirl in mind starts trumpeting about the forthcoming success, as he is already calculating his first profit. And then our trader enters a trade, puts a stop that is much wider than what his study in the "Planning stage" allowed for. Whether he exits this trade with a success or a failure is of no consequence. He is now a wild tiger on the prowl as his trade now runs on the fuel of adrenaline. Only thing is he is not aware of the fact that he is "drunk at the driving wheel" now. He is bound to meet with an accident sooner or later, and he is going to pay for it. Hopefully, he has enough finance to enter the next trade setup when it comes. But by then, he is pumped with other kind of adrenaline. He does revenge trading as he now wants all his losses covered and that too as fast as he can. More accidents, more losses on the way ahead.
Let this not happen to you. Be aware that your thoughts can come between you and your success and that they will need some tackling. They cannot be just wished away.
After a lot of struggle with my trading and of course, after huge financial losses, and after way too many instances of refinancing my trading career, I have found a simple safe and sure tactic to silence these inner distractions. Let me explain with an example again.
Lets say I am a small swing trader, having done extensive study on the stochastics of a particular scrip and having finalized a trading plan to buy when it looks up from oversold and sell when it looks down from overbought.
Lets say I am the trader who has just entered the trading room and confronting the trading terminal. The green candle in my chart is growing oversize and is threatening to run away and I am not in trade yet. The same chain of thoughts occurs in my mind too. But what I do is "NOT" take that entry into the trade. Instead I demand from those "thoughts", the evidence from the screen. I just tell them to show me the stochastics line looking up from the oversold zone. And there they go silent. I tell them calmly that maybe they are right, but the time has not come yet, and we need to wait.
These two questions, have helped me a lot in balancing my entry and exit from trades. They can help you too.
1) Where is the evidence on the screen?
2) May be, the right time has not come yet.
Once you start demanding evidence on the screen, there will be no "fear of failure" and there will be no "fear of being left out". Mind you, these two fears are the biggest roadblocks in the life of any trader. The sooner you learn how to deal with them, the faster you will reach your goals in your "Business of trading."
Happy Trading !!!
The problem with these psychological issues, is that they creep into your mind without you becoming aware of their presence. And then they control your thoughts and then your actions. Once your actions start getting driven by your thoughts and not by the events that occur on the trading terminal, you make mistakes, and keep on defending them till the end.
This is a typical "Startup" traders trade that I am narrating now.
The trader is full of enthusiasm as he confronts the terminal and gets ready for his first trade. The market starts and his terminal lights up with candles moving thick and fast. He watches them calmly for some time. But then suddenly a thought crops up and says "Look, just watching the screen ain't going to bring you any money." "Why not take this trade and try it out?" "Maybe you would be first time lucky!". The cheergirl in mind starts trumpeting about the forthcoming success, as he is already calculating his first profit. And then our trader enters a trade, puts a stop that is much wider than what his study in the "Planning stage" allowed for. Whether he exits this trade with a success or a failure is of no consequence. He is now a wild tiger on the prowl as his trade now runs on the fuel of adrenaline. Only thing is he is not aware of the fact that he is "drunk at the driving wheel" now. He is bound to meet with an accident sooner or later, and he is going to pay for it. Hopefully, he has enough finance to enter the next trade setup when it comes. But by then, he is pumped with other kind of adrenaline. He does revenge trading as he now wants all his losses covered and that too as fast as he can. More accidents, more losses on the way ahead.
Let this not happen to you. Be aware that your thoughts can come between you and your success and that they will need some tackling. They cannot be just wished away.
After a lot of struggle with my trading and of course, after huge financial losses, and after way too many instances of refinancing my trading career, I have found a simple safe and sure tactic to silence these inner distractions. Let me explain with an example again.
Lets say I am a small swing trader, having done extensive study on the stochastics of a particular scrip and having finalized a trading plan to buy when it looks up from oversold and sell when it looks down from overbought.
Lets say I am the trader who has just entered the trading room and confronting the trading terminal. The green candle in my chart is growing oversize and is threatening to run away and I am not in trade yet. The same chain of thoughts occurs in my mind too. But what I do is "NOT" take that entry into the trade. Instead I demand from those "thoughts", the evidence from the screen. I just tell them to show me the stochastics line looking up from the oversold zone. And there they go silent. I tell them calmly that maybe they are right, but the time has not come yet, and we need to wait.
These two questions, have helped me a lot in balancing my entry and exit from trades. They can help you too.
1) Where is the evidence on the screen?
2) May be, the right time has not come yet.
Once you start demanding evidence on the screen, there will be no "fear of failure" and there will be no "fear of being left out". Mind you, these two fears are the biggest roadblocks in the life of any trader. The sooner you learn how to deal with them, the faster you will reach your goals in your "Business of trading."
Happy Trading !!!
Great, nice reads...your content is good for all traders who alwaysalways in the battle of emotional minds and practicle action.
ReplyDeleteI second Yogi. Good article indeed. Day-trading is not everybody's cup of tea. In fact it requires lot of courage, balanced mind, money and destiny. तसे बघता, स्थितप्रज्ञता हा शेअरबाजाराचा आत्मा आहे. कवी ग्रेस यांनी बाजाराकडे बघूनच म्हटलंय कदाचित, भय इथले संपत नाही!
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