impulsive trades impulsivity

[foroom lluzers]

I am looking for guidance on what causes impulsive trades .

Impulsive trades are done by the automatic mind

http://www.trade2win.com/boards/psy...ment/223300-mind-traps-affecting-traders.html

There is an underlying layer of consciousness—call it the automatic mind—that processes information automatically without conscious awareness. We engage our automatic mind in virtually everything we do. While putting on a trade , for example, our conscious attention may be focused on what so-and-so said today while our automatic mind is fast at work continually calibrating the movements of our hands on the mouse . We shift seamlessly to conscious attention whenever the need arises ("Better get to the right. My exit is coming up."), but otherwise we execute thousands of discrete movements of hand with little if any direct awareness of them. Think about it: Are you aware of how many times you entered and exited trades without any reasons?

I have 3 links here

http://www.trade2win.com/boards/general-trading-chat/111938-acting-impulse.html

Joe Ross was very good in his explanations.

Depending on your personality, background, training, and experience with the markets, you may have trouble reigning in your tendency to act on impulse.

For some people, being impulsive is in their nature. They have trouble focusing their attention. For others, being impulsive is related to emotionality. Some people have so much trouble controlling their emotions that they react impulsively out of frustration. . When the extremely emotional trader encounters one of these setbacks, he or she becomes overly agitated, and may close a position early, or in a fit of confusion, make a major trading blunder that can only be remedied by closing the position.

That said, any trader can act impulsively at times. There are many situational factors that contribute to being impulsive. Research has shown, for example, that when people are tired, they have difficulty focusing their attention. As much as part of your conscious mind cares about sticking with your trading plan, your unconscious mind thinks, "Who cares? I want to take a break." Psychological resources are limited. When you push yourself to the limits, you will have trouble focusing on your ongoing experience, concentrating on your trading plan, and sticking to it.

Other people may be impulsive because they lack experience with the markets.
When you have an incomplete trading plan in which important aspects are left unclear, you will have trouble following it.

https://www.andrewmenaker.com/category/impulsivity/

Impulsive traders tend to take action with less forethought than others at the point of entering the trade. It does not help even if they had thought through the trade the night before. This is because impulsiveness blinds or blocks out assessment and recall ability

http://www.littledada.com/2013/01/impulsive-trading/

Impulsive traders tend to take action with less forethought than others at the point of entering the trade. It does not help even if they had thought through the trade the night before. This is because impulsiveness blinds or blocks out assessment and recall ability

 

[foroom lluzers]

 

[foroom lluzers]

https://www.ncbi.nlm.nih.gov/pubmed/19410598

The frontal-cortical areas of the brain oversee behavioral control through executive functions. Executive functions include abstract thinking, motivation, planning, attention to tasks and inhibition of impulsive responses. Impulsiveness generally refers to premature, unduly risky, poorly conceived actions.

http://www.neulaw.org/blog/1034-class-blog/3898-prefrontal-cortex-dysfunction-and-impulsivity

 

[piphoe]

very little time to hold "meetings" on a trade in this world of HFT. make split-sec decisions, calc

 

[foroom lluzers]

very little time to hold "meetings" on a trade in this world of HFT. make split-sec decisions, calc

all your trading is impulsive

http://www.trade2win.com/boards/general-trading-chat/224376-forex-trading-so-hard.html

 

[piphoe]

all your trading is impulsive

http://www.trade2win.com/boards/general-trading-chat/224376-forex-trading-so-hard.html

"all", thats a bit harsh. i admit to making impulsive trades, and doubt any trader here would deny making the same from time to time. you get a hunch and go with it....

you can't see the reasoning behind my trades, and sometimes i don't so how can you judge?

 

[foroom lluzers]

"all", thats a bit harsh. i admit to making impulsive trades, and doubt any trader here would deny making the same from time to time. you get a hunch and go with it....

you can't see the reasoning behind my trades, and sometimes i don't so how can you judge?

Depends how rapidly you think and over trade , frequently jumping from instrument to instrument , within minutes based on impulse.

 

[Arashimuro]

I'm quite an impulsive person by nature and it often hinders me in trading. But I try to fight it. Unfortunately, not always successfully... Could you give me some advice, please?

 

[Brumby]

I'm quite an impulsive person by nature and it often hinders me in trading. But I try to fight it. Unfortunately, not always successfully... Could you give me some advice, please?

Trading will always bring out our emotions and the first step in addressing this issue is developing awareness. Only 37 % of traders are self aware of their emotions when trade decisions are made and unfortunately emotions tend to drive the intuitive system that is associated with impulsive actions. It is our basic physiological makeup to automatically default to the intuitive path when under stress and the reason why for so many traders it is not easy to overcome the problem.

The first step is to develop an awareness of the stressors when making trade decisions. It is about recognising the signs and symptoms and how you are experiencing it. It can be in the form of feelings or bodily sensations. When the feelings or impulses become overwhelming, our trade actions are driven by the need to seek emotional release through our trade actions rather than to follow the trade plan. For example, a trading magazine poll ask traders which emotion is the toughest to control and the predominant one mentioned among the lot was fear. This would include the fear of missing out or FOMO as is commonly known. Any impulsive move to jump into a trade is primarily to address the emotional fear of missing out on a trade. The action of entering a trade automatically offer relief from that emotion. As such, the trade is driven by an emotional outcome rather than a trade set up constituted outcome. You will need to develop an inventory to identify the extent of your problem; under what circumstances is it a problem; and identify what sets you off?

The next step is to accept that working with emotions and stress is part of trading. You can't avoid it and neither can you control your emotions. You have to work with your emotions once you have identified the areas you need to work on. A key part of the program is to ensure that your overall trade decisions is process driven rather than outcome focus.

The final step is the program itself which is basically about developing emotional distancing. I remember years ago reading about a particular trader featured in the book "Market Wizards" where he would describe the experience of standing in the corner of a room watching himself trade. The whole idea of distancing is that our emotions are artificially kept at a distance rather than attempting to control them. There are a number of defusion techniques that are suggested. They include :
1)verbalising the emotion when they surface. For example, if there is an urge to impulsively enter the trade because of a fear of missing out on it, you would verbalise it by saying "I noticed that I am having an urge to enter the trade because of my fear of missing out"; or
2)by adopting the bouncing ball technique. It is about picturing in your mind a ball bouncing across those words in (1); or
3)by adopting the sailing boat technique. It is about picturing in your mind you are placing the identified emotion unto to a sailing boat and watching it sail away.

Practise what works for you. It will require effort on your part. Once the emotions are kept at a distance you would need to direct your mind to go through the deliberate process of determining the feasibility of the trade through your established trade process.

 

[mpups]

Trading will always bring out our emotions and the first step in addressing this issue is developing awareness. Only 37 % of traders are self aware of their emotions when trade decisions are made and unfortunately emotions tend to drive the intuitive system that is associated with impulsive actions. It is our basic physiological makeup to automatically default to the intuitive path when under stress and the reason why for so many traders it is not easy to overcome the problem.

The first step is to develop an awareness of the stressors when making trade decisions. It is about recognising the signs and symptoms and how you are experiencing it. It can be in the form of feelings or bodily sensations. When the feelings or impulses become overwhelming, our trade actions are driven by the need to seek emotional release through our trade actions rather than to follow the trade plan. For example, a trading magazine poll ask traders which emotion is the toughest to control and the predominant one mentioned among the lot was fear. This would include the fear of missing out or FOMO as is commonly known. Any impulsive move to jump into a trade is primarily to address the emotional fear of missing out on a trade. The action of entering a trade automatically offer relief from that emotion. As such, the trade is driven by an emotional outcome rather than a trade set up constituted outcome. You will need to develop an inventory to identify the extent of your problem; under what circumstances is it a problem; and identify what sets you off?

The next step is to accept that working with emotions and stress is part of trading. You can't avoid it and neither can you control your emotions. You have to work with your emotions once you have identified the areas you need to work on. A key part of the program is to ensure that your overall trade decisions is process driven rather than outcome focus.

The final step is the program itself which is basically about developing emotional distancing. I remember years ago reading about a particular trader featured in the book "Market Wizards" where he would describe the experience of standing in the corner of a room watching himself trade. The whole idea of distancing is that our emotions are artificially kept at a distance rather than attempting to control them. There are a number of defusion techniques that are suggested. They include :
1)verbalising the emotion when they surface. For example, if there is an urge to impulsively enter the trade because of a fear of missing out on it, you would verbalise it by saying "I noticed that I am having an urge to enter the trade because of my fear of missing out"; or
2)by adopting the bouncing ball technique. It is about picturing in your mind a ball bouncing across those words in (1); or
3)by adopting the sailing boat technique. It is about picturing in your mind you are placing the identified emotion unto to a sailing boat and watching it sail away.

Practise what works for you. It will require effort on your part. Once the emotions are kept at a distance you would need to direct your mind to go through the deliberate process of determining the feasibility of the trade through your established trade process.

Hmmm perhaps just the act of thinking about it all as a process helps too - in distancing yourself from the individual trade outcomes , thanks

 

[Quantt]

Hmmm perhaps just the act of thinking about it all as a process helps too - in distancing yourself from the individual trade outcomes , thanks

check lists and more check lists - a system - I think this is the only way around it... (not to mention the possibility of automation later)

 

[Arashimuro]

Impulsiveness or any other emotional involvement in forex will lead to the deposit drawdown. This market doesn't forgive for such mistakes. All decisions should be measured and cool.