Mental Mindset - What's yours like?

[Forexmospherian]

Do you really know yourself?

You may think you are fairly calm and relaxed and can handle problems - whereas you partner may see the other side - ie the road rage - unwillingness to accept when you are wrong - constantly worrying about small matters etc - short attention span etc etc.

Have you ever been able to change something in your life ?

Have you managed to loss weight say 10 yrs ago and kept it off ? - given up smoking for over 3 yrs ? Changed career and gone on to greater success ?

Have you done a SWOT analysis on yourself recently ie Strengths , Weaknesses, Opportunities, Threats etc?

All what I have mentioned above are important if you want to succeed in trading and making money.

So many people enter into trading and really should not even bother. They just don't have the disciplines, the commitments, the work ethic. patience , correct mindset etc - and so they are doomed even before they start.

They might be excellent for working in other professions - but in the cut throat deceitful world of say Forex Trading - they are just going to get beat up and waste their time.

The type of mentality I think is important is as follows -

a) - Dont trust anyone but have an open mind - and never accept anything you are told without finding out yourself

b) - If you suffer with road rage and general anger - forget it - you will end up beating yourself up all the while on your trading journey. Every single person gets angry in life - but you need to be in full control of your emotions

c) - Brains - you do need them - NO you dont need to be a member of Mensa or have a First class Degree in Maths - but you need an active inquisitive brain that works well under pressure and stress . Also it helps if you are streetwise and maybe have read the "art of war" a few times

d) Can you accept that the only real "trading set up" - is the one being played out on you ? ie you are being set up - you are being deceived by charts and all the fundamental stuff you will read - you are facing false set ups - manipulation and wrong sentiment - and therefore you will lose money and be wrong


e) Can you problem solve ?

f) What are you like under pressure - ie real pressure - when you have to make a decision in minutes ?

g) Are you resilient ? Are you able to just keep going after loads of set backs?

h) Are you generally confident - satisfied that you are not the best at everything in the world - but far from being the worst ?

i) Are you presently stable in your personal life? - having money worries is normal worrying about not having a six pack and the size of your manhood is all normal for young guys - but if you have major personal issues giving you stress - sort them out first - don't compound them trying to make money learning to trade

OK - that's enough for now. Be honest with yourself - are you up for it ?

Can you now see without even looking at charts, economics, money management etc etc why most wannabe traders fail before they even start ?

You really do need a tough mindset to be a successful trader. Like anything in life - you can learn to adapt and change - but it will take time and lots of effort

Don't kid yourself - find out all your weaknesses - learn to control and conquer them - and then besides being a better trader - you might even be a better person

Its only my opinion and many might disagree - love to think whether you agree or not ?

 

[johnradical]

Hi F

Some good points laid out in the above. I got into trading FX about 18 months ago and could read charts and see the set ups well when I started but the thing to understand and conquer to become successful is the mind, found that out the hard way. If you can't control your fear/greed, stress/anger, resentment towards the markets your doomed.

I worked for myself in the construction industry and started out May 2008 during the crash. I had a dedicated work ethic and gritted my teeth to make something of myself and my company and I did. I'm not blowing my own trumpet but like the above statements you have to be of the right work ethic and mind to succeed. Saying that I needed to fine tune my mind set when it came to FX from the construction industry. It was hard at first but I enjoyed the challenge and I just want to keep progressing.

BTW i've followed your "live trade" thread for a while now and I like what you have done there. I might pop in and add my novice 2 pence some time.

Take it easy F

Enjoy the rest of the wknd

Regards JR

 

[Forexmospherian]

Hi F

Some good points laid out in the above. I got into trading FX about 18 months ago and could read charts and see the set ups well when I started but the thing to understand and conquer to become successful is the mind, found that out the hard way. If you can't control your fear/greed, stress/anger, resentment towards the markets your doomed.

I worked for myself in the construction industry and started out May 2008 during the crash. I had a dedicated work ethic and gritted my teeth to make something of myself and my company and I did. I'm not blowing my own trumpet but like the above statements you have to be of the right work ethic and mind to succeed. Saying that I needed to fine tune my mind set when it came to FX from the construction industry. It was hard at first but I enjoyed the challenge and I just want to keep progressing.

BTW i've followed your "live trade" thread for a while now and I like what you have done there. I might pop in and add my novice 2 pence some time.

Take it easy F

Enjoy the rest of the wknd

Regards JR

Hi John

First of all - you are welcome to come in with comments on the Intraday Live thread - no problem - any questions etc or when you see it different to me etc - I welcome input and will always try and explain why or how I might be viewing a FX pair at a particular time of a session.

Well Done starting your business at the start of all the world wide problems. I have a cousin who is a few years younger than me who had trained as a surveyor and worked in the construction business for over 23 yrs and he came out in 2010 - he found it that tough and after owning his company for 15 yrs just had to make many of his staff redundant as all his contracts had dried up and he just could not carry on.

When you go through all the stresses and demands of running your own business you tend to think you can tackle anything. One of my businesses I sold out of had a turnover of over £5 million per annum and was making good profits of over £400kpa - but I wanted a change and though at the time Forex trading ticked all the right boxes for me. I had an Economics Degree from my student days and had trained as an accountant and was good with stats and problem solving.

I had thought I was mentally tough - gone through many challenges in life and always thought I was in control of my emotions etc .

That all changed one day after I got to a stage i had found a method that worked well ( forget the economics and fundamental side - waste of time) and had compounded over 6 months up to stake over 25 lots per pip. I was used to having $2 -4 k wins and losses up to $1 - 1,5 k and thought I could just keep compounding and carrying on upping my stakes etc etc.

It all went wrong this one day I had 7 bad trades in a row. I had 3 consecutive bad trades many times at stakes of 10 lots and 12 lots and accepted them as I would then might get 3 or 5 winners in a row - so it was easy overcome.

But with big stakes and then seeing me lose more in a day than I won in previous week or two badly effected me.

My mind was no longer thinking rationally - I was angry and frustrated and could not believe what was happening.

It had such a bad effect on me - it took me nearly 6 months to regain proper confidence again - and even then I know I could no longer keep compounding - I had hit my wall with my own money and I was just uncomfortable with high stakes.

Since that day - at least 6 yrs ago - i have never tried again over 15 lots or £100 a pip and feel far more comfortable at stakes ranging from 4 to 10 lots maximum

The idea of winning say £10 -15k per day is great - but to do it I might have to risk losing £ 2 -4 k and if I have say 3 or 4 bad consecutive trades - I cannot handle it - its outside my comfort zone with my own money.

I just could not get my mind to accept that over 20 or 50 trades - i should still have a win ratio of over say 65-70% - because my stats proved that - I could not control my mind from the negative thoughts of what if I now have 10 or 15 bad trades in a row???

Luckily , Its never happened again - and after many more thousands of live trades I know if i have 4 bad trades in a row - i have to stop for an hour and look at a different pair or session.

I am pleased I am not a gambler - I can at least control that side - but when You have high stakes on and you start sweating and having palpitations - that shows you are outside your comfort zone and are placing yourself under additional stresses.

Today - even if I had 5 losses in a row - It would might be less than £1k and max £1 5k - and that seems to be acceptable to me when I know 5 - 8 decent scalps can make me £2 - £3k.

My Brain can accept it - without giving me stress / palpitations and other emotions - which i know would happen again if i went up to 20 or 25 + lots again.

If I was 30 yrs younger - I am sure I would want to overcome my weaknesses -but nowadays I accept them and regularly say to myself I am a "chicken" or a "wimp".

Saying that if a Bank gave me $20 million and said place 200 lots a pip on your trades - then thats a different problem - and I am sure my brain would say no problem - its not your hard earned money - I can detach from the transaction and its OK.

Its amazing how your mind can effect your trades. Although all my money management rules are not "set in stone" - I always take the cautious view to trading on my main capital accounts. For fun yes you can run riot with a $100 capital account - as then if you do blow it its no great loss

Good Luck on your journey John and if I can be of any help or assistance - no problem

Regards


F

 

[scotd]

Believe it or not, your mindset or mental state affects your trade. It goes a long way to determine if you will loose or make money in your day’s trade. Imagines getting sad news, and you enter the market with such psychological emotion, you are bound to make mistake when analysing the market

 

[Fugazsy]

I believe that to became successfully in trading one has to find a system that reflect his/her personality.

Non knowing a bit about one self will make it impossible to find the appropriate method, it might be ok to trade if one trades as a hobby or others, but when trading for a living, a system that walks hand in hand with the personality is a must, there is not another way......

I also believe that great traders are not born but they make themselves, it will be ok not to have a personality that is not suited for trading, great traders are nimble, they see and they change, they adjust for what is best, not only in techniques but they also learn to adjust their personality structure as well.

Traders with strong beliefs have not chances in my view, they become prisoner of their own conviction and once there the mud will suck them in unless one has the will to start to look inside.

 

[IzaIza]

Great read, all of it.

Trading In The Zone - Mark Douglas, I found this book to be an eye opener regarding mental mindset.

Though it is mainly in regards to traders who consistently find themselves in the mud, it can still potentially enlighten traders that are doing well.

 

[drtro]

I made riches in paper trading just as most people do. I thought the "live trading is so much differently mentally" would never affect me when I went live. Once I went live, I never have much problems, besides patients. I've been profitable and consistent. I followed the same plan I developed in paper money, but I was impatient once I got in trades. I would get out after the first red candle I saw forming, and didn't stick to my strategy for a real exit. So instead of making 50, 60, or 70 ticks on a trade, I'm getting out at 15, 20, or 30. I'm still trying to overcome this. A losing trade hinders my judgement for the rest of the day. Especially when my first trade of the day is a loser.

 

[Forexmospherian]

I made riches in paper trading just as most people do. I thought the "live trading is so much differently mentally" would never affect me when I went live. Once I went live, I never have much problems, besides patients. I've been profitable and consistent. I followed the same plan I developed in paper money, but I was impatient once I got in trades. I would get out after the first red candle I saw forming, and didn't stick to my strategy for a real exit. So instead of making 50, 60, or 70 ticks on a trade, I'm getting out at 15, 20, or 30. I'm still trying to overcome this. A losing trade hinders my judgement for the rest of the day. Especially when my first trade of the day is a loser.

Hi drtro

I agree - it does take time to accept losses into your daily trading - but it does get easier the more trades you take in a day - but without going silly etc

I know quite a few day traders who only take 2- 4 trades a day. One loss - they accept quite well - but if they have the first 2 trades go wrong - they sometimes stop and say - not my day and accept a losing day.

Now I normally take on average 10 -20 intraday trades a day.

On good easy days and if I get a row of 8 or 9 wins - I might stop as more than likely reached daily target.

However one Monday last month in November out of my first 8 trades - 6 ended up all as small losses ranging from 2 to 5 pips. Now because I have traded my method for years and with many thousands of trades - I know I had another 5 hrs or so that I could turn that around. So I carried on after a short break - and by the time I had taken 12 trades I was going the right way and after I think 18 trades I had made my daily target.

6 bad trades in a session in very rare for me - 1 to 3 accepted as normal

Try and keep the losses as small as possible - cut as quick as you can - I dont wait to see if it hits my tight (soft) stop - thats why entries are paramount in my system - even if I take a bad trade - I normally might be able to still get out with 1 or 2 pips profit etc

Losses are just part of a successful trading method - as nobody will maintain 100% win ratio - unless they are one of these traders who are totally inefficient and use super small stakes and are prepared to wait 1 -2 years for bad trades to come back around into profit - and even then that does not always work .

Good Trading to you


Regards


F

 

[The Blueprint]

Hi drtro

I agree - it does take time to accept losses into your daily trading - but it does get easier the more trades you take in a day - but without going silly etc

I know quite a few day traders who only take 2- 4 trades a day. One loss - they accept quite well - but if they have the first 2 trades go wrong - they sometimes stop and say - not my day and accept a losing day.

Now I normally take on average 10 -20 intraday trades a day.

On good easy days and if I get a row of 8 or 9 wins - I might stop as more than likely reached daily target.

However one Monday last month in November out of my first 8 trades - 6 ended up all as small losses ranging from 2 to 5 pips. Now because I have traded my method for years and with many thousands of trades - I know I had another 5 hrs or so that I could turn that around. So I carried on after a short break - and by the time I had taken 12 trades I was going the right way and after I think 18 trades I had made my daily target.

6 bad trades in a session in very rare for me - 1 to 3 accepted as normal

Try and keep the losses as small as possible - cut as quick as you can - I dont wait to see if it hits my tight (soft) stop - thats why entries are paramount in my system - even if I take a bad trade - I normally might be able to still get out with 1 or 2 pips profit etc

Losses are just part of a successful trading method - as nobody will maintain 100% win ratio - unless they are one of these traders who are totally inefficient and use super small stakes and are prepared to wait 1 -2 years for bad trades to come back around into profit - and even then that does not always work .

Good Trading to you


Regards


F

I like the points that you make here.

Firstly regarding losing trades. I think the idea that a lot of people stick to (and you refer to) of calling it a day after a certain amount of losing or winning trades, will entirely depend on the mindset of the individual. For someone who is prone to acting impulsively, it is a good idea, because on a losing day they will revenge-trade and on a winning day they will over-trade thinking they have the Midas touch. Neither are good ideas for impulsive traders.

However, this is where really understanding your own mentality comes into play (and keeping a journal really helps for figuring this out). Some traders after losing twice in a day, will only make their situation worse by calling it a day at that point. They will keep the negative experience and let it play into their future trading days, almost allowing it to become a crippling factor where they have so much self-doubt that it just compounds on a daily basis. Instead it is sometimes better to get back in the saddle on the same day and to ride it out, being patient and controlled but not allowing the situation to get the better of them. Even if they don't actually open any trades that day (if there are no correct set-ups). The simple fact that they were willing to, will make the next day a lot easier.

In any activity, job or role where your performance level really matters to the success of the activity (sports being a key example), you will have 'dry spells' where your performance just doesn't seem to hit its peak for a while and you don't know how to get it back. For example, think about a footballer (soccer player for Americans!) who is used to scoring a lot of goals; suddenly he hits a dry spell and it becomes a complex for him - the more he thinks about it, the more of an issue it becomes (sort of like bedroom problems for men ). So what's the trick to getting out of that? It's obvious that thinking around the problem is only making it worse... if you keep thinking about your losing trades, you're only going to attract them by doubting yourself rather than having conviction.

Instead, in that situation, you should remember that trading is not only about finding profitable trades (although a lot of the time we think it is), it's also about protecting your money. You can literally run through a list of things you have done and put a tick next to most of them, meaning we are doing our job right. E.g. finding a set-up that matches our system, realising a trade is making a loss and cutting it early, staying patient and disciplined, using correct money management...and so on. All of these will have a tick, and therefore be a positive thing we have done, with the only negative being that the trade was a loser (something that was the market's fault not ours - if we stuck to our system and know that our system has an edge). Therefore, we should be focusing on the positives and not the negatives. Why are we making our lives extra difficult by having such strict criteria for being confident and happy with our trading? There are many aspects to our job, if we are doing most of the things right, we should be content and realise the rest will fall into place sooner or later.


Sorry for the really long post there, I got a bit carried away as I was typing, since it's a subject I enjoy talking about and find fascinating.

Cheers.

 

[tomorton]

Its always tempting to take time out when you hit an unlucky streak. But if you have a strict rule-based system and have been and can continue to stick to your own rules, best to carry on - the greater the number of trades, the less impact chance has on the outcome.

Don't fail to realise that your rule-based entry and trade management criteria continue to tick up in the market whether you take these trades or not, so just by being out of the market doesn't affect the win rate of your system, only your personal score.

 

[myattitude]

When things got crazy today I switched to the demo account to practice my trading risk free. I'm -300 points down on there. Was chasing my tail too much.

 

[smokealarm]

well my priority is not letting my mind to have a lot of pressure ... just stay cool and enjoy life and trading

 

[NVP]

I was lucky in that I saw a lot of the reality of gambling in my early years - growing up with my father and grandfather running a successful bookmakers......

They had a lot of regular customers ...............steady losers all of them ...........but all nice people and many from professional backgrounds and families ....intelligent and smart .........

but dumb **** gamblers ........for so many reasons its too long to talk about here

then there were the players.......people dad and grandad were friends with but never ever took their money (once they realised who they were).............why ?...........because they were pro gamblers ............they walked the path few of us can ever walk...........they actually made money

so what differentiates that rare breed from the rest of population ?.........

well many things as Forexperian and others are mentioning here ...........

for me my experiences of those guys were

1) all business ....no chit chat or buddy buddy timewasting and gossip
2) loners ..........
3) laser focus and experts....knew everything about their subject....everything
4) it was their life ..........nothing else came close 24/7....365 days a year

not exactly the description of Richard Branson is it ?

sorry to burst the bubble

N

read nick mordins betting for a living if you want an insight into old school pro gambling

http://www.amazon.co.uk/Betting-Liv...d_sim_b_2?ie=UTF8&refRID=0GQNK5FG4NYPTGGP54GJ