today I want to talk about trading psychology .
At the heart of this matter is the question : Why do we trade ? what may seem obvious is actually a lot deeper than we think .
To me ,the motivations for our trading are of utmost importance, and I feel the only genuine motive is to win ! think about it. The desire to win at trading is different to desire for money , or greed in other words .
A lot of people come to the market expecting to swing a few big trades and then come up with a fortune after a few months , im sorry the markets don’t work like that , it seldom rewards what are essentially thrill seeker , chance it all gamblers . I know of 1 girl with this exact same attitude and she ended up a net loser , in the 100’s of 1000’s of $ , near bankrupting her parents in the process.
Such people are better off at the casino or the racetrack or some other gambling arena , since they will never have the courage to be disciplined to learn trading rules and stick to them , they'd rather just get in, hold on and chance everything to luck. . nothing wrong with this but you cannot be a serious trader like this !
So what does it mean to want to win but not to lust for money per se ?
it means we see the markets as a game , a challenge , that we really want to win and that the money is just to keep score . of course as winners , we want that score to increase as MUCH as possible and we take this very seriously! but we don’t fear the losers along the way because each time we lose we will not think “ oh drats , there goes my new tv or cd player “. In this respect we are non materialist, we have no sincere attachments to material things. Money is just a means to our peculiar end.
We play with calmness, emotional neutrality and even cold heartedness .that to me is the winners attitude.
The step therefore is to identify what emotional needs we have and eliminate them . for example , we may feel the need to prove ourselves in some way: that we are clever , we are capable , that we crave social acceptance of some sort . if we expect the market to satisfy these needs then we will get thrashed , since the market is emotion neutral , cold , and has no respect for our frailties and will usually hand our heads back in these cases !
My advise is pick some outside interest and discharge these emotions, eg) start playing a sport: soccer, rugby, boxing, that should give you enough distraction . I use sport as it is the first to come to mind , it could be anything.
This is what is meant by the calm state of trading , never getting over excited about our wins and never being too despondent over our loses . when we feel like “ smashing “ something then this should send alarm bells through our system that we are NOT in the correct mental state for trading .
Most people who know me will say that I am a passionate guy , but when trading im as cold as ice . why ? leopards don’t change so how did I do it ? I didn’t change, I modified and controlled my behaviour because I decided right at the start of trading that I wasn’t in it for emotional needs , and I had my other outlets . with this 1 stroke ,I was able to discipline my emotions .
The key is to ask yourself honestly why you are trading ? if you know it is for emotional needs and you are not willing to do something about it, then admit that the best you can do is breakeven . better yet , if you WANT to do something about it , then im sure you will given what ive just said , and you will be a profitable trader .
At the heart of this matter is the question : Why do we trade ? what may seem obvious is actually a lot deeper than we think .
To me ,the motivations for our trading are of utmost importance, and I feel the only genuine motive is to win ! think about it. The desire to win at trading is different to desire for money , or greed in other words .
A lot of people come to the market expecting to swing a few big trades and then come up with a fortune after a few months , im sorry the markets don’t work like that , it seldom rewards what are essentially thrill seeker , chance it all gamblers . I know of 1 girl with this exact same attitude and she ended up a net loser , in the 100’s of 1000’s of $ , near bankrupting her parents in the process.
Such people are better off at the casino or the racetrack or some other gambling arena , since they will never have the courage to be disciplined to learn trading rules and stick to them , they'd rather just get in, hold on and chance everything to luck. . nothing wrong with this but you cannot be a serious trader like this !
So what does it mean to want to win but not to lust for money per se ?
it means we see the markets as a game , a challenge , that we really want to win and that the money is just to keep score . of course as winners , we want that score to increase as MUCH as possible and we take this very seriously! but we don’t fear the losers along the way because each time we lose we will not think “ oh drats , there goes my new tv or cd player “. In this respect we are non materialist, we have no sincere attachments to material things. Money is just a means to our peculiar end.
We play with calmness, emotional neutrality and even cold heartedness .that to me is the winners attitude.
The step therefore is to identify what emotional needs we have and eliminate them . for example , we may feel the need to prove ourselves in some way: that we are clever , we are capable , that we crave social acceptance of some sort . if we expect the market to satisfy these needs then we will get thrashed , since the market is emotion neutral , cold , and has no respect for our frailties and will usually hand our heads back in these cases !
My advise is pick some outside interest and discharge these emotions, eg) start playing a sport: soccer, rugby, boxing, that should give you enough distraction . I use sport as it is the first to come to mind , it could be anything.
This is what is meant by the calm state of trading , never getting over excited about our wins and never being too despondent over our loses . when we feel like “ smashing “ something then this should send alarm bells through our system that we are NOT in the correct mental state for trading .
Most people who know me will say that I am a passionate guy , but when trading im as cold as ice . why ? leopards don’t change so how did I do it ? I didn’t change, I modified and controlled my behaviour because I decided right at the start of trading that I wasn’t in it for emotional needs , and I had my other outlets . with this 1 stroke ,I was able to discipline my emotions .
The key is to ask yourself honestly why you are trading ? if you know it is for emotional needs and you are not willing to do something about it, then admit that the best you can do is breakeven . better yet , if you WANT to do something about it , then im sure you will given what ive just said , and you will be a profitable trader .
