Psychology Trading is a Journey in Self-Discovery

I know a trader, let’s call him Leon. He day trades Futures. He has been actively trading for several years. His profits are erratic and undependable, often going dramatically up and down in the same session. When Leon is making money his confidence soars and he feels like he is a power trader. On the other hand, when he loses money, which is more times than he cares to admit, he feels like a failure, a loser and stupid. For quite some time Leon has wondered why he can’t be consistently successful, and why his drawdowns tend to be much larger than his profits. He wonders this even though he has no Business Trade Plan, doesn’t consistently document his trades and despite having numerous rules, tends to violate them regularly. Leon doesn’t have a clue and wonders why he can’t get different results even though he continues with this pattern of behavior. Leon is out of control and unless he changes he is headed for a financial ice-cold shower. Are you Leon?

If you want to change your behavior, you must first change your thinking and since much of your thinking is driven by your unconscious, you must become aware of your underlying self-sabotaging beliefs that drive thinking, emotions and behavior. Trading is arguably the most difficult business venture on the planet; why? Because we are talking about money, and with every tick while in a trade you are either gaining or losing money. But, it goes beyond that. Money is not only the cornerstone of our society, it is tied up in your identity. If you are winning it, you often feel powerful, competent, intelligent or “good looking” and if you are losing you feel impotent, incompetent, stupid or “ugly.” The fact of the matter is that when you go to the market you invariably are expressing yourself; whether you want to, try to or feel a need to, it doesn’t matter, you are and will express yourself. And, when expressing yourself your behavior is tied much of the time to unconscious beliefs. Actually, when you are in the markets, every blemish, weakness and character flaw in your personality will be challenged, called out and tested. Now, that doesn’t mean that the markets are doing that to you. On the contrary, the markets have no intention for you – even though you may have often wondered how the markets knew that you just placed a long trade and how they chose that exact moment to reverse! Also, there are no rewards, punishments, pain or risk in the markets, only consequences. You provide all the rest. And, with changing yourself, you must provide all the ingredients for that as well.

You can’t change what you can’t face and you can’t face what you don’t know. Awareness is key. The more aware you are of your underlying self-sabotaging beliefs the more you can position yourself to begin to address these issues – one at a time. Now, you might be asking; how do I do that? How do I become more aware if these limiting beliefs are unconscious. Good question! You become aware by simply asking questions of yourself, and by introspection and more importantly by personal observation as you are going through market observation. By checking yourself and checking the market you’ll begin to gain an awareness of why you have no Business Trade Plan or failing to follow the one you have. Why you have no Trade Journal, or failing to document in it. Why you are continuing to do things that you say you must stop doing; and why you are failing to do those very things that you say you must do. Once you identify the underlying self-sabotaging data, you can begin to deal with them…one issue at a time.

So, trading is a journey in self-discovery, and you must begin to pull back the layers of your unconscious onion, one at a time to begin to realize and recognize what is motivating you to behavior that is producing results that you don’t want. There are essentially two kinds of data with respect to trading. Many traders miss this fact and therefore miss a very important set of variables that impact heavily upon their trading. One type of data is mechanical data, which are everything that have to do with the markets; that being, news, technical analysis, instruments, indicators, etc.. This data is external to you. The next type of data is internal data, which are everything that have to do with your thoughts, emotions and behavior; in other words the T+E+B=R equation which impacts upon every outcome that you get. You must manage this equation in order to manage your results.

Trading is a 100% mental and emotional game. Either you are preparing, analyzing, processing or executing while trading; all of which require mental and emotional tools. If you don’t have mental and emotional tools that’s like driving without a steering wheel; and you will not only lose your way but you will crash and burn without it. And, you can’t steer if you are driving blindfolded. You must become aware of what is between you and keeping commitments with consistent follow-through. In Mastering the Mental Game we teach you tools and techniques to put the steering into your trading while helping you to remove the blindfolds as well in order for your journey to be a joyful and self-fulfilling one. Remember, you can’t change what you can’t face, and you can’t face what you don’t know.

May all your trades be green.
 
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Following US news, I am out and gone speculative long. I did get a few more pips on the short but nothing to write home about. That concludes my trade posting here. The long may win or it may not. No concluding remark on that will be made. The few extra pips I had will cover any losses.

How did you determine to go long, was it a coin toss entry?
 
Thanks Joe. All journeys will be different. Your moment of inspiration may not have, quite rightly, been a psychological one, but to get to that inspiration you must have applied something. That is the angle I am coming from. I agree totally that once you understand what is going on the mental factors play less of a part.
 
Looks like a turn to me. But normally the trend should continue. Hence it's a speculative.

Given that the Eur is the worst performing currency so far today, then your logic of taking a speculative long on it is completely flawed.
In my experience, the worst performer stays as the lagger, even if the markets make an about turn.

Note to self.
I really should stop trying to educate the uneducable.
 
Given that the Eur is the worst performing currency so far today, then your logic of taking a speculative long on it is completely flawed.
In my experience, the worst performer stays as the lagger, even if the markets make an about turn.

Note to self.
I really should stop trying to educate the uneducable.

Well, clearly your journey was different to mine as well. My long is now non-loosable. Trading needn't be so much work, so much thinking, and so much teaching. One just has to flow, you know, really flow. While it's flowing, I now go play sports. When I come back, pips could be waiting.
 
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Well, clearly your journey was different to mine as well. My long is now non-loosable. Trading needn't be so much work, so much thinking, and so much teaching. One just has to flow, you know, really flow. While it's flowing, I now go play sports. When I come back, pips could be waiting.

Illiterate ****-"non-loosable" (n) - so you cannot "loosen" whatever it is you omit to name.
Perhaps you mean-" I cannot lose."
 
good morning

hello dr M
I just spend a few minutes reading your article very relevant. I wanted to thank you for the advice that will make me a much better trader.
 
Markets work independent of what we think about it and it's been doing that for years & years.
It's us who have to keep on re-adjusting to the actions we take against the market, and this re-adjustment times & again is something which brings our inner values on the table in front of us.
If we love ourselves, we pick up the right values and let go of the bad ones, else we just ignorantly keep going and lose all we can.
Trading is a platform for self-discovery, I've experienced that, I hope someday you all do.

Regards
Pankaj
 
I was looking for intelligent comments , which of these comments should I believe?
 

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This is a very good article for all traders .

http://www.trade2win.com/boards/educational-resources/161540-trading-journey-self-discovery-4.html

To trade succesfully a trader needs to be in a transcendent state in which there is neither suffering, desire, nor sense of self.There are plenty of youtube viseos for meditation.

Traders make mistakes and plenty of them.

http://www.trade2win.com/boards/educational-resources/223432-mistakes-make-losing-traders.html

There is a thread explaining mind traps and rewiring the human brain , in the psychology section.
 
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