HOW TO DEAL WITH THEM
10. Too big a point value
This topic links well to having unrealistic expectations. If you are feeling panicked and constantly worrying about how much you might lose on a trade then consider reducing your point value to a level you feel very comfortable with. Having a lower point value may mean smaller profits, but this is a short-term view. Your long-term view should be on gaining consistency with your trading decisions.
If you reduce your point value, you’ll naturally be less anxious and therefore find decisions easier to make whilst trading. Once you are trading well at the lower point value, you can increase it in small, incremental steps. Master it one step at a time and you will be more successful in the long term.
The four broad challenges traders face
This is a brief insight into a variety of problems traders come across and what could be contributing towards these behaviours. The following chapters address the psychological
causes of bad trading.
The table below will help you see how the errors you make might be linked to the four key psychological problem areas outlined in the following chapters. This is just as an example and all four topics are intertwined in a variety of ways. To give you an idea, lack of review may be due to wanting to avoid the negative self-talk associated with making mistakes; you may feel anxious and want to move on from a trade, especially if you lost money; and this may be because you are afraid of failing.
When talking to traders, I could probably mark every box for every issue at some point or another. However, it is useful to create some broad patterns to enable you to focus on certain areas. The table may give you an idea of particular chapters you want to pay more attention to, depending on your trading challenges.
Issue Chapter 4: Coping with Losing Trades
Chapter 5: Stress and Anxiety
Chapter 6: Negative Self-Talk
Chapter 7: The Role of Fear
Lack of review X X X
Focus on profit X X X
Not controlling risk
X X X X
Losing too much money
X X X X
Lack of planning X X X
Unrealistic expectations
X X X
Panic trading X X X X
Compulsive trading
X X X
Lack of routine X X
Too big a point value
X X X
NB. Although I make reference to certain chapters seeming more applicable to you than others, don’t race through those you think may not apply to you. Work through the whole book and read each chapter carefully to work out which techniques resonate with you.
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CHAPTER THREE. Understanding Your Trading Challenges
s a trader it is important that you start by focusing on what you want to achieve from trading and the challenges you will face in achieving this, whether these are bad habits, a lack of information, or managing your emotions.
In order to create positive and constructive change, you need to know what you want to change and why you want to change it. Then you can move on to how you can change and what you want the result to be. This chapter is designed to help you analyse how you trade, your trading behaviours, the mistakes that you make and what the resolution to each issue might be. This is to provide you with clarity on what exactly it is that you want to change.
Grab some paper and a pen. Start by writing down all the bad habits, problems and challenges you face as a trader. It is important that you are honest with yourself so that you get the best results from the exercise and don’t cheat yourself out of success.
Here are a few examples of behaviours and problems traders present with day to day in my hypnotherapy practice:
No particular methodology
Too much money per point – out of their comfort zone Not following advice from experts
Pulling out of trades too soon
Misreading charts/missing key indicators Ignoring their methodology
Getting caught up in the moment
Not sticking to particular times to trade/compulsion to keep checking charts/markets, etc., even at a non-trading time
Consistently losing trades
Taking a minimal profit just in case it might become a loss
Feeling like you have to take a trade even if nothing looks suitable Wanting to prove others wrong/impress others
Being too focused on how much you want/need in your account – pressure Distracted by family/relationship problems
Problems paying bills/money worries
Once you have written down all of your challenges, rate each one on a scale of one to ten – ten representing a massive influence on your trading success, one representing very
little impact. This is so you know where to focus your attention.
Once you have rated each factor influencing your trading, you are ready to start breaking down those barriers to success. The second half of this activity is to write down the resolution to each individual trading problem you identified above.
For example, if your trading is affected by a relationship problem the options are: fix the problem, or be able to switch off from the problem whilst trading.
Take your time to complete this and organise the results in a table like the one below in the order from most influencing factor to least influencing factor.
Challenge Resolution
By completing the above activity you are focusing your mind on creating the changes that you want. You are seeing the problem and you are seeing the resolution. Being able to visualise what you want to achieve is an important step towards achieving it.
Let’s now move on to the ‘how’ element of the book. We’re going to look at various challenges traders face and I’ll provide techniques that can be used to overcome these problems.
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CHAPTER FOUR. Coping With Losing Trades
rading is guaranteed to cause you a level of cognitive and emotional confusion. It is one of the most emotionally turbulent careers you can choose. This is because you choose it to make money – you hope a lot of money – yet you have to experience losing money on failed trades and accept that losing is all part of the process.
Easier said than done, right? How are you supposed to accept and move on from losing trades? No other job involves working at a financial loss and risking profit on a daily basis quite like trading does. In this chapter you will learn: