Traders' Delusions

Loser's Mindset in Trading

Posted in Traders' Delusions, Submitted by Trading Critic on Sun, 2006-07-09 11:45.
A loser's mindset almost always leads to further trading losses. Don't be frustrated - always trade with a clear mind.

A loser's mindset leads to further trading losses. How does one get into a losing mindset? There are a few ways:

  • A losing streak: effectively wiping out your confidence
  • A negative attitude: do you believe in self-fulfilling prophecies coming true

As a trader it is inevitable that your account would be hit by losses. And when it does happen, you risk being succumbed by a loser's mindset. Especially when you hit a string of losses.

A negative attitude in anything almost always results in failure. A negative attitude is no excuse in the trading game.

The only solution is to step back. Take a breath. Wait until the nerves and the adrenalin rush flushes from your body (if you were in a losing streak). Reflect on the reason why you are trading (if you have a negative attitude). Review and reflect on the trade. And simply start over again taking on board anything you conceived from your reflections.

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Is your Trading FINE?

Posted in Traders' Delusions, Submitted by Trading Critic on Sat, 2006-07-08 00:42.
My Trading is FINE (Freaked out, Insecure, Neurotic and Emotional)

In the 2003 remake of the movie "Italian Job," one of the characters responded that they were "FINE". But in their world of underworld dealings FINE is an abbreviation of Freaked out, Insecure, Neurotic and Emotional. So is your trading fine? (In the original version 'F' actually stood for F**ked up) If it is, then you've got a problem.

If you're fine, your trading is likely to be inconsistent and finicky. I can see you ripping your hair out, every time you look at your charts trying to decide whether or not to enter into a trade or exit. I can see you sweating it out, when your accounts are deep in the red, when you failed to exercise your stop loss (that is, if you had a stop loss in the first place).

If you're trading stocks – at least you have 16 to 18 hours of rest until the next trading period. But if you're trading forex and if you're feeling fine, you must be a stressed SOB.

You're feeling…
... freaked out because you aren't confident about your trading.
... insecure because you don't know your risk in each trade you execute.
... neurotic because you don’t have a plan to follow and stressing out from all the uncertainty
…emotional because you are gambler, feeling the highs and lows of your newfound addiction.

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Why Trade?

Posted in Traders' Delusions, Submitted by Trading Critic on Thu, 2006-07-06 14:27.
Why traders trade the worldwide forex and stock markets

I've spent the past week just pondering what to write for my first "real" blog post after posting up my reasons why I set this blog up. I could start off with a "What is trading" post, but you wouldn't be here if you didn't know what trading already was. How about a post about "Where is trading?" Trading is everywhere. Retailers buy off suppliers, hoping to make money on the buy low sell high principle. But the scope of this website is trading the equity markets such as stocks and foreign exchange in markets all over the world. "When can one trade?" With the power of the Internet, there is always a market open for trade anytime for at least 5.5 days of the week. "Who trade the markets?" Financial institutions and private/retail traders like me. "How do you trade?" I'll be delving into the answers of this question throughout the life of this blog. Simply put, traders make money off the difference of the entry price and the exit price when they trade some equity. We've briefly looked at the What, Where, When, Who, How of trading, now we finally come back to the central question, "Why trade?"

Why so much emphasis on the why?

First of all, why am I placing so much emphasis on the why? Your own reasons for trading are important in successful trading. You must always remember the reason why you trade whenever you put forward an order. When you lose sight of your goal, you risk losing yourself in trading. You must be asking... "what the hell do you mean by that mumbo jumbo?"

Trading is sometimes closely linked with gambling, and I’ve argued before that trading is gambling (with a twist). And for this reason, you, the trader, must tread with caution in every trade you make. To ensure that you don't ever turn your trading into pure gambling.

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