Psychology of Successful Trading
How to stay confident and believe in yourself as a trader
Today I am super inspired to write about the psychology of successful trading. We definitely need to address this as a lot of success comes from your personal happiness. Vice versa, if you are constantly being stressed out, your chances to succeed are diminishing.
How many times have you heard "don't quit your dayjob, work , work and work". Until you die right? Well it doesn't have to go that way. You want to be independent, be yourself and actually live your life. There is a subtle difference between trading and other jobs. For majority of the jobs, working more means being more productive. Working more could make you become an "employee of the month" and your boss thinks more of you. Or you might get a salary bonus if you had extra hours at work. However, in trading the more you work the less you make. You should never ever fall into a trap of overtrading. Too much trading costs money, raises your tax bill and can reinforce bad habits. No matter how happy you are because you have made a winning streak, stay away from trading too much.
Psychology of happiness
Watch this cat for example.To us, human beings - this look very cute right? But this poor cat really isn't happy. She is struggling to drink. A simple struggle to live another day.
Well now, this cat looks happy indeed. Notice the difference between two cute cats. Both seem to be happy but the real thing is - What defines the happiness? Is it only for the satisfaction of drinking water, to quench the thirst while actually the cat is struggling to drink ? Or it is why cat number 2 actually LIVES a LIFE. This cat doesn't think about survival. She is happy and is living a life. We can compare these two cats to struggling and successful traders.In order to become and stay confident in our trading decisions we need to practise different techniques for maintaining a positive mind and overall happiness. One of those techniques is habits - not one shot events, but actual, well developed and repeating habits as you yourself have the ability to control how you feel.
Are you developing good or bad habits?
Have you ever compared yourself to a happy person. For example like Mr.Homer -He is laughing in the face of problems, because he knows he will ultimately be on a winning side. Ask yourself about your habits. Have you developed any habit at all? Only positive habits will lead you to overall success.
Remember what we talked about during our psychology webinars. Don't fall into a trap of bad emotions. By developing bad habits you are actually making them a daily routine and you will not improve. Remember, your daily routine is what will differ you from a trader with a good plan and a trader with a bad or no plan at all.
Now you might say, "hell no, I am a very confident trader". That's great, because confidence is needed if you want to produce good results. However overconfidence will make you fail. Psychologists observe that most people are overconfident; they overestimate the precision of their knowledge and the level of their abilities. Have you ever caught yourself that you are actually trading based on your beliefs? Overconfident traders are so sure that what they believe is right and are more likely to act on their beliefs. The result is overtrading.
Overconfidence and lack of positive habits are bad behavioural patterns. Try developing the skills to identify and change the way your mind works. Maybe you will need to change your routine… OK do it! ASAP! You will never break the habit until you make the decision to break the habit. Never forget:
The path to success - Psychology of trading happiness
It won't be easy but it is achievable. And I am repeating it again - it is achievable. As i have already explained above - your mindset is important. If you use the approach: "I NEED to make money from this", or "I REALLY want to quit my day job and become a full-time Forex trader", then you are developing an improper trader's mindset and you are again moving towards developing bad habits. I have already stated that less is more in the Forex market. If you are getting bad results you might think that you aren't putting in enough time or trying hard enough. That would lead you to push harder and put in more time studying and analyzing various systems, search for a holy grail and revenge trading. Bad idea! Emotional trading will make you lose your focus, lose your nerves and fail in trading. I am reminding you again that in Forex trading - less is more. Trying LESS and putting in LESS time doing technical or fundamental analysis might actually IMPROVE your trading. That is why analysts are there - to help you and give you the cues for direction, trend, targets and entries. We can also compare trading success to success in human relationship patterns. The best relationships will not require a lot of work on behalf of either individual, once a certain level of understanding has been achieved. Trading success comes from a discipline. You should always have a routine and don't let failures touch you. If you do, you will feel like a failure. Don't forget to develop positive habits because you will successful. Don't be afraid of losing. It has always been part of trading. If you start doing things right, you will soon realize that wins have overcome your losses and in return it will make you feel great.The market is like a shadow. If you try to run after it, you will never catch it. However, if you stand still, your shadow will come to you and embrace you.
What about me?
I am a happy person. I work for the company I love. I love my job and I have a wonderful wife. I go out with my friends and my dog. I have both winning and losing days. But i am relaxed as winning trades always overcome my losing trades.
But that's not everything that defines my trading happiness. All of you people, who have been reading and commenting on my analysis and webinars, have made a very positive impact on my trading career. Some studies suggested that people who read positive statements about their actions have been more successful at problem solving and creativity. Positive feedback takes no time and it doesn't cost any money. But it definitely requires us to pay constant attention in return. It is called professional dedication and commitment. And yes- it brings personal satisfaction. Recently I helped my friend who was struggling with trading. He sent me a gift which has a special value to me - a crystallized Tarantula.
"You only live once, but if you do it right, once is enough" - Mae West
But ,wait! What about the cat who struggled with a glass of water? Don't worry , she is ok! She took her lesson well :)