Psychology is a crucially important aspect of trading, but most traders pay no attention to it. Traders put all their effort into developing technical skills, but eventually learn that technical skills alone offer only a partial picture. Concentration on the psychological aspects of trading is equally vital.
Traders Wait too Long to Learn Mental Skills
Most traders wait until it is too late. Because they haven’t developed the requisite mental skills to trade well, they make a series of poor trade choices – some driven by poor technical skills, many driven by avoidable mental mistakes. Mistakes and their resulting losses cause traders to become fearful of the markets. This fear drives erratic trading actions such as placing stops too close, cutting winning trades short, hesitating on pulling the trigger and even jumping into unplanned trades, creating a vicious cycle of emotionally-based trading. Understandably, traders want to eliminate fear and related emotions from their trading.
Even Highly Experienced Traders Feel Discomfort
Although not widely understood, it is really not possible to eliminate emotions while trading. Emotions are part of our human experience. We simply can’t just get rid of them. Tim Bourquin, host of Traders Interviews, found that even among highly skilled and very successful traders, discomfort in making trades was a common and routine experience. This was true even for traders with successful track records of 20 years or more. Trading psychology isn’t about getting rid of emotions. It is about placing your focus and attention on certain actions and learning how to handle your emotions to prevent them from hijacking your trading and dictating your trading actions. It’s a skill that can be learned.
Practical & Effective Trading Psychology
Last week I started to discuss trading psychology in my weekly Deep Practice program. I haven’t presented this material before. My approach is based on sound psychological research (clinical trials and research studies that demonstrate efficacy in the method) in human performance psychology. It is an in-depth approach to the mental skills needed for successful trading. Clearly, technical skills are a must for traders to trade. All the best psychology won’t help much if you can’t read a chart! But as we all know, the psychological side of the game is crucial to grasp. I’ll be continuing to discuss my approach this week and likely for the following 2-3 weeks to help traders in the group handle what goes on ‘between the ears’ while they trade.
Bringing Technical and Mental Skills Together
In my Deep Practice program we meet as a group each week and typically focus on technical trading skills such as how to assess a higher time frame chart for guidance in trading a lower time frame chart and bar-by-bar chart reading. We frequently walk a chart forward, assessing each bar in the unfolding market, making trades and managing them. If learning how to read a chart bar-by-bar is of interest to you, and you also want to understand trading psychology at a deep and practical level, then come join us for Deep Practice. We have individuals in the group who are professional fund managers, very experienced individual traders, as well as novices from across the globe. Join this week and you will get access to the last four sessions, including the first one on trading psychology. Learn more at this link: Dr. Gary’s Deep Practice Program.
Leave a Reply