"Trading Psychology". A provocative webinar

Good afternoon, ladies and gentlemen Forex traders! Admit to yourself honestly: How much money have you lost because of emotions? How many losing trades did you close because they went into the red and it irritated you? And how many times did the currency reverse immediately after you locked in the loss?

Up to 80% of success in Forex trading depends on psychology. Money management is of enormous importance, and only after that comes strategy. Not everyone understands this, but that is the harsh reality. How do you defeat yourself? How do you remain unperturbed in any situation? How do you protect yourself from negative emotions that cloud the mind? It is time to level up your emotional control skills in trading.

Suppose you saw an opportunity to enter on the chart, open one or several trades, but none of them work out. Because of this, you form the opinion that this pattern/strategy does not work, and everyone who teaches this method is a hypocrite. After some time, you see the same setup on the chart and it works out!

The problem with experience is that when seeing some kind of picture, your brain remembers it and later, seeing the same picture, you unconsciously expect the corresponding outcome of events. But the point is that the market is not a constant value and it has no single exact formula. It is, to some extent, chaos in which we look for statistical patterns. That is, if a certain pattern works in 60% of cases, having run into those remaining 40%, you may think that the system actually does not work.

Another example is a situation when only after exiting a trade do you realize that you could have earned much more by keeping the position in the market. And next time, having gained similar experience, on the contrary you overstay in the position when the price unexpectedly reverses and goes into the loss zone.

Therefore, you need to understand that the market is a game of probability. Today this pattern works, and tomorrow it does not. But, in general, over a long period of time a certain setup will work, say, in 60% of cases. In one particular trade it may also fail.

When you are sitting in losses, you do not pay attention to what is happening on the chart. That is, your brain filters out signals indicating that the price will continue to go against you. On the contrary, the brain tries in every possible way to convince you that the price is about to reverse, which, naturally, does not happen. But if you close the position and look at the market with a clear eye, you come to understand that the situation on the market now is not at all the one that was in your head a moment ago. This distracting factor in the form of a losing position affects your attentiveness, and you do not notice the obvious.

There is such a concept as analysis paralysis. That is, when some event literally throws you off balance, after which you cannot adequately perceive the situation. This can be avoided with reasonable sufficiency. That is, you stop looking for the ideal solution, looking for where to add on or average down. Instead, you make the most correct and simple decision: close the losing position.

Another point is that some people have a fear of small stops. That is, there is a fear that the price will quickly knock out that stop, then reverse and go where it was planned. As a result, people place a large stop, which is also taken out, and they lose even more. Therefore, you should not be afraid of small stops, this is quite normal. Especially since with a small stop and a large profit you will be profitable even with 30% winning trades.

Traders also often fear losing profit. But again, how many times have you held a losing trade hoping for a reversal, and it still kept going against you? The same is true with profitable trades. There is a constant feeling that the price is about to reverse and all the profit will be lost. As an option, in this case you can use a trailing stop. Then in any case you will know that if the price reverses, the profit will not be lost.

In principle, the cure for the influence of any emotions on analysis is proper money management. That is, you simply need to reduce your trading lot. Try reducing the lot by 5 times. If that is impossible, open a cent account. The goal is to set such a lot that it would not cause strong emotions in you.

Until you get used to maintaining discipline in any situation, it is better to trade with such a lot that you could forget about. For example, you could open a trade on the daily chart and forget about it (accidentally or naturally). At the very initial stages, this approach is justified, since no open positions will interfere with your ability to analyze the situation competently. At the same time, the very fact of a losing trade will not throw you off balance.

In trading, systematic profit withdrawal is very important. That is, about once every week or two you should withdraw half of the profit and spend this money on yourself. If you have problems with greed, this really helps. Thus, potentially large profit will not worry you so much.

There is this idea that, supposedly, if I earn 10% every nth period, then in a year I will become a millionaire. In fact, constantly accumulating money in the account is harmful. Profit needs to be divided: you leave half on the deposit, and withdraw the other half.

Remember, you are not perfect. There is no such person who, like a robot, does not get nervous because of trades, trades absolutely perfectly, and never makes mistakes anywhere or at any time. We all make mistakes, this is normal, and this needs to be understood.

Suppose you read that you need to reduce your lot size, not use emotions, and yet you still make mistakes. The thought that "I am smarter" does not leave your head. But, in general, if you read the biographies of successful people in other fields, you will learn that they also made mistakes. Quite often, a person needs to make every possible mistake only so as not to make them later. So to speak, we learn from our own mistakes.

The average person believes that he is smarter than 80% of people. At the same time, when asked "why are you so smart, but so poor," there are always excuses - something gets in the way, too old, too young, a wife/husband gets in the way, born in the wrong country, and so on. Almost everyone thinks this way, so do not worry, you are not the smartest.

The vicious circle of a novice trader:

Way out of the circle:

In general, all these pieces of the mosaic lead to a way out of the vicious circle. You find a system, then trade, adequately perceiving losses. Accordingly, then you work with this system, solve problems with emotions, entries and exits, improve something, add something, and so on.

A common situation is when household members, upon seeing forex, will convince you that you are trading in a casino, that it is a scam, all Mavrodi's tricks, and so on. What should you do in this case? First of all, do not say that you are trading with real money. Do not share your successes and failures with them. You can explain that this is your hobby, you analyze financial news and trade on a demo. That is, it is a hobby, something like a game.

At the same time, when you lose money, household members start to irritate you greatly. When a position is hanging in the market, there is usually no time for everyday problems. As an option, you can set aside a certain time for trading, or switch to higher timeframes. Ideally, you should allocate a separate room, if that is possible, of course. Another option is an internet cafe or any other place with wi-fi.

The point is that our brain, compared to a computer, has a very large hard drive but a very small amount of RAM. Are you familiar with the feeling when the brain is so overloaded that absolutely no information fits into it, even, it would seem, some simple kind? Of course, it will not be possible to expand this memory, but we can control the number of simultaneously open "windows" (applications/programs).

That is, you need to fight the so-called white noise. Remove social networks - VKontakte, Facebook, messengers - Skype, ICQ, demotivator sites, YouTube, checking email, the TV being on, and so on. All of this is white noise that clogs your brain and prevents you from working adequately.

It is better to move all this to rest time, for example, to the evening, when you no longer need to strain yourself. How can you motivate yourself? As an option, you can watch everything at once, that is, all the events of the past day. For example, if you watch something in the morning, then you will not know what happened after lunch and this thought will torment you all the following day, while your productivity will drop greatly. You also need to take breaks and not stare at the chart all the time. Ideally, allocate time for trading in order to find out where the price went.

There are many opponents and many supporters of meditation. Meditation is, in essence, nothing more than lying down/sitting to calm music, entering a certain semi-trance state. A person periodically needs three states: wakefulness, sleep, and a state of trance.

Usually after certain mental efforts you start to become very dull, while doing no useful work at all. This is the brain giving a signal that you lack the state of trance. 30 minutes of trance a day is quite enough. A special program Natura is suitable for this. Turn on alpha waves or sounds of nature and rest for half an hour. As an alternative, you can download any music of the ambient genre, for example, Brian Eno.

When you set yourself a certain goal, for example, to earn 50/100 dollars or points every day, it does not work. Again, you begin looking for nonexistent trades, clouding your mind. Therefore, there is no need to set profit goals. On the other hand, restrictions on losses can and even should be set!

Sometimes there is a sudden unjustified desire to open a trade. Although the system gave no signal and there is no level, and the indicator has not redrawn. Naturally, most often this does not work.

As a way out of such a situation, you can try opening two accounts - one for sensible trading, where you will open trades strictly according to the rules of the system. Another, smaller one (it can be a cent account), for aggressive trading when you have an irresistible desire to open a trade. If it really "works," you will still make a profit, albeit not such a large one.

As we can see, a strategy is often not the decisive factor in trading. Psychology is what, in the end, makes you act one way or another. To remain unflappable in trading, you need the right approach and practice. The rest comes with time.

Respectfully, Pavel
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