Psychology

8)Traders that lose money approach it with the wrong mindset and psychology .As humans, we are born to be terrible traders. The reality is most people think the problem why they are losing is they do not have the right strategy. But actually the biggest problem in your trading is YOU. trading psychology is actually what is stopping most people from being successful. They might have a profitable strategy but are unable to follow it. It is really difficult, but it is something you have to overcome.

8a)Humans want to control every single thing and brute force something or fix it if it is not working correctly… Men coming to trading in their 40s are the worst. In their work they climbed the ranks to the top by working extra hours, fixing mistakes, doing whatever is required to progress. The problem is you cannot control the outcome of the trade. So it is extremely difficult for someone who has succeeded consistently in other areas of their life, to enter a performance arena where you are going to be often wrong on a regular basis and there is absolutely nothing you can do about it. In trading this same mindset does not apply. The more you try to improve your win rate and fix something or become too selective, the worse a trader you become. The reality is that you are missing the point which is we play the odds game, which is taking a good number of trades with a decent strike rate. Our goal is not to be right on each trade. You cannot make a trade go your way and you need to be softer and more accepting of the outcome. The problem is some people just cannot accept that the outcome of a trade is not down to them and will really struggle with trading as a result. Beginner traders don't know how to deal with the uncertainty of trading, so they make irrational decisions during the trade based on emotions. They are unable to ignore the "fight or flight" response of being attacked whilst trading, so their survival brain kicks in and forces them to take action to avoid fear and pain. They are often unable to even follow their own trading strategy due to the emotions the trading.

8b) A huge problem is that most people simply are unable to accept being wrong. In most areas of life, to lose is to be wrong which is a bad thing. And after being "wrong" one needs to problem-solve to make sure it doesn´t happen again, which in trading means changing strategy. When you enter a trade, you believe this trade will go to your target so it drives an emotional response which is painful if it does not go your way. You feel silly and stupid. Beginner traders often internalise the problem of taking a loss and take it very personally and become emotionally shaken and overwhelmed. They immediately try to fix the problem that the account has taken a loss and revenge trade. Professional trader understands that trading is all about how to handle uncertainty and pressure. And that emotions in trading hinder you in a big way. When under duress, people make emotional based decisions first to stop the pain, not process based decisions. When I take a trade, it is extremely uncomfortable and it always will be. But actually it is meant to be painful. But you cannot make decisions based on emotions, and you MUST find a way to control the pain experienced during trading. In fact the biggest ability to be a good trader… is the ability to take pain, to be able to handle pressure and emotions. You just have to accept the outcome of the trade and that you cannot be right all the time. You need to be calm in the face of uncertainty and give up some control of the outcome. The more you can learn to let go and surrender to your strategy, to taking both wins and losses, the better trader you will be.. its almost a state of vulnerability. Actually you need to make, reset and create new brain pathways to think differently. Because humans are designed to be terrible traders and actually the goal of trading is not to avoid taking losses, it’s to play the odds game and become better emotionally when you take a loss that is according to your strategy. You must not care about the outcome of a trade and instead become process-based and not outcome-based. You need to know how to remove emotions and follow a probability model over a larger number of trades. Professional traders create a trading approach from a simple framework, based only around keeping things simple and controlling risk to enable them to execute perfectly.  It might be a complex strategy with many nuances, but it is reduced to its most basic form for execution purposes in the live market. In trading simplicity works...why?...because you need to beable remove the possibility that emotions enter your trading. 90% of the problems are due to the fact that you are focused on making money, rather than building good trading habits. Abandon all expectations when you trade. It doesn’t matter if the next trade wins or loses. Success feels effortless when you trade each day with no intensions...the trade comes to you, it either wins or loses. You see losses as a business expense, and just stick to your strategy. Once you do this, you trade relaxed and confidently and without fear. If you can think process-based and follow your strategy, and ignore all emotions.. congratulations you have crossed over the threshold from being losing retail trader to professional trader.

Conclusion. And read this before every trading day

*********Professional traders are not predicting the future, just trading the odds of price behaviour which they have already tested and know will work.

*********You must not care about the outcome of a trade and instead become process-based and not outcome-based. The goal is not to be correct all the time. The more you can learn to let go and surrender to your strategy, to taking both wins and losses, the better trader you will be.. its almost a state of vulnerability. The focus of any trader is to minimise your performance discrepancy as much as possible each day. Your trading success each day should be seen in terms of.. did I follow my strategy exactly? rather than whether the trade won or lost. ********

Trading Psychology