There are many things in our life that we behave inappropriate to what is expected from us that are considered normal or correct by most people. At a certain level, we are all guilty of this. We keep on eating unhealthy food in spite of increasing weight. We smoke even if it’s bad to our health. We are still attached to money in spite of the knowledge of the Law of Attraction, even breaking some rules or promises just for the money. We judge, blame, and complain of so many things even if it’s just a waste of energy. We sin even if we pray and go to church every week. Most of us, we are not aware that we behave these ways, and we even fight for them, and formulate different alibis just to justify them.
All of these behaviour are triggered by 2 emotional traits that human have; GREED and FEAR. We are all GREEDY for happiness, money, power, acceptance, control, the need to be correct, and the need to convince people of our point of view. On the other hand, we are also FEARFUL and doubtful of so many things. Most of the time, our irrational behaviour is caused by the mixtures of the two; GREED and FEAR.
These two behaviours are also the main problems with Forex Trading, on both manual and automated trading. Let’s go straight to the point on how we can resolve this issue. Three steps are necessary.
3 Steps On Correcting Trading Psychology
- The first step to a successful trading is to admit that you have these two behaviours and be aware whenever they attack you. The most important of all, even if after you have done something wrong already, you just need to analyze and admit to yourself that you have done something wrong. The usual attitude we have after doing something wrong is to look for someone or something to blame. If you can not control this attitude, you will not get ahead in Forex Trading and you will not achieve the success that you are aiming for. You have to catch yourself having those behaviours and admit them once you recognize them. You have to say “I’m guilty of these”. Four specific scenarios will be given in the next series of posts, applicable on trading situations.
- The second step is determining how to resolve these behavioural issues that you are going through. Awareness is not enough. You’ve got to find a solution and ACT on it. Otherwise, awareness and knowledge about the situation is useless. Knowledge is not power without any appropriate ACTION. I repeat; it is “USELESS” without any action to correct them. No books, ebooks, seminars, mentors can help you, if you don’t take action. Don’t expect a positive change in your life if you are not willing to take action to change something in your life and if you are not willing to get out of the situation that you get used to, a behavioural comfort zone.
- The third step is to PRACTICE on taking actions on the resolution. No one can change their behaviour overnight. It will take some time to overcome it. You have to practice it over and over again until it becomes a part of you. You can start with small actions, one by one, step by step, then proceed to bigger actions, until you get used to the new behaviour. It’s like programming yourself. These is why some Forex traders took years to become consistently profitable. If we don’t have the kind of human emotions that we have, after knowing a strategy and a money management method, you will surely be profitable consistently with Forex right away. Some traders resolve a part of their psychological issues by using a Forex Expert Advisor (or Forex Robot). A Forex robot, semi-automated or full-automated, can only help you partially. There are still a lot of psychological problems when using a robot. Some of these are the following…
- If you don’t have the patient to wait for the robot to open a trade and if it’s so long for it to take a trade, you will open a manual trade while waiting.
- If the robot got negative results after the first few trades, you will stop it. Then you will over-analyze what happened. Then, you will re-run it again. You continue this bahavior like a merry-go-round; stop-run-stop-run… and so forth. A robot is usually design to run 24/7 so that it will not miss an opportunity. If you keep stopping it from time to time, there will be a great chance that you will miss the best opportunity that it is waiting for.
- If the robot got negative results after the first few trades, you will stop it. Then you will re-optimize it again or manually change the parameter inputs before running it again. This behaviour will not just make you lose opportunity but it will lose the best set-up on a any given moment. Re-optimization is usually done only once a month or every other month. You will only do re-optimization when the current parameters are no longer doing well on backtesting.
In the next post, I will discuss the three behavioural patterns that all traders should recognize in themselves...
(This post is an exerpt from the Ebook: Forex Trading Psychology Insights)
