In forex currency trading, stock and futures trading, self-sabotage is a serious problem for the individual trader. Here we will explore why traders often intentionally make intentional mistakes in their trading that result in losses. Trading psychology is critical as the trader's mind is the control center for everything.
"To Err is Human", but in trading it often happens that people will intentionally make decisions that cause trades to go bad. The situation we're looking at is not losses that are the result of testing out a trading plan or a particular combination of indicators. Nor are we looking at simple faux pas committed purely by accident. If profit is our goal, then why would we do these things that are totally out of alignment with what we know to be right? This phenomenon has many very undesirable consequences that are experienced quite regularly in the trading world.
The Trader's self-esteem can take a severe blow when these intentional mistakes occur on top of the loss of money. Other after-effects often include quite a bit of negative self-talk for having made the mistakes. Depending on the magnitude of the error, this can wind up in a rather nasty cycle that compounds the problem and sets the stage for it to happen again. Until the root cause of the problem is discovered and the trader takes action to address it, the self-sabotaging behavior is likely to happen again and again. This doesn't just happen only to new traders either.
For an example, one such trader (a real person that we'll call Mark) with over 50 years experience had been going through this repeatedly for over a decade since he started trading from home. Mark has done just about everything there is to do in the futures industry. He spent time on soybean farms and at the shipping docks loading ships and coordinating shipments and orders. For about another decade, Mark ran orders on the exchange floor. From there, he worked both for and as an introducing broker in the commodities industry until he decided to retire at the age of 59. Needless to say, Mark had plenty of exposure to trading, but for nearly fifteen years, Mark has been losing money. But why, and why does he continue?
Trading is definitely nothing new to Mark. As a broker, he was very successful. He understands just about every strategy and system there is. He's pretty intelligent and knows his way around the computer and what he's looking at on the charts. Mark loves trading and is excited about getting up every morning to get in front of the computer. On a typical day, he might make $600 or lose $800. Most often times he loses. When his wife gets home from work (yes, she still works at the age of 70), he's usually brooding in his recliner after kicking himself and calling himself "stupid" or "idiot". In all these years, he still has yet to end a year in the black. He's also not sure how much longer his money is going to last.
When asked why he sticks with his current method, and why he doesn't pursue a strategy that he knows is profitable, he simply says that he doesn't because they are boring. This is very true: a well-thought out trade, where you have already determined what you'll do before you place the trade regardless of which way the market moves can be very boring. However... when you enter trades without a plan, or if you've done something outside your rules, the suspense can be very powerful.
Why do people take the time to read entire books instead of going straight to the end to see if the hero triumphs or fails? Why do millions of people watch football games, rather than simply check the scores in the morning? It is the suspense, the excitement of not-knowing the outcome, that brings the excitement. The moments that are most enjoyed and fully captivate us are when the ball is in the air and hasn't been caught yet, when the hero's fate is uncertain. In being human, there is a part in all of us that desires that excitement.
At the conscious level, profits are what everyone desires (who doesn't?). Many people choose trading because trading offers the opportunity to realize very significant monetary gain. The real risk is that it also offers the excitement that a certain part of us desires at the subconscious level. If that part of you isn't being fulfilled through other channels of your life, it is highly probable to seek fulfillment in your trading. Excitement from not-knowing the outcome in your trading is where you don't want it. The solution is to keep yourself regularly involved in activities in your life that tend to this very human desire, and let your trading be a little boring - but making money.
Did you know that it takes anywhere from 7 to 20 YEARS for most to develop the Trading Psychology to profit consistently and confidently? Can't afford to wait that long? Go to => www.InsideOutTrading.com
The Trader's self-esteem can take a severe blow when these intentional mistakes occur on top of the loss of money. Other after-effects often include quite a bit of negative self-talk for having made the mistakes. Depending on the magnitude of the error, this can wind up in a rather nasty cycle that compounds the problem and sets the stage for it to happen again. Until the root cause of the problem is discovered and the trader takes action to address it, the self-sabotaging behavior is likely to happen again and again. This doesn't just happen only to new traders either.
For an example, one such trader (a real person that we'll call Mark) with over 50 years experience had been going through this repeatedly for over a decade since he started trading from home. Mark has done just about everything there is to do in the futures industry. He spent time on soybean farms and at the shipping docks loading ships and coordinating shipments and orders. For about another decade, Mark ran orders on the exchange floor. From there, he worked both for and as an introducing broker in the commodities industry until he decided to retire at the age of 59. Needless to say, Mark had plenty of exposure to trading, but for nearly fifteen years, Mark has been losing money. But why, and why does he continue?
Trading is definitely nothing new to Mark. As a broker, he was very successful. He understands just about every strategy and system there is. He's pretty intelligent and knows his way around the computer and what he's looking at on the charts. Mark loves trading and is excited about getting up every morning to get in front of the computer. On a typical day, he might make $600 or lose $800. Most often times he loses. When his wife gets home from work (yes, she still works at the age of 70), he's usually brooding in his recliner after kicking himself and calling himself "stupid" or "idiot". In all these years, he still has yet to end a year in the black. He's also not sure how much longer his money is going to last.
When asked why he sticks with his current method, and why he doesn't pursue a strategy that he knows is profitable, he simply says that he doesn't because they are boring. This is very true: a well-thought out trade, where you have already determined what you'll do before you place the trade regardless of which way the market moves can be very boring. However... when you enter trades without a plan, or if you've done something outside your rules, the suspense can be very powerful.
Why do people take the time to read entire books instead of going straight to the end to see if the hero triumphs or fails? Why do millions of people watch football games, rather than simply check the scores in the morning? It is the suspense, the excitement of not-knowing the outcome, that brings the excitement. The moments that are most enjoyed and fully captivate us are when the ball is in the air and hasn't been caught yet, when the hero's fate is uncertain. In being human, there is a part in all of us that desires that excitement.
At the conscious level, profits are what everyone desires (who doesn't?). Many people choose trading because trading offers the opportunity to realize very significant monetary gain. The real risk is that it also offers the excitement that a certain part of us desires at the subconscious level. If that part of you isn't being fulfilled through other channels of your life, it is highly probable to seek fulfillment in your trading. Excitement from not-knowing the outcome in your trading is where you don't want it. The solution is to keep yourself regularly involved in activities in your life that tend to this very human desire, and let your trading be a little boring - but making money.
Did you know that it takes anywhere from 7 to 20 YEARS for most to develop the Trading Psychology to profit consistently and confidently? Can't afford to wait that long? Go to => www.InsideOutTrading.com
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