Trading is much more of a psychological problem then a methodological one,Stock Trading Psychology Plan Articles only the traders who have first accepted this have a chance of being consistently successful traders. Without an understanding of trading psychology and the various issues that circumvent method, there will be virtually no chance to overcome the fear, confusion, and despair that can be inherent in trading. Ultimately, after a series of consecutive losses, method becomes replaced with a feeling that it is impossible to do anything right; if for no other reason than this situation, trading psychology is more critical than trading method.
New Trader Scenario
Consider a scenario where a trader develops a method for day trading an index future. The method gives 15 trades per day, and the trader has gotten to the point where they are able to paper trade with the following results: 9 wining trades averaging $85 each, and 6 losing trades averaging -$65 each thus giving $375 average daily gains. The trader has achieved these results for three consecutive months; their paper trading goals have been met and it is time to start trading real money.
Real money trading begins, but things quickly change. Instead of trading their method like they did when paper trading, the trader starts skipping trades trying to pick the winners instead of accepting the 40% losers; of course, they invariably pick more losers than winners. Trying to then correct this problem, the trader decides that maybe they are entering their trades too late. So now instead of letting the setup complete and then doing the trade, the trigger is anticipated so the trade can be entered earlier – the losses get worse.
With the continued losses the emotions take over: What is wrong, why am I such a pathetic loser? Maybe its not my fault, maybe the method just doesnt really work.
The problems get worse with each trade, more emotions and more loses – the trader quits trading. The trader now decides that their paper trading results werent really adequate to begin real money trading. They will go back to paper trading and studying again.
Thoughts that are going through the traders mind now: Maybe I should try different trading methods until I can eliminate those losing trades then I will be ready to trade real money again. Really, maybe I should just quit trading altogether maybe I am just a loser, and thats why I cant trade.
The Trading Psychology Plan
What should be very apparent from this scenario is that the trader never traded their paper trading method plan after transitioning to real money trading. Unfortunately, the trader is unable to realize what they have done, instead their emotions first place blame on the method thinking that it really doesnt work, and then on themselves for being such a pathetic loser. The final result being that the trader quits trading, and if the real underlying reasons for what has happened arent accepted and changed, this trader will never be able to trade real money even if their paper trading results become 100% winners, which of course is not going to happen.
The trader had a trading method plan, but they did not have a trading psychology plan. They did not have a way to make the transition from fear and emotion directed trading to actually trading the method as designed. They did not have a plan to objectively access and understand their given non-method actions, and then define a setup for replacing them.
The trading psychology plan must begin with an honest assessment and acceptance for what really happened: the trader never traded their method plan; there is no other blame to be placed, or excuses to be made. There is nothing wrong with the https://immediateedge.pro/ trading plan, and regardless, the trader has not traded it in order to be able to make that evaluation. As well, traders cannot internalize trade loses where they lead to their viewpoint of themselves you are not a loser because your trade is a loser.
Trading Psychology Plan Components
Accept that losing will be a normal part of trading. Not only is it impossible to be perfect, it is not an objective or necessary to be a profitable trader.Replace the focus of winning and losing with the objective of following your plan. This was not done while paper trading, as the trader had a specific profitability goal that they used to tell them when they were prepared to trade real money. They did not understand that the reason they achieved this goal was because of how they followed their plan.
Remain neutral and non-judgmental towards yourself. If profitable trading is ever going to be possible, this is mandatory. There is no way that you are going to be able to trust yourself to manage risk while you are also telling yourself that you are stupid or a pathetic loser each time you lose or feel that you have done something wrong.