Developing Emotional Resilience: Bouncing Back from LossesOkay, fellow TradingViewers, it’s time we tackle a topic that may make you a bit uncomfortable. But, rest assured — it’s for your own good! Today, we explore the realm of emotional resilience and, more precisely, how to bounce back from losses.
Losses are inevitable. Ask anyone — even the big dogs in the industry have gone through painful losses (as you’ll see at the end of this write-up). Drawdowns so severe that they’ve nearly put hedge funds out of business (just ask Ray Dalio). And yet, bouncing back from losses is what has helped these one-time losers to develop emotional resilience and make the best out of the experience.
Acknowledge the loss, but don’t overblow it
Accept that losses happen and they’re a natural part of the trading journey. No matter how skilled or successful you are, you will have losing positions every once in a while. First, make sure you find out what went wrong. And second, don’t dwell on the losses too much and don’t let them cloud your prospects of becoming a better trader.
Size your positions according to risk tolerance
Never let a single position wipe out your entire account if it turned against you. We know how attractive it is to bet big on currencies swings spanning European countries . But keep in mind that, in such case, the old market adage "You're as good as your last trade" will hold true and it may not be pretty.
There are two main ways to prevent the wipeout of your account with a single trade — don’t bet too big (or use too much leverage). If you do bet big, make sure you have a tight stop loss that won’t let your balance get washed out and drawn underwater. Always think about defense before you think about offense.
Let your strategy take care of your trading
You won’t have to be emotional if you let your strategy take care of your trading. Having the right trading plan will eliminate the need to react on the spot and make rushed decisions out of emotion. A solid strategy can empower you to withstand even the harshest market conditions with your chin up and trading account unscathed.
Embrace the power of habit and routine
In trading, consistency is key. Create for yourself a nice and easy-to-follow trading routine. This may include making your cup of coffee before you sit to do some chart reading. Or get a workout in before you read the daily news. Whatever will help you stay disciplined and emotionally balanced — do more of that.
Invest in yourself and then trade the markets
Your most valuable asset isn’t your trading account — it’s you. Invest time in learning, reading, watching interviews of successful traders and financiers. Read books on finance and trading, study the economic calendar , or sign up for a paper-trading account to test your trading skills risk-free. The more knowledge and practice you soak up, the more resilient and prepared you will become.
Know when to step back and get a break
Sometimes, the best thing to do after a loss is do nothing at all. It’s understandable if you feel emotionally unstable, off-kilter and overwhelmed when the markets gives you a slap in the face. Especially if you’re just starting out in the volatile trading space. What to do then? Unplug, unwind, recharge. The market will still be there tomorrow — go touch grass and come back with a refreshed perspective.
Celebrate the wins — no matter how small
Trading has to be about more than just coping with losses. Give yourself a nice pat on the back for every little victory. Made a successful trade? Or even got out at breakeven thanks to your stop loss? Perfect. Recognize and celebrate these moments. They’re little milestones to remind you that you’re on the right path to success.
Loss advice from the big dogs in trading
Let’s wrap up some with loss advice from the world’s best traders and see how they dealt with the blows of Mr. Market.
Paul Tudor Jones , hedge fund manager: “Losses are not your problem. It's how you react to them. Ignore losses with no plan, or try to double down on your losses to recoup, and those losses will come back like a Mack truck to run over your account.”
Ray Dalio , founder of the world’s largest hedge fund Bridgewater, on how he viewed a near-bankruptcy experience: “I needed to balance my aggressiveness and shift my mindset from thinking ‘I’m right’ to asking myself, ‘How do I know I’m right?’ It was very, very painful, yet it changed my way of thinking. It was one of the best things that ever happened to me.”
George Soros , pioneer of the hedge fund industry: “It’s not whether you’re right or wrong, but how much money you make when you’re right and how much you lose when you’re wrong.”
Let’s hear from you
How do you usually deal with a trading loss? What’s the best thing a loss has taught you? Comment below and let’s spin up a nice discussion!
Emotion
Lets make a BottomBounceIndicator today=Step by step annotated=
Today, I am going to try something different. Let's make a Bottom Bounce Indicator. What is a bottom bounce? Bottom Bounce is a move I saw when analyzing a massive drop. The move caught my eye and has become a staple in how I find and catch a falling Knife. I have my weaknesses and demons just like anyone else. I am severely impatient and extremely an emotional creature by nature.
**Fun Fact**
There are two (technically three if you combine them and care about people in general) but for our purposes there are two ways to make a decision in life.
Logical: Everyone has done this before:
You want to buy a new car(substitute with whatever gets the juices flowing).
You go online, you do your research and you come up with these things that are going to be absolute in your buying decision:
Year, Make , Model of vehicle you want
Color, style, package, interior
Must have features as an absolute! Like Sunroof
Dealership you will purchase from (normally closets one because people are lazy and like getting taken advantage of)
Price you will pay.(if they knew the invoice it would be that because people don't need to make profits on things that cost $20k+) “oh, you guys will make it back on someone else” (Because everyone believes they are that one person that is above everyone else and deserves things for free) I=(
Trade value you won't take a penny less for. (because for some reason everyone believes their car is in Great Condition and showcase ready)
Bank they will get their money from or Cash they have to spend(Usually if its cash it's some absurd perfect trade and absolute negative deal that makes the amount of money they have just right.) ;: )
Interest rate they will get
Amount of money they will put down
Years they will finance
**I think that covers most of it*** (boy im really going deep into this scenario….)
Here is where reality sets in…
You show up to the dealership and you tell the sales person you are just looking around. (Because you love being tortured by salesmen and you felt, “ hey I don’t get much free time let's go to the dealership and be harassed by salesman” (sounds about right) Finally, you grace the salesman with the right to show you a vehicle.
You tell them everything above about the car you want.
2024 Lexus RC350 f package White with Red interior $54,072 +++
Emotional Decision:
While on your much deserved test drive you start to take ownership of this finely crafted out of the most premium of premium hand stitched leather seats and steering wheel, wait what's that the shifter also has the same leather on it. And look at that dash it moves when I start the car! Push button Start, and the LEDS! Sunroof, Navi, Surround Sound, and OMG the seats are like Hugging me!
Who cares about Covid and being isolated from people when I can be hugged by this seat! Heated and AC, WHAT! Of course my Honda has it but not like this!
The steering wheel doesn’t even shake at like 100 mph, ok the salesman is scared….let me get a hold of myself.
Trade Details:
Trade: 2020 Honda Accord EXL Black with gray interior
55k miles regular maintenance (obvs right before the major 60k mile checkup)
tires have been changed once.
No Wrecks one owner. New was around $32-34k
4 years old 15k miles ish/yr
The decision:
Location: Local Lexus Dealership inside sitting down looking at numbers…
The mood: Serious
During the test drive you:
Fell in love hard for the vehicle
Fun fact: you can't see the outside from the inside.
Lexus doesn't make cheap interiors so it doesn't matter the color as it looks way better than the “Cord”.
While Driving you started thinking:
You know I got that bonus and haven’t touched it, I could put that down as well.
I mean I could pay another $100 a month for this.
I didn’t think I would like the Blue but I actually love it!
Black is so hot but really they are all hot! As far as interiors go.
If I could finance this through them, maybe I’ll get a rebate or something and then just refinance it with my bank so I don't have to wait and I can drive home today!
Emotional Decisions: replace all logic and throw it out the window, think of it like an extremely efficient Moving company with a crew of like 15 jacked dudes and pull up in an envoy that is reminiscent of a Military Convoy. And literally toss everything you have out the door and windows and load up, take off in less than 15 mins.
Then what happens next is they bring in the Decor team which is made up of like every reality show Fix it and ditch it Home Renovation Show put together and within the next 5 mins they fill your home full of new IDEAS! YAY!
Back at negotiations:
You stand Firm and You tell him with a serious VOICE that you will buy it for 84 months $ 690 with $5k down and that you will take $18k for your trade and not a penny less!
Finance through them for the rebate but really so you can drive home today. Interest Rate: 7.99%
All for the Vehicle you test drove:
2024 Lexus RC350 f package Blue with black interior $53,761++
After a few hours you finally walk out to see your brand New Car and get handed the 3 C’s =
See your Car
See your Keys
See you Later!
And that my friends is how emotion will destroy your logic every time!
By iCantw84it
10.30.23
In 2 days its my bday give me a Bday Gift I love Boosts! Plus they are free, if you found this somewhat entertaining, and educational pls like follow and BOOST! Thanks!
*** btw if you want to know the 3rd way just shoot me a message and a
*** btw if you want to know the 3rd way just shoot me a message and I’ll let you know.
FrogAlgo: 5 Simple Ways to Control Your Emotions in TradingThe markets are emotional and so are the people who trade them. But that doesn’t mean you have to let it affect you. Instead, learn how to control your emotions and make more money. Here are five simple ways you can control your emotions in trading and make more money.
Don’t let your emotions dictate your trading
It’s important to remember that your emotions are a part of who you are as a person. But they’re not part of who you are as a trader. Nothing in trading requires you to let your emotions dictate your trades. The best traders are in a state of flow — a state of complete absorption where nothing else exists except the task at hand. In a state of flow, the only thing that matters is what you’re doing. It doesn’t matter if you’re in a down market or a strong bull market — if you’re in flow, you can’t be affected by the outside world. You can’t let your emotions get the best of you and make bad decisions because you’re on autopilot.
Set a threshold for when you’ll trade
When you get started in trading, you’re going to have a period of time where you’re emotionally charged and feel like you have to trade every day. You might have a specific time period where you’ll only feel like trading when the sun is out and the markets are up. If that’s the case, then trade when you’re in that “charged” time period — but set a threshold for just how “charged” you’ll get. Let’s say you only feel “charged” from 9 am to 12 pm — set that as your trading time window. You’ll still feel “charged” enough to trade, but not so “charged” that you make mistakes.
Train yourself to be aware of your emotions
The best traders are in a state of flow — a state of complete absorption where nothing else exists except the task at hand. In a state of flow, the only thing that matters is what you’re doing. It doesn’t matter if you’re in a down market or a strong bull market — if you’re in flow, you can’t be affected by the outside world. You can’t let your emotions get the best of you and make bad decisions because you’re on autopilot. The best traders are aware of their emotions. If you don’t know what you’re feeling, you can’t let your emotions get the best of you and make bad decisions. The more you know about your emotions, the more in control you’ll be and the more money you’ll make in the markets.
Know the difference between a trade and a position
In trading, every position is a trade. It’s just a matter of how much money you’re putting at risk. The most important distinction is between a position and a trade. If a trade occurs when you risk a set amount, a position just happens when you risk an amount that’s less than what you’re long or short. What’s important is that you keep track of both your position and your trade. You might think a trade is only 1 or 2 shares. But if you end up adding to that position, then you actually have a position that’s thousands of shares. Your position is what you have, but your trade is how much you risked.
Find a good trading mentor
The best way to learn new skills is to have an expert show you how to do them. Trading is a lot like golf — you’re better off with an experienced teacher than trying to learn from reading books. A good mentor is someone who will help you build your skills as a trader. They won’t just tell you what to do — they’ll show you how to do it. They’ll help you develop the skills of patience, discipline, and the ability to be in the market even when the market is not in your favour. A good mentor will also be someone who shares your same passions and interests. A good mentor is someone who shares the same passions as you — someone who likes the same things you like. Being in the same place in life helps — but don’t let it stop you because it’s the best way to learn.
Conclusion
Emotions play a big part in trading, but they don’t need to dictate your trading. The best traders are aware of their emotions and know the difference between a trade and a position. They also find a good mentor and use them as an expert to help them build their skills. When you control your emotions, you’ll make better decisions in the markets and increase your profits. And the best part is that once you have the skills, you can trade anywhere in the world.
Emotional Responses are Dangerous in this EnvironmentMarkets across all asset classes hate uncertainty because it causes traders, investors, and all market participants more than a bit of indigestion. Fear and greed are emotions that drive impulsive behaviors. Effective decision-making depends on a rational, logical, and reasonable approach to problem-solving.
The Fed finally addresses inflation
Recessionary risks are rising
Stagflation creates the worst of both worlds
Tools impact the demand side- The supply side is a challenge
Tools and rules for keeping emotions in check during scary times
Reducing impulsive, emotional responses is a lot easier said than done. While it is easy to mitigate emotion during calm periods, they take over and trigger fear or greed-based actions in the heat of the moment.
In mid-May 2022, the markets face a crossroads. The current market correction is a function of rising interest rates, the potential for an economic decline, a rising dollar, the war in Europe, supply chain issues, geopolitical tensions between nuclear powers, and a host of other domestic and foreign factors.
It is now the most critical period in decades to take an emotional inventory that will avoid catastrophic, impulse-based mistakes. Wide price variance in all markets could accelerate, and those with a plan are the most likely to succeed and protect their hard-earned capital.
The Fed finally addresses inflation
The US central bank had an epiphany after mistakenly believing that rising inflationary pressures were “transitory” in 2021. The Fed woke up smelling the blooming inflationary environment late last year when CPI and PPI data showed the economic condition rose to the highest level in over four decades.
At the May 4 meeting, the central bank hiked the Fed Funds Rate by 50 basis points to 75 to 100 basis points. The central bank told markets to expect 25 or 50-basis point hikes at each meeting for the rest of 2022 and into 2023. The Fed also laid out its plans to reduce its swollen balance sheet, allowing government and debt securities to roll off at maturity. While the Fed has switched to a hawkish monetary approach, it remains behind the inflationary curve. Last week, April CPI came in at 8.3% with PPI at 11%, meaning real short-term interest rates remain negative, fueling inflation. While wages are rising, they are lagging behind inflation. Consumers may be earning more but spend even more on goods and services each month.
Recessionary risks are rising
The US first quarter 2022 GDP data showed a 1.4% decline or economic contraction. The war in Russia, sanctions and retaliation, supply chain bottlenecks, deteriorating relations with China, political divisiveness in the US, and many other issues weigh on the US economy. Meanwhile, rising US interest rates have put upward pressure on the US dollar, pushing the dollar index to a multi-year high.
As the chart shows, the dollar index rose to 105.065 last week, a two-decade high. A rising dollar is a function of increasing US rates, but it makes US multinational companies less competitive in foreign markets.
The falling GDP in Q1 2022 increases the threat of a recession, defined as a GDP decline in two successive quarters, putting pressure on the Q2 data this summer.
Stagflation creates the worst of both worlds
Recession and inflation create stagflation, the worst of all worlds for central bankers seeking stable markets and full employment. The most recent economic data has put the US economy on the road towards stagflation as rising prices and a sluggish economy require competing monetary policy tools.
The Fed is addressing inflation with higher interest rates and quantitative tightening, but recession requires stimulus, the opposite of the current hawkish monetary policy path. The central bank must decide on which economic condition threatens the economy more. The Fed seems to have chosen inflation, but it is more than a reluctant choice. Tightening credit treats the inflationary symptoms, but it can exacerbate recessionary pressures as higher rates choke economic growth. Stagflation is an ugly economic beast.
Tools impact the demand side- The supply side is a challenge
Meanwhile, the US and other central banks have deep toolboxes that address demand-side economic issues. While inflation and recession require different tools, the Fed faces other compelling factors from the global economy’s demand side.
The war in Ukraine is distorting prices as sanctions on Russia and Russian retaliation distort commodity prices. Moreover, the “no-limits” alliance between China and Russia creates a geopolitical bifurcation with the US and Europe. With nuclear powers on each side of the ideological divide, economic ramifications impact the economy’s supply side. China is the world’s leading commodity consumer, and Russia is an influential and dominant raw materials producer. Energy and food prices are the battlegrounds.
Central banks have few tools to deal with supply-side shocks and changes, which can create extreme volatility in the prices of goods and services. The Chinese-Russian alliance transforms globalism with a deep divide. Global dependence on Chinese demand and Russian supplies distorts raw material’s supply and demand fundamentals. While the US Fed faces a challenge balancing inflation and the potential for a recession, the supply side issues only complicate the economic landscape, increasing market volatility across all asset classes.
Tools and rules for keeping emotions in check during scary times
The best advice for dealing with anxiety came from US President Franklin Delano Roosevelt, who said, “the only thing to fear is fear itself.” Conquering fear requires a plan that mitigates emotions no matter the market conditions.
The Fed’s toolbox is bare in the current environment, creating a volatile landscape. Chasing inflation and dealing with a recession in the face of supply-side shocks is a potent cocktail for price variance. Investors and traders need to change their orientation to markets to adapt to the current conditions. The following tools and rules can assist in mitigating the human impulses that lead market participants to make significant financial mistakes:
Hedge portfolios using market tools to protect the downside and allow for upside participation. Hedging reduces the impulse to liquidate portfolios because of fear.
Since volatility creates opportunities, approach markets with a clear plan for risk versus reward.
Remember that the market price is always the correct price. A risk-reward plan only works when risk levels are respected. Markets are never wrong, while traders and investors are often wrong.
A long or short position should constantly be monitored at the current price, not the original execution price. Positions are long or short at the last tick.
Adjust risk and reward levels based on current market prices.
Follow trends, not news, “experts,” or pundits. Trends reflect the crowd’s wisdom, and collective wisdom reflects the sentiment that drives prices higher or lower.
Never attempt to pick the top or the bottom in a market, let the price trends do that for you.
The rules are simple, but emotions are tricky. The emotions that trigger impulsive behavior cause market participants to ignore the rules. The critical factor for success in markets is discipline, defined as “the practice of training people to obey rules or a code of behavior, using punishment to correct disobedience.” When it comes to our hard-earned savings and portfolios, the punishment is losses.
Tuck those emotions away and face the volatile market landscape with a plan. Hedge your nest egg, and you will sleep better each night. Remind yourself that fear is the only factor you should fear.
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Trading advice given in this communication, if any, is based on information taken from trades and statistical services and other sources that we believe are reliable. The author does not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects the author’s good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice the author provides will result in profitable trades. There is risk of loss in all futures and options trading. Any investment involves substantial risks, including, but not limited to, pricing volatility , inadequate liquidity, and the potential complete loss of principal. This article does not in any way constitute an offer or solicitation of an offer to buy or sell any investment, security, or commodity discussed herein, or any security in any jurisdiction in which such an offer would be unlawful under the securities laws of such jurisdiction.
LET'S GET REAL: Fear of Losing! Hey Traders,
Most traders battle it. I myself had to progress past this in order to achieve consistent returns trading the markets. It is seen as one of the hardest challenges to pass in terms of emotional discipline. Understanding yourself better so you can make decisions in a calm, composed and consistent manner is crucial to success.
Today I wanted to touch on that. I wanted to talk about the fear of losing what spurred from my fear of losing, how I progressed through it (it still creeps in from time to time). Hopefully you can take from my story and how it improved your trading or how it can help you progress past that fear of losing.
If anyone has any questions or maybe some other stories in the way they progressed through a fear of losing or a fear of being a failure, please feel free to share in the comments and I'll get back to you as soon as possible.
Have a fantastic trading week!
What Does Consistency Mean In Trading ? Hello traders:
Today let's talk about “consistency” in trading.
Many traders understand they need to be consistent, but what exactly is consistent in trading ?
To me, it's not just making consistent “profit”, rather it's being consistent with your trading strategy, risk management, trading psychology, mindset and emotion.
Let's take a look at a few examples of consistency in trading:
Consistency in profits:
More often traders think about hitting a set amount of % return in consistency.
This is certainly one way to look at it, but I would say to challenge ourselves to do more.
Each and every month, the market will develop differently, hence our profits are not gonna always be the “same” each and every month.
Some month with more profits, some month with more losses. We need to have the ability to stay “consistent” no matter what the market condition is.
Consistency in strategy and Trading Plan:
Remember, there are many different trading strategies out there.
The ability to stay “consistent” with your current trading strategy, and not jump from strategy to strategy.
Even if your strategy right now isn't getting any entries available in the current market condition, while others are entering trade, you need to stay consistent with your strategy and let the probability play out.
Understand no strategy can catch every move in the market. Some will catch this particular run, while others will catch other developments.
Consistency in risk management:
When you are at a series of drawdowns and losses, the ability to stay “consistent” with your risk management.
Not risking more than 1%, not entering more than 2-3 trades at a time. No revenge trade, and/or over leverage trade.
Respect your SL and honour the SL. More often traders fall into this stage while they take a number of losses and throw their risk management out the window.
Consistency in mindset and emotion:
When your strategy isn't playing out on a short term, the ability to stay “consistent” and not to start randomly taking trades based on FOMO, Greed and emotion.
Sometimes traders get impatient and feel like waiting for setups to happen is a hassle and they don't want to wait.
This is when they start to rush their trading journey and backfires on them.
Consistency in your goal:
Set goals for your result and progress. The ability to stay “consistent” with yourself and don't let external factors like social media, fake guru, scammers affect you and your goal.
If you plan to have 5% per month profit, then don't let other people affect you in a negative way.
Everyone trades differently, and with different strategy, method and approach. No need to compare and compete with others, rather, with yourself each and every year.
Below I will forward some good educational videos on the above topics that we have discussed:
Trading Psychology: Revenge Trading
Trading Psychology: Fear Of Missing Out
Trading Psychology: Over Leveraged Trading
Risk Management: Combine everything you learn to prevent blowing a trading account
Good analysts are not always good traders [Principle vs Emotion]#TommyLecture #PrincipleofTrading #TheoryofTrading #Emotion #Management
Hello traders from all over the world. This is Tommy.
How were your trades lately? The market was quite unpredictable recently showing high level of fluctuation which makes it harder for us retail traders to follow up. It sort of seems like a sideway trend in a big horizontal box but also within that, it also keeps surprising us time to time by showing extensive bullish or bearish rallies at unexpected price and time zones.
In this foggy arena, we traders make decisions to minimize risks based on strict criteria and standards of our own. Whether you are a long-term holder, a swing trader, a daily trader, or a scalper, we must take at least some risk for reward(return) and there is no complete risk-free strategy, market, or product in this world. Despite all these uncertainties in the market, as long as proper risk reward ratio and win-rate are secured in every trade, traders eventually will end up profiting theoretically and this is what makes trading different from gambling. To some people, what we do might seem like gambling on certain direction of trends and price action zones, but it surely is different from that we deal with numbers and consistency based on a highly reliable source called ‘Technical Analysis’.
Since all of us are humans carrying emotions, we often tend to narrow our sights desperately expecting only the best scenario. We easily get disturbed just by thinking about the unwanted results or potential losses and ignore the risks that we have to face every time. However, there are thousands of possible scenarios that can happen, and the market is not always on our side. Just remember that there can only be two possible outcomes for every trade we take; we either win or lose.
There is nobody on Earth who can win every trade maintaining 100% win-rate (Even you, Elon Musk!). Whether you like it or not, we are destined to encounter circumstances when market is just totally not on your side and if you are a wise trader, you would normally admit this very situation as soon as possible. Just because market did not flow as expected, it doesn’t mean that you suck trading. Good traders are not the ones that win every single trade but are the ones that can maximize their profit when market is on their side and minimize the losses when market is against their side. Nevertheless, there are some traders, many actually, who just hate to admit the fact that they are losing during position and they start to let their emotions kick in. Unfortunately, now or later, these types usually end up being in worse situation.
In this world, establishing and following consistent principles is much more important than analyzing the market (TA or FA). No matter how good you are at analyzing market, if you keep breaking promises to yourself, you eventually won’t be the survival in this market. I have seen so many traders thriving but end up losing all their money with just one tiny mistake. Always keep in mind that there are many traders who win 99 times and lose everything just by one simple mistake, letting their emotions be involved. Emotion in fact, is the biggest risk here.
For example, if you designed your stoploss and target price, execute your trade as you have planned. Don’t change your mind being agitated by lowering your stoploss or exiting position before reaching the target price. Also, if you have set your daily profits and losses, do comply! I have seen so many traders who could not just admit their loss and become irrational, insisting to take more trades and eventually losing much more. You should be familiar with calling a day if the maximum loss for the day, week, or month has been reached. I know very well more than anyone that you desperately want to recover all the losses and I even know that by 50% chance, you will successfully restore all the loss. However, by 50% chance you won’t. This terrible situation will seduce you to lose control, make biased judgement, and you will probably end up regretting.
Observing many of my fellow traders, students, and followers, I have performed some researches deeply about psychology and mentality of traders. When and where do most of the retail traders start to not obey their principles and in what process? Compared to the past, in recent market with numerous untraditional patterns and phenomenon, there are much more variables that easily lure traders to trade with emotions. In technical perspective, widening/broadening pattern, V-shaped bounce, long-tailed candle, double SR flip and master pattern, etc. are some of the major occurrences that weren’t quite common in the past. From these unfamiliar price momentum and flow, traders are highly likely to lose their temper and break their principle especially when they face these cases: stoploss hunting, bull/bear trap, target price missed closely, entry price missed closely, and breakout entry hunting, etc.
To illustrate in depth about the fundamental process why emotions are regarded as poisons when trading, I developed a simple model that depicts the relationship between trade setup phase and performance. In this world, ideally, if we can manage emotions perfectly like robots, our trading performance (profit or loss) should not affect the trading preparation/setup phase (Designing EP, SL, TP based on the deducted trend) and thus it would be a causal relationship where an independent variable (preparation phase) affects the dependent variable (performance) only in one-way. However, the more we let emotions kick in by breaking our principles, the more it becomes correlated between these two variables. In other words, as we fail to control our emotions, the performance will no longer be independent, and start to affect our judgement when setting up our next trades, either positively or negatively. This will eventually create a vicious cycle where factor A affects B, B affects A, and A affects B again, getting worse and worse just like sinking into a swamp. Therefore, as a wise trader whose task is to manage risk, it is integral to be able to cut this cycle before things get worse. We should know how to stop with a small loss, before it becomes a big loss due to that cycle.
Hence, it is extremely critical for us to properly design and obey the strategies consistently and carefully and regardless of the latest trading outcome, we should be as neutral, objective, and prudent as possible. Which set of principles, strategy, and mindset should be adopted to effectively eradicate emotional trades? I hate to say this, but the answer would be different depending on your trading preferences and your economical/technical/physical conditions. So first you need to know yourself. Here’s a fun fact; this thing called ‘trading’ lets you learn deeply about yourself that you did not even know before. Pretty cool huh? It explicitly lets you know how greedy, fearful, doubtful, and jealous you are under this social system called capitalism.
Once you find out about yourself through decent self-reflection, you then need to figure out your trading propensities and the strategies you are fond of. It is definitely going to be different for everyone. For some traders, a high RR ratio & low win-rate strategy might suit and vice versa for some else. Some long or short, some short-term or long-term, and some high or low leverage. It is significant to find the optimal combination of trading strategies, theories, and indicators as well as trading products and platforms, that fits your trading preferences and behaviors.
To give you a tip, make habit to always consider the risk first, before the reward. Consider the status when you lose money rather than thinking about the profit. In this way, you will naturally get a sense of weighting risks that you are facing. By prioritize risk over rewards, you will be less affected by negative emotions when you actually lose trading and will also help you efficiently manage your risk in advance.
Let's all become a wise and smart trader who are always prepared for the worst possible scenario. Remember, it’s not the win-rate that makes you a successful trader. It’s all about minimizing loss and maximizing profit. Thanks for reading my post.
Your subscription, comments, and likes are the biggest inspiration for me.
How to continue in trading during uncertainty timeHello traders:
Recently I received many messages from traders about taking many losses during this uncertain time.
What's going on globally right now may have a different impact on all the different markets.
Many have told me of your frustration, stress, and negative emotion on losing money and continue to feel defeated.
Today I will explain a few things that you can implement into your current trading plan,
approach and perspective during this period of time.
First, you must acknowledge risk management.
Too many traders ignore this key important aspect of trading.
Especially during this time where the market can be volatile and irregular.
It's in your best interest to understand how to manage your risk. You should have a plan that lists out how your approach would be.
For example for my risk management right now:
-1% per trade of account capital.
-No more than 1 trade on the same currency, unless the first trade is secure in profit.
-No more than 2 trades open during a day, max drawdown 2% per day
-10-15 trades per month
-3 trades maximum per week
-Minimum 3:1 RR allow before entry
-Will Take profit on average when in profit 3:1 RR.
Second, learn to control your mindset and emotions.
More often when traders approach me these days, they are telling me they are taking too many trades, chasing profits and revenge trading their losses.
All these arise from the mistakes of FOMO, get rich quick mindset, enter multiple trades.
IF a trader can truly understand the fact that the market will always be there tomorrow, next week, next month..etc, then it's an easier thing to deal with on a psychological level.
You will no longer stress about trying to enter too many trades, worry that the market may not be available tomorrow.
Third, less social media exposure.
In today’s world, unfortunately in trading, most of the things you see on social media are fabricated and fake.
Their sole purpose is to sell you a dream, lifestyle, and easy money concept.
ITs always during this uncertain time, you will see more and more of these “gurus” who will show you how much $ they made during this time.
Now, I am not saying all are fake or scam, I am sure small # of them are doing well.
But, most of the things you will see in your social media feed, are likely to be photoshopped, faked, fabricated to make you believe whatever you are doing is wrong, and you tend to “compare” your result with these people.
This ended up becoming very negative and stressful to continue.
ITs important to understand trading is one of the toughest professions out there.
IT requires so much emotion control, clear mindset, and proper psychology on a regular basis.
If you are struggling, it's usually not to do with your trading strategy, but rather your approach, perspective, and perception.
So, eliminate as many unrealistic things you might see, and focus on yourself and your journey.
Any questions, comments or feedback welcome to let me know.
Thank you
How to Construct Your Trading Plan 2.0 Hi everyone:
Today let's go over a trading plan in more detail. I have made an educational video on this before, and many have asked me to create a more in depth breakdown on this topic.
So let's take a look at what topics to include in a trading plan.
First, what you should understand is there are no set guidelines of what exactly you should include in your trading plan.
Most traders will have different approaches on this topic, and some will have similar ways of constructing it.
What is important is this is something you will look at on a regular basis.
You will add, remove, edit your plan so it is the most up to date with the information you want to include in.
You should NOT however, just copy someone else’s trading plan, since it won't be applicable to you.
Below I have outlined the 6 main topics that I include in my trading plan, and I will go over each topic in more detail on what can be included in.
Personal Goals, Emotion/Mindset, Changes
Trading Checklist
Trading Quotes to reflect on
Trading Past experiences, mistakes, and lesson
Trade Enter Criteria
Trade Management
If you have any questions, feel free to let me know :)
Thank you
Treat trading like a business or you might not succeedHello everyone:
Today I will go over 6 main points on why you should treat trading like a business in order to succeed in this industry.
1. Business will have busy seasons and slow seasons. But overhead expenses will remain the same. So not every month can be profitable, same with trading.
-Some months you can have more wins, some months you will have more losses. It's what you do on average for the whole quarter/year.
2. Record your win/lose trades like any businesses that has bookkeeping to record their revenue and expenses
-This is for you to keep track of your progress, results and find areas to improve. You must record your profits/losses so you can identify your result.
Refusing to do so is like a business that does not record their expenses and wondering why they spend so much $
3. In trading, YOU are the Owner/Director/CEO. If you are not putting in the time and effort like a top executive of a business, then it's unlikely you will succeed.
-Top executives don't just work 8 hours a day, 5 days a week. They put in way more hours than that to keep the business running, operational, and profitable.
4. No business starts out as profitable, they are likely to be in the “red” until years later when they can recover the losses and then some.
-Most businesses start up with debts, borrow money and loans. Don't expect to pay off all those in one year.
In trading you will likely incur losses in the beginning of your trading journey. Understand its a process all must go through in order to come up to the top.
5. Each and every year, businesses review their entire operation. Identify the mistakes they make, find solutions to their problems, create plans, visions and goals.
-Identify your mistakes by journaling your trades. Find areas to improve, whether that is your entry, SL/TP, Risk management, trading psychology, mindset/emotion.
Acknowledge your mistakes, drop your ego, work on overcoming your mistakes.
6. 90% of small businesses fail within 3 years, acknowledge the odds are not in your favour, but continue to put in time and effort. NEVER GIVE UP
-90-95% traders fail in time. You don't often hear about the traders who lose, but you often hear about the social media “guru” and scammers doing so well.
Trading is not a get rich quick scheme, nor is it easy. You have to continue to put in time and effort to succeed.
IT doesn't come instant, and those who can not commit to such, will not be able to continue trading consistently and sustainably.
Most important is, if you fail, get right back up. NEVER GIVE UP in trading, and NEVER GIVE UP in life.
Any questions, comments and feedback welcome to let me know.
If you like more of these contents, like, subscribe/follow and comment for me to keep doing them. :)
Jojo
Emotional Control in InvestmentWarren Buffett famously said, “Be greedy when the market is fearful, be fearful when the market is greedy.” Knowing fear and greed in investing is therefore a good thing.
Our ancestors in the past, thanks to fear, knew how to run away from predators so as not to be killed. And also because of greedier than other animals, people know how to cultivate, store food, and then build a prosperous society like today.
However, it is no coincidence that the EQ index argues that the more able a person is to control his emotions, the more likely he is to succeed in life. The same is true in stock investing. Even the skill of mastering emotions is also put on the top by experts, which is a decisive factor in winning - losing, gaining - losing.
So what should we do to control emotions in investing, so that the actions of "fear" and "greed" appear at the right time and in the right place?
How do emotions affect investment decisions?
Let's analyze the characteristics of an investor's work. Every day, when the stock market opens, we begin to sit in front of a price list, with the numbers flashing green and red and changing every second, every minute.
Looking at the boring price list, we turn our eyes to other investors, groups - group chats on social networks, to see what people are buying, selling, what is the target price, holding this code or that code for a while. How long,... Then when the price list was off, even the night had fallen, we were still thinking, lost in the discussion and analysis.
And emotional trading also emerges from here. For example, if we are happy, we are blind to the risks. If we are afraid, we miss good opportunities. If we're angry, we're willing to take great risks to try to undo the consequences (revenge trading).
Living in that variable environment, if we do not have enough bravery and knowledge, it is easy to buy and sell irrationally and lack discipline. And so the account also "exploded" itself.
If we do not have enough bravery and knowledge, it is easy to trade irrationally and lack discipline.
How to control emotions in investing?
Shaping an investment method for yourself
When investing in stocks, in many cases, you have to make decisions continuously, and you have to decide quickly. But to make quick and accurate decisions, it is necessary to analyze and process information, set investment goals, plan allocations, etc. There is a lot of work to do, to make a decision. good.
To make things simpler, you need to have an investment system, or investment method. This helps you to perform actions according to a pre-programmed logic sequence. It will be the directional compass, so that every time you need to make a decision, you just need to check the conditions of the system and follow it.
For example, you can stick to a periodic investment plan (SIP - Systematic investment plan). By continuously investing small amounts, you take advantage of long-term cost averaging (DCA). Thanks to the habit of investing periodically over a long period of time in familiar assets, you will be more prudent in risky speculative decisions.
Have yourself an investment system that helps you perform actions according to a pre-programmed logic sequence
Building investment knowledge
After reading the above idea, many of you will probably think: "I don't know anything about investing, how can I build my own investment method?" That leads to the second element that you need to focus on developing, which is building investment knowledge.
Referring to investment knowledge, you will probably think of PE, EPS, valuation methods, ... (if according to fundamental analysis), or MA, RSI, technical indicators, wave counting ,... (if according to technical analysis).
This is not wrong, but if you don't look at the investment method, the above knowledge can become a fragment of knowledge. Such knowledge must be systematized from the perspective of a specific investment method and way of thinking. You can find these knowledge in the section
To make things easier, you can look to investment advisors, brokers, even fund managers who you know for sure have their own investment systems.
However, when receiving investment advice, no matter what method it is, be sure to learn from an expert the important components of an investment method:
Clear, objective (non-emotional) logic to make buying/selling decisions.
Investment history follows the above logic, applied in Vietnam market.
Principles of portfolio allocation, appropriate investment size.
Risk management principles should clearly state what we will do when a risk occurs.
In addition, investment knowledge is not only professional knowledge but also general understanding. For example, you should know in advance that no method is all-encompassing; a potentially high-return opportunity also carries a high degree of risk; It's not like businesses and the whole economy can grow by tens of percent per year, but you just invested in stocks and want to earn 5 times 10 times,...
Don't stand on this mountain looking at that mountain
16 years of experience in the stock market gives me the opportunity to meet a lot of people. Many of my clients confided to me: “I just need to make a steady profit of a few dozen percent per year.”
However, they weren't happy when they only held a 35% increase, while a certain X doubled. But there are also lucky people, who bought the correct X code and doubled it, but still regretted: "If I know that, I will buy more".
In this case, instead of comparing the actual profit with the original target, they compare it with someone else's profit, or the profit it could have been. No matter how much they say, they will have a reason to regret anyway.
The solution to not falling into this situation is to return to your own investment goals and methods. If this still isn't strong enough, try linking that goal to the important things in your life.
In software development, there is a concept called user story, written in the format: “Is…, I want… to……”. I love this style of writing because it focuses on the subject and the goal.
Applying investment, for example, we can write the following: “As a father, I want to invest to have money for my daughter to study abroad at the age of 18.” I believe if you always remember this , you will be less emotional, less reckless and stick to your investment plan more, because you know this determines your daughter's future.As a father, you cannot bring your child's future to life. can bet.
As another example, we could write: “As the breadwinner of the family, I want to invest to have a sustainable passive income source, so that my family doesn't have to worry about finances when I get old.” If you develop If you can express this, you must have remembered your responsibilities, your goal of financial peace of mind.Emotional decisions make you insecure, so there is no chance to dominate.
Enjoy the emotions of investing in a controlled manner.
Conclude
Having emotions is a natural mechanism of all living things, including humans. Therefore, if emotions become too dominant, we should not reject them to the extreme, but should only moderate and control them to an appropriate intensity to facilitate work.
Experiencing the emotions of investing is like climbing to the top of Fansipan. Climbing to the top may not be fun, if we don't experience the cold, the slippery pain when climbing the slope, the times we have to struggle with the mud, we have to swing into each bamboo grove to go.
Investment is similar. Accept and enjoy emotions, but don't let them hinder us from reaching our destination, let them overwhelm our goals, and erase our motivation.
The Reality Of Emotional TradingHello Traders, today I would like to talk about the reality of trading with your emotions, this can be whether you are a swing trader or a day trader we are all human and get emotional but we must learn how to control them and not trade when you are unstable.
Emotional instability
The most common reason why people plummet to the end of their forex trading is due to emotional instability. Forex trading in reality is all about how well you can control your emotions.
Reality
Mastering your fear, hesitation, anxiety, impatience, curbing down your greed and over confidence, this is all what any trading decision is based upon. It might be surprising, but a large percentage of people, struggle with the most basic step in trading forex, why? Because they downplay its importance. Being emotionally stable and in control of your emotions, is often overlooked because everything else seems much more important: profits, losses, risks, strategies, trading plan.
Here are some of the ways which help you trade better:
Be consistent.
Do not lose faith in your strategy.
Have a risk management strategy.
Don’t switch strategies.
Have a strong trading plan.
Take a break.
Learn to control your emotions.
Don not revenge-trade.
These are the 5 emotions you often feel while trading and how you may react to your trading
Happiness – underestimate the risks
Fear – we fail to act (inertia)
Anger – Overreact (Revenge)
Sadness - risk averse
Greed – Take bigger risks
If you cannot control your emotions during your trading you may react in a way which breaches your trading plan. This is extremely important as this is one of the biggest factors a lot of traders face while trading.
Thanks for taking the time to read my post
😆😂😆😂😆😂😆😂
Pre-market and the futures. Are they meaningful? Often times we find ourselves staring at the futures or the pre-market before the actual markets open. Is there a point?
And why does it matter whether we have an opinion about the futures or the pre-market?
A recount of my emotions in the market ETHUSDAnalysing my previous ideas to identify my tone and emotional state
Complacency at the peak is what I find very interesting.
I assume this is due to the consistent rise, maybe the market got boring? lol
This is my recount
Weekly Trading Recap NASDAQ, USDJPY, CHFJPY, EURAUD July 24 2021Hello everyone:
Welcome back to this week’s trading recap video.
Let's take a look at the trades entered/closed this week from me.
I will explain my approach on the entry, SL, TP and management.
NASDAQ: +1.83%
Full analysis/forecast:
USDJPY: +1.50%
Full analysis/forecast:
CHFJPY: +1.60%
Full analysis/forecast:
EURAUD: -1.00%
Full analysis/forecast:
Any questions, comments or feedback please let me know. :)
Thank you
How to manage & deal with consecutive losses in trading ?
Trading Psychology: How to manage & deal with losses/consecutive losses in trading ?
Hi everyone:
Today I want to go over a very key trading psychology lesson on how to deal with losses, especially consecutive losses.
This is bound to happen to any traders, whether you are new or experienced. ITs something all professional traders will have to deal with on a regular basis.
Understand that, dealing with losses psychologically is the key factor in the success of a trader.
This is because losses are inevitable, and trading is a probability, which trades that you take will end up both in wins and losses.
However, traders usually can not accept losses, due to their ego, greed and other emotional factors.
Aside from having a good risk management, trading plan, and trading strategies, traders can still experience the psychological emotions of losing.
This is due to the fact that we are humans and we are an “emotional” animal. We don't want to be wrong, at all.
Taking a loss is like getting slapped in the face by the market, which we have egos to fight against.
What ends up after taking losses or consecutive losses, it puts traders at a disadvantage where their emotion is high, and likely to “revenage” trade to chase back losses, which end up in a deeper hole.
To deal with such psychological phenomena, take a step back and observe your situation:
First, did you follow your trading plan/strategy on how to enter, set SL/TP, and management ?
Second, did you take an emotional trade due to greed or fear of missing out ?
Third, have you journal down your losses and review them to make sure they are trades you really want to risk your capitals on ?
By now you will see why we need to review these. Trading is a probability, not right or wrong. It's a random variable that you are putting your $ at risk.
So if you understand the rules and plans that you follow and execute a trade accordingly,
then there should NOT be any negative emotions towards the outcome of the trades, whether they are winners or losers.
When I discuss the trades I entered every week in my trade recaps videos, I am always happy to enter a position, even if it goes to a loss.
This is because I have done enough backtesting, chart work, and plan to enter a position.
I understand strictly from a probability point of view, I could have a higher strike rate, and more often the trades will end up as a winner rather than a loser.
However, I also understand and acknowledge that some trades will end up in a loss, disregard mine technical analysis or other’s fundamental analysis. It is what trading is all about.
When I have consecutive losses, I will always review the 3 points I mentioned above and make sure they are all valid for me.
Then I simply will take 1 day off from the market, chart, phone, and just get your mind clear. Come back strong after 1-2 days of rest, and have a positive mindset.
What traders often do when they have consecutive losses is to right away re-enter back into the market and try to chase back their losses.
This has always been the downfall of losing and it creates anxiety in traders’ minds.
Such a negative experience is going to stay in the traders’ mind longer and deeper, compared to consecutive winners.
So wise we understand that is the case how our brain is "programmed” into thinking, then it's up to us to do the opposite, and fight the urge to “revenge” our losses.
At the end of the day, no one is trading your trading account, except yourself.
Taking ownership of your account, learning to control our emotions, understanding the probability side of trading, and learning to let go, drop our ego will help us in the long run in this industry.
I hope these pointers can help some traders who are still struggling with this concept.
It's impossible not to take losses, but professional traders deal with it on a regular basis and still remain consistent in the long run.
Thank you
I will forward some Trading Psychology educational videos below on some of the topics explained today.
Trading Psychology: Revenge Trading
Trading Psychology: Fear Of Missing Out
Trading Psychology: Over Leveraged Trading
Trading Psychology: Is there Stop Loss Hunting in Trading ? How to deal with it ?
Trading psychology - The key to success !!In this post, I'm going to focus on one of the most unpopular but most important topics of all.
TRADING PSYCHOLGY !!
The central issue in retail are feelings, especially fears. Anyone who wants to survive in retail in the long term needs mental knowledge and has to work hard on oneself all the time.
The beginner neglects topics such as risk management, money management, position sizes mostly completely. This leads to the fact that he becomes insecure with every small movement. He is constantly afraid of not getting straight. Anyone who is in this emotional kaos, it is very difficult to achieve long-term profits.
That is the main reason why most of them fail at trading. They trade emotions, not setups. All these useful tools are of little help if you are not able to use them with discipline. And only those who have their emotions under control will also rule the trade. Traders do not fail because of the system, they fail because of the implementation. Many studies have proven that.
Do you know the advertisement. a good-looking guy, a hot blonde in the passenger seat of his lambos ... takes his cell phone out of his pocket, quickly places a buy order while driving, and 2 traffic lights further he has earned 3k..don't fall for such guys.trading is hard work !
I burned my portfolio 3 times before I got confused with my personal psychological problems.
Already heard of the 90-90 90 rule: 90% of all traders lose 90 % of their portfolio in the first 90 days.
Your spot on, the only way to succeed is hard work and control those emotions. Trade the chart not your heart. Safe trading everyone.
First ask yourself frafe aller: Why do I trade, what do I want to achieve? The answer determines whether you want to trade as a game, as a hobby or as a business!
The second important question is what psychological type are you
Brain stem-oriented person:
-person-oriented
-avoid arguments
-Customer
- inflexible
- strong need for security
- are routine tasks
This guy acts stomach-oriented, listens to others and avoids change - own trading style difficult to achieve
diencephalic oriented person:
- dominant character
- gets straight to the point
- can admit mistakes
-acts impulsively
-acts flexibly
This type is quite suitable for scalps and daytrades - but you have to be careful not to over-trade
strives for a safe distance
-is a lone wolf
-has little relation to his feelings
-rational process-oriented
- he keeps calm in the chaos
This type has very good trading requirements, emotions on the interpersonal level will also be reflected in trading. Stop out-never mind. This type will certainly find its strengths in system.swing and position trading.
All professionals went through hell in the first few years. Why should it be any other way for you?
Are you ready to lose money in order to increase your portfolio much later in the long term?
Are you ready to take many years of time for success?
IF YES, YOU CAN DO IT !!
WHIT COACHING TO THE GOAL !!
if you want to become a good trader you should constantly work on further development. external coaching and self-coaching are the solution. every professional, no matter in which area they need help, just pay attention to the fact that they are not of the beginners in their suits reinfallen can be found on countless youtube channels. it cost me months, if not a year.
IF YOU WANT, I M ALSO HAPPY TO ANSWER ANY QUESTIONS; JUST WRITE ME !!
If you like my posts smash the like button, comment or follow me !!
and I will expand this important topic into countless numbers
XRPUSD Ripple - How everybody looks at it, Best ConfirmationCrazy moves on XRP.
Probably most of the investors/traders are crying right now. The reason is because they missed on this big move but why?
Due to their emotions. That was the best confirmation for me why I was still holding XRP and still publishing here new Updates to remind everybody about it that a huge pump will occur.
The first time when I made an analysis on XRP was at 0.20$
I presented so many confirmation about why this is so logical that this thing should take off and it did.
My best confirmation was the emotional aspect of the majority. This is how investment works. Whenever the majority are super confident about an Investment Instrument to go to 0 or considering it as an bad business you should open you eyes and attack at the right point(price). Whenever the prices are low the majority are scary. After the price is pumping everybody is looking to buy. But it is too late.
This is exactly what happened when XRP faced the lawsuit with the SEC. Everybody was selling and so many investors bought that market a few days before due to that strong % growth (+250%). A few days later there was a *reason* to dump xrp. That made it even more attractive to buy it after that huge drop.
Boom here we are ;)
Trading habits that lead to SUCCESS...Plan for success but have no expectations... A lot of trading emotion comes from expectation. Traders expect the next trade to be a winner, they expect this month to be profitable, they expect the USD to become bearish, etc, etc. Having no expectations can really help to reduce trading emotions. Obviously, you should still stick with a strategy and do all you can to BE success, just don't expect to succeed.
Success will come as you unemotionally stick with a strategy that gives you an edge. Success comes from trading your strategy with consistency, not be giving-up when expectations are not met.
Trading habits that lead to SUCCESS...Keep yourself busy between trades... Work, run a business, study or play video games. Being busy between trades will help to keep your mind occupied and your emotions focused on something else.
As soon as emotion becomes involved in trading, everything will go pear-shaped.
Trading habits that lead to SUCCESS...Focus on the long-term. Calculate returns and review your trading performance once per quarter or once per year. Checking returns daily or weekly just becomes frustrating and leads to emotional trading.
Trading is about getting rich slowly. Analysing performance on a daily or weekly basis is irrational and can be soul destroying.
Trading Habits that lead to SUCCESS... Have a trading schedule. Start, finish and check the charts the same time everyday. Many new traders never develop a trading routine. This leads to them checking the charts too often or having long breaks between trades.
Is there stop loss hunting in trading ? How to deal with it ?Hello everyone:
Today I want to discuss a common discussion about new and experienced traders.
“Is there stop loss hunting in trading?”
Many wonder, since they can all recall the moment where price just hits their SL on a trade, and then the market quickly turns around towards their desired profit direction.
I want to dig deeper into this and explain it with different viewpoints, from a technical and psychological view.
The vision I am trying to provide is that, thinking about is there stop loss from the brokers won't help you to get better in trading.
It's a mindset thing we need to understand. For example, whether there is or isn't a stop loss hunting, it's nothing you or I can change or control. It is what it is.
However, if you understand this, then it's about adjusting your plan, strategies and trading style to these types of volatility moves and come up with the correct mindset to work around it.
Technical part:
More often, people set their SL and see their trades get taken out just a few pips above before reversing the opposite way.
Dig deeper into this. Is it a fake breakout, is it just being impatient and jumping the gun?
Is there LTF continuation/reversal correction that gives you bias to enter a long/short ?
Is your analysis aligned with the higher time frames ?
Many factors on why a trade is at a loss, no need to jump right into a conclusion that it's the broker who is stop hunting you.
This is why we always look for confirmation and confluence when we enter trades.
Just because the price breaks the support and resistance line people often use, it's not an automatic buy or sell.
Same goes with trend lines and other indicators people use.
We need to confirm it with price action. After an impulse phrase, was there a continuation correction phrase? If not, then it doesn't justify a buy entry.
This is also why we backtest so we see these types of price action often, and acknowledge what we need to do in order to work our ways around it.
Psychological part:
When traders take a loss in this way, hitting the SL and reverse, this creates a negative emotion in them.
They often get frustrated and upset, hence in human nature, we tend to blame others.
But take a step back and understand this:
The market can do whatever it wants to do.
Most beginner and newcomer traders think the market MUST follow their strategies and style. If it doesn't, then something is wrong with the market, the brokers, their mentor/coach, their strategies...etc.
This negative mindset needs to change.
First of all no strategies and style will promise you 100% strike rate and profit.
Any strategies you take will incur a loss, it's how you deal and manage it that will show you as a consistent or inconsistent trader.
Second, if you have experienced several losses due to the “Stop hunt” in your own mind, then instead of blaming the brokers or the markets, start looking into your trading plan and management.
Are you experiencing FOMO ? Are you over leverage trading, and revenge trading ? Are you taking into consideration your risk management ? Entry, SL/TP, how much to risk ? Is it consistent with your plan ?
These are the things you can control, rather than external factors which you can not. Adjust yourself.
Third, remove your negative emotion from your losses. Take it as a learning curve and experiences earned.
Then the next time you enter a trade, you will remember the lessons that were taught to you by the market.
This is why we journal our trades so we can look back at them and understand what we did.
I hope these few pointers will help some of you to get back on the positive direction of trading.
No need to think and get upset if there is a stop hunting of your trades. Instead, use that towards your advantages.
If you consistently see a false breakout and reverse, then come up with a strategy and plan to capture that reversal move.
No need to blame the market or the broker, that is something you can not control. Jumping brokers to brothers simply won't help you to eliminate that psychological mindset of a stop hunting.
I will put below several other educational videos on the topic we discussed today.
As always, any questions, comments or feedback welcome to let me know :)
Trading Plan:
Risk Management:
Trading Psychology:
FOMO:
Revenge Trading:
Over Leverage:
