In previous sections, we talked about how our thinking self, our emotions, and physical make up contribute to decision making in trading. Now it’s time to briefly describe which are these ineffective trading behaviours that most of us have fallen into. The fourth component of the trading vicious cycle is behaviour and in trading this refers to the execution of a trade, the management of a trade, a specific decision or anything else that we are doing and affects the outcome of our trading.
- Leaving losing trades run longer than we should, hoping that the market will reverse and at least we will be able to break even
- Taking profit too fast and at a lower level that we have originally planned even though there are still objective data that support our original setup.
- Analysis-paralysis. Analysing data again and again but eventually entering no trades.
- Trading like a gambler/ putting trades without planning or without following any methodology
- Increasing planned position size of trades after a win so that we make more profit or after a loss to recover the loss
- Decreasing position size or stopping trading altogether after a loss
- Keep adding on our losing positions with disregard for stop loss levels, trying to prevent margin call and stop-out.
- Alternating between making profit and loss constantly, having as a result no significant profit ever made
- Trade only when there is high volatility-again a gambler’s attitude
All the above trading behaviours are caused by our lack of awareness into our psychological processes in trading. We are so overly convinced by what our mind telling tells us that get into the trap easily, almost automatically. In this website, we aim to provide you with information about how you transform this automatic vicious cycle you go into and become a deliberate,mindful, goals-focused trader.