My neighbor, John Dailey, is a school teacher and a forex trader. We live next door and eventually became friends. He shared with me his experience and I shared with him mine. John Dailey day-trades several forex pairs. Usually it is EUR/USD and GBP/USD. It has been his extra income for several years. He complains though that his profits are unpredictable and unstable, often going severely up and down in the same session.
When John is winning his confidence rises and he feels like a power trader. On the other hand, when he loses he feels like a loser.
He has wondered why he can’t be a consist winner, and why his drawdowns tend to be much larger than his profits. John doesn’t have a clue why he can’t increase his profits even though he continues with his trading patterns. Well, it is his pattern that he has no trade plan, he doesn’t document his trades and does not analyze his trading on a higher level. He has several trading rules although he routinely violates them. I often feel that John is out of control and if he does not change what he is doing he is headed for a financial ice-cold shower.
On the other hand, I am a licensed psychiatrist and successful forex trader and this here is my professional advice to John.
If you want to change your luck, you must first alter your thinking. Remember, that much of your thinking is driven by your unconscious. Therefore, you must become aware of your primary self-sabotaging unconscious that runs your thinking, emotions and behavior.
Forex trading is perhaps one the most difficult business on the planet. Because? Because we are talking money, and with every instant after you enter the trade you are going to either gain or lose money. But, it goes beyond that. Money is not only the foundation of our society, it is embedded in your identity. It is the cornerstone of who you are. If you are getting money, you feel controlling, capable, clever and attractive. If you are losing you feel powerless, useless, stupid and unattractive.
Now that fact of the matter is that when trading you always are expressing yourself. Whether you want to, try to or feel a need to, it doesn’t matter, you are and will express yourself. You and your trading patterns are tied much of the time to your unconscious beliefs. When trading forex every blemish, weakness and character flaw in your behavior is challenged, called out and tested.
However, this is not forex doing it to you. There are no rewards, punishments, pain or risk in forex. There are financial consequences. The rest you provide yourself.
Awareness is key. The more aware you are of your underlying self-sabotaging patterns the more you can position yourself to address these issues – one at a time.
How do I become more aware if these limiting beliefs are unconscious? Good question! You become aware by asking questions of yourself, and by inspection and introspection and more importantly by personal observations.
By testing yourself and testing the market you will gain a realization of why you have no trading plan or failing to follow the one you have. Why you have no trade journal, or failing to document in it. Why you continue to do things that you say you must stop doing and why you are failing to do those very things that you say you must do. Once you identify the underlying self-sabotaging data, you can begin to deal with them…one issue at a time.
Yes, forex trading is a journey in self-discovery, you must deal with these issues one at a time to begin to understand and identify what runs the patterns that are producing results that you don’t want.
There are essentially two kinds of trading data. One type of data is the practical data relevant to the actual aspects of trading: news, technical analysis, instruments, indicators and an internal data, which are everything that have to do with your thoughts, emotions and behavior.
Trading is a 100% mental and emotional game. Either you are preparing, analyzing, testing or executing while trading forex, it requires psychological and emotional tools. If you don’t those tools that’s like driving without a steering wheel. You will not only lose your way but you will bump into a tree and burn the cart. Therefore, you must become aware of what is between you and keeping commitments with consistent follow-through.
You have to start mastering the mental game and first of all start to control and analyze yourself.
Also read Forex Trading Psychology
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