Trading Psychology and How The Mind Works (III)
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Trading Psychology and How The Mind Works (III)

Psychology and Money Management

Created June 23rd 2009 by George
Updated January 12th 2019 by arun28887
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Trading Psychology and How The Mind Works (III)

  #31 (permalink)
ND, India
Posts: 47 since Feb 2010
Thanks: 284 given, 46 received


Welcome to the forum.
I agree with George (formerly BMT) is a good place to start with nice & cooperative environment.

Also I would like to suggest this blogspot the best a true Gem for trading Psychology related material



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  #32 (permalink)
Trading Experience: Intermediate
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jungian's Avatar
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Just started reading this... sounds interesting The Hour Between Dog and Wolf: Risk Taking, Gut Feelings and the Biology of Boom and Bust (9781594203381): John Coates: Books

A successful Wall Street trader turned Cambridge neuroscientist reveals the biology of boom and bust and how risk taking transforms our body chemistry, driving us to extremes of euphoria and risky behavior or stress and depression

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  #33 (permalink)
San Jose, CA
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Thanks George! Your articles rock!

Failing and anxiety are apart of learning something new. If you fail, get back up and push through the pain, and itís okay to be uncomfortable.
Visit my futures io Trade Journal Reply With Quote
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  #34 (permalink)
Sugerland, TX/USA
Posts: 13 since Jan 2014
Thanks: 2 given, 15 received

George View Post
Have you guys ever heard of, fear of success?
Isn't that one of the biggest enigmas and ironies that's out there?
It's like trading right! I mean how crazy is that?

I do want to make money, I love money, I love trading! But I'm still loosing money.
What we're experiencing here is a conflict between the conscious mind and the subconscious mind.

Remember, who the real you is! You're actually the sum of all your programming. Funny thing right? We got a lot of programmers in here!
So, being the sum of all your programs, and by the fact that your subconscious mind has the role of protecting you. There you got it!
It doesn't allow you to make money. Because somewhere in the programs you've got a bad experience that has a negative charge, and it keeps holding you back from getting hurt "again".

For instance let's say that you've been brought up by your parents (and they by their own parents), with a small simple value, such as "In order to earn money, you have to work hard".
It has probably been put there, somewhere between the age of 0-7. After that it has been amplified every time you've been in and out of social contexts containing those values.
Unfortunately, our parents becomes parents without getting any instruction manual on how to raise kids, plus that we have the social construction as well in the picture.

What does all this lead to?
Your parents are starting to train you in order to fit into the social construction. By doing that, they forget about unconditional love, and they start to introduce two things, punishment and reward.
They punish us when we're not following their instruction and reward us when we do as we're told. The kind of reward we get is, acceptance.
When we get that acceptance, we then fulfill one of our basic needs. Remember?; the need for security.

That creates here an association, with an equation that says "In order to earn money, you have to work hard" equals "SAFETY".
We grow up, and start to work, and eventually we find out that, working hard equals earning money. And the safety need is fulfilled.

No problems here right?
Everybody's happy !

Til you get into situations that can make you money easy, without having to work hard. That's when you blow it!
Take trading for instance. You've gone all the way. You've gone through all the phases (learning, experience, indicators etc). You're a complete trader. But you're still loosing money! By now, trading is easy for you. Doing it is easy, acting upon it is easy.

Suddenly we've got a new equation into play. "Earning money is easy" equals "NOT TRUE". Why? We do not want the money!
Life is not about money. Life is about safety. We live in societies, that has told us that we can reach safety through money. Money is just a tool, nothing else.
We want safety, and if that isn't met by the information we got in our subconscious minds we do whatever there's in our power to go for that.
And if the real you is, the sum of all your programs, there's simply no place for that there!

Scary thing right! It scared the hell out of me, the first time I realized that's the way things are working. I refused to buy the concept. And it took me a while before, I finally had the courage to face it, and to understand that, it doesn't matter how I take it or perceive it, by my conscious mind. The subconscious plays the lead here.
And no matter how much I refused to accept that, it wasn't that way. That I do love money, and that money is easy to earn, and that I love being all that trading is giving me. It just laughed back at me by decreasing my account.

Do you now understand how fear of success works and why it works that way? This was of course a very basic example. Every case is unique with it's own ingredients, but manly is built on the columns explained above.

In the next article, I'll write about what to do about it. Hang in there guys, there's hope!

To be continued...

Thank you for the post... this is a struggle I and I assume most everyone else struggles with... Thanks again!!

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  #35 (permalink)
Los Angeles, CA USA
Posts: 3 since Jan 2014
Thanks: 6 given, 5 received

Trading Psychology

I think in order to become a profitable trader you have to let go of your ego and realize that just because you got on the wrong side of the trade and lost money does not make you stupid. Our need to be right all the time gets on the way of successful trading.
"To err is human". The trick in my opinion is to learn and try again and not repeat our prior mistakes.
Do not be discouraged if you lose just refine your trading approach

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  #36 (permalink)
Sugerland, TX/USA
Posts: 13 since Jan 2014
Thanks: 2 given, 15 received

wiztrader View Post
I think in order to become a profitable trader you have to let go of your ego and realize that just because you got on the wrong side of the trade and lost money does not make you stupid. Our need to be right all the time gets on the way of successful trading.
"To err is human". The trick in my opinion is to learn and try again and not repeat our prior mistakes.
Do not be discouraged if you lose just refine your trading approach

yeah... psychology is WAY more important than any trading system or method... Gotta have this part down.

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  #37 (permalink)
Hackensack NJ
Posts: 11 since Oct 2014
Thanks: 0 given, 6 received


Of course there are also those that have self destructive personality types or they had poor
or faulty wiring layed at some time in the begining. When the crap inevitably hits the fan, they
fall back on bad habits and decisions.

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  #38 (permalink)
Posts: 10 since Nov 2013
Thanks: 2 given, 3 received

Before every trade I ask myself: Must I trade?

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  #39 (permalink)
Posts: 18 since Mar 2015

Running scared

Big Mike View Post
George, thank you again for your contributions.

Fellow Traders! Attention!

The mental aspect of trading is far and away more important than your trading platform and indicators. How much time are you spending on new indicators? How much time on tweaking your chart? And how much time perfecting your trading rules?

I know that dealing with these mental issues is not fun. Indicators are like porn, they can get you all excited! But at the end of the day, wouldn't you like to be excited for having made money instead of being excited because your chart is pretty?

You can have the best indicators the world has ever seen, the most beautiful chart that makes you feel "oh so proud". And guess what, you can lose money. Lots. You need to start analyzing yourself, not your chart.

I've been preaching the "less is more" mentality for a while. I am still in the process of reducing the number of indicators on my chart. For the past few weeks I've been using three charts with a total of three indicators (1 per chart). I think I can safely cut that down to 2 indicators. And guess what? Trading is easier and more clear than ever before.

The important thing is to reflect on the losing trades. The winning trades are easy to deal with. Your time and energy needs to be focused on the losing trades. I assure you, the market is not out to get you. So you need to look at why the trade was a loser, and I think most of the time, the fault will be with your execution of the trade -- not the indicators.

Your goal is to be able to have a losing trade and have made no mistakes. Yes, think about that. A losing trade that you executed perfectly. Those are the acceptable losses, because you did everything right and the trade did not work. That's life, that's the market! Don't worry, they won't happen often if you have truly done your homework and been honest with yourself.

If you've read the entire post then you get a cookie


Hi Mike,

I'm a new trader-paper trading for 3 months, 1 live month. I've been making money, but my entire philosophy has been based upon looking for institutional traders to move against retail traders. To that end, I think the market IS out to get me. Would you disagree?

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  #40 (permalink)
Chiang Mai Thailand
Trading Experience: Intermediate
Platform: NT
Broker/Data: IB/IB, AMP/CQG
Favorite Futures: ES
Posts: 129 since Feb 2013
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George View Post

You're never going to see the connection between the conscious and the subconscious mind. It won't work. If we were to see the connections, then we could be brainwashing ourselves in the right direction. Actually, that is possible

On the other hand, we're all able to feel the connection. Remember that's where our feelings lie, in the subconscious mind. So when ever you think of something, let's say in the right direction (that is, in the desired direction, for i.e. I want to make loads of money), and you get a bad feeling in your gut. That's when you become aware of IT!

What's happening then is that, the information that's in your subconscious mind, doesn't match the thoughts in your conscious mind. And it communicates that to you by feelings, good or bad. Just feel it.

Go ahead, pick a thought (take a goal or something you wish to have or complete in your life), and put your focus on your gut (the chest, stomach area -that's our feeling center), and see if how it feels. If it matches, then the both minds are in sync. If not, that is, if you get a bad feeling. That's your subconscious mind telling you, NOPE, we don't like that information, we don't accept it, and there's no place for it in here!

Try it out, and see.


Ok I can feel that at times---Then what can we do about it??

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