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Hello, My name is Samurai; and I am a trader with a bad habit. I am guilty of 'Seeing what I want to see, not what's actually in front of me.
(This being Traders Anonymous, everyone says, "Hi Samurai")
For example, today I took a short trade because I thought price had pulled back in a down trend. I further saw overhead resistance. I expected price to test the resistance and continue down. Naturally, that's not what happened. I was stopped out. Before you ask, I did use a decently placed stop above price action assuming I was correct about the move. I believe I was wrong because I wanted to see a downward continuation.
It wasn't until after I was stopped out that I realized I missed some important price action immediately preceding my entry. I was seeing what I wanted instead of what was.
My question to you all: How does one overcome this bad habit? How do I start seeing what I see rather than what I want to see? What advice do you have for a trader who wants to break this behavior pattern?
Eliminate a Bad Habit by Discovering Its Trigger
BY ADAM DACHIS
"Habits are formed when you do something over and over again, which is great if you want them. The problem is when you end up with a bad habit because you start repeating a behavior you don't want without necessarily realizing it. If you want to get rid of this problematic mannerism, the first thing you need to do is figure out it's trigger so you're aware and can start making changes.
Self-improvement blog Pick the Brain believes that every bad habit has a cue that falls into one of the following five categories:
Location
Time
Emotional State
Other People
An immediately preceding action
Every time you engage in the same bad habit, make a note of those five things. When you start to see similarities, you'll learn what's triggering the habit and you can take the necessary steps to solve it."
dont believe anything you hear and only half of what you see
When it hurts enough and you lose real $$$ u will change or you better change, compare it to something in regular life you are good at, use same rules with trading. Simple things like this help.....
Most bad habits in trading have strong emotional triggers. Nearly all of these emotions are to protect the ego.
Example:
You are told that to be successful as a trader you must make money. This is a fact.
Your ego has a strong desire to become a trader. An identity. This desire is born of the fact that we live in a society that values extrinsic motivation (being told we a good enough). This desire to please others is an illusion.
You jump into trades at the most illogical of times because your ego fears missing out. Missing out = no profit = identity as a trader crushed = ego destruction. This greed (fear) that pushes you into trades is an illusion.
Losses from coincidence or from foolishly rushing into trades further put the ego on edge. It fears that you will not be profitable = identity as a trader crushed = ego destruction. This fear of what the markets "will do to you" is an illusion.
How do you break the habit? Observe yourself. Be present in the NOW moment. When the ego feels fear let it. When the ego fears missing out let that fear sit. Just watch it. It doesn't exist. It isn't you. You are perfect just the way you are. Your value isn't determined by profits/losses or your identity as a trader. You are enough.
Willpower is not enough to be a good trader. Willpower can help you with the discipline and determination, but it cannot solve everything.
A lot of traders often tell me how committed they are to trading. That is great, because if you aren't committed to it then you don't stand a chance. But being committed to it is a prerequisite, it does not give you an advantage to actually succeed against other professionals.
I believe most struggling traders don't have any form of accountability or any tool to identify problem behavior. If you are not maintaining an active trade journal, listing every single trade taken, why you entered, why you exited, and posting charts -- etc -- then you are at a huge disadvantage to discover the true underlying reasons for your behavior.
A journal is about writing down the "why" type of thoughts. I am not talking about an Excel spreadsheet with a list of entries. That is an analysis tool, but it is not the type of psychological or behavioral analysis that you get with an actual journal that describes why you made decisions to do what you did.
So start with that. Post to it regularly. You will only get back what you put in, so if you write one line posts with no charts, no reasons for entry, no reasons for where you set your stop or target, etc, then you will also get back worthless info. But if you are thorough and post a chart, describe why you entered, why your stop was where it was, why your target was where it was, how you felt during the trade, and why you exited ---- then you have a mountain of useful information to help improve your trading.
At the end of the week, go back and read the past two weeks of journal entries. Look for patterns. Look for strengths and weaknesses. Make a list, and start working on individual items, grading yourself on the improvement in a specific area, one at a time.
There is a high chance you could see the same thing happen again and instead of being stopped out this time, your profit target get hit instead.
I had seen again and again the exact same preceding setup developed into 2 opposite results. It just tell me I will be wrong sometime and right another time. I realized then the crux is in my trading plan is I must take into account I will be wrong in some trades and I must be net profitable over a number of trades even if some of the trades go against me.
Develop rules and then train yourself to never under any circumstance to violate rules. The training is the hard part but journaling as has already been mentioned in this thread is a great place to start. I personally had to automate to get 100% compliance with my own rules.
I have taken many stops because my rules say leave it alone no matter what I think the market may or may not do. At times I could have saved some coin by getting out before a stop was hit. Another example is watching a trade get 1 tick from target and wanting to get out and lock in gain only to see it never hit target. Next time that happens the temptation is to take the profit and not wait for target. But long term these things are detrimental because they train you to violate your own rules. I have found if I will violate one rule I will violate all my rules.
This is the hardest part of trading and if cannot find a way to overcome it you will fail. One of our biggest enemies as traders is quick single trade gratification or pain avoidance as opposed to viewing our trading over many trades. It helps me to remember every time I push that button in violation of my rules even if the trade wins I have just taken a step towards failure.
"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
dont believe anything you hear and only half of what you see 
