How to trick your brain and become a profitable trader
Most traders know that trading psychology is the most important piece of the puzzle. In searching for the answer to the question "how to become a profitable trader" you are bound to stumble upon your own psychology. However, most traders avoid working on themselves in every possible way. Understanding the necessity comes later, with time.
However, the price for this understanding is not only lost time, but also your own money and nerves. For some people the price is so high that the mere fact of understanding no longer solves anything. Neither money nor energy left to return to the market and continue the process of professional development. The price for understanding was too high.
It's hard to get into your mind
While a trading strategy and a trading system can be drawn (presented graphically), described on paper and displayed in the form of indicators, such an option will not work with psychology. In addition, it is much more difficult to correct mistakes in psychology. Screenshots of deals can be saved and then errors made during position opening can be analyzed. How can we take screenshots of our own thinking at that moment?
Your own mind is much harder to analyze on your own, so it is much harder to develop it.
It's not all bad, however. There are some concrete steps you can take to improve your reaction to market actions and strengthen your trading psychology.
Changing Perspective
When people take their first steps in stock trading, they have absolutely no experience to compare. They simply have nothing to compare what they encounter while trading in the market with. Naturally, the brain begins to actively learn and accumulate the experience it needs, but it does so on the basis of the tasks it is used to.
Its main task is to preserve our lives and ensure our psychological well-being. At any cost. As soon as you start trading, you start losing money. You experience pain. The brain records these experiences and emotions. It begins to make causal connections. It begins to make old habit predictions about the future based on past experiences.
Since for most beginning traders the first experience turns out to be quite sad, the brain begins to associate trading with pain. That's why after a while a novice trader may experience not just unpleasant emotions, but full-fledged panic attacks when looking at charts.
Moreover, all these thoughts and experiences arise on an unconscious level, and you cannot even understand what is happening until someone explains to you what is happening, or you yourself finally make the connection between one and the other. Unfortunately, this process can take years. It is very difficult to make this connection by yourself. When understanding comes, it may be too late. No, there will be no tragedy, but you may be completely discouraged and disappointed in your abilities.
Example
As an example, we can take the situation with one trader I know. He had such strong internal anxiety about his abilities that he could not start trading. At the same time, he was acting according to the same scheme. He opened a trading account, deposited money to it, then closed it and withdrew funds. He explained that he did not like the trading conditions that this particular account offered. broker.
When I asked him why he was satisfied with the conditions when he opened the account, he referred to his inattention and said that he had not studied everything in enough detail. Thus, on the one hand he was creating the illusion that he was ready to trade, and on the other hand his brain was simply building a strategy to avoid pain. He didn't understand why he was acting this way until he overcame his fear and was able to analyze his behavior.
This is very similar to the behavior of people who have suffered psychological trauma in the past and avoid consciously or subconsciously taking actions that could potentially lead to a repetition of the negative experience.
Gaining new experiences
I have very often encountered traders who have a subconscious fear of the market. The best, and perhaps the only, way to deal with this problem is take action. It is necessary to reprogram your brain and build new cause-and-effect relationships. In order to do this, you must fundamentally change your attitude toward the market.
The market is not an area of danger. No one and nothing is threatening you in the marketplace. In fact, the market is completely neutral, and it doesn't care at all about what you do or how you react to it. It has no ulterior motives or plans against you personally. Everything you attribute to it exists only in your imagination.
You can get used to the market gradually. Start trading with the smallest volumes. This is how you train your brain not to be afraid and not to feel a lot of pain when you lose. Little by little, this is how you begin to trade without much risk. Your mind will begin to react to the market neutrally, not perceiving it as an aggressive environment. You can always increase the volume of the position. It is much easier to do this than to learn how to trade steadily.
Psychologically speaking, for some people the loss of money can be extremely painful, even traumatic. These experiences become similar to post-traumatic stress disorder. The only way to deal with this is to gradually retrain the brain. Such a method is called exposure therapy.
It has proven to be excellent when working with combatants or with various phobias, such as a fear of spiders. For some people, the loss of a large sum of money or a "sunk" deposit can be as traumatic an event as a physical trauma. Gradual exposure to exposure therapy will help such people return to trading.
People are made to lose money
Another difficult psychological problem with which I often have to work is based on simple principles of human nature. All of us, from birth, are brought up according to very clear schemes. When we do something right, we are encouraged; when we are wrong, we are punished. From early childhood, at school, university and work. The pattern does not change. It is natural and understandable to us.
This scheme is great for helping us socialize in society, but it doesn't work at all in the marketplace. It doesn't work here. If you've done everything correctly, that is, according to your trading system and strategy, but the market has gone against the position, your mind is confused. It forces you to hold a losing position in the hope that the market will come back. After all, you've done everything right. So, you deserve to be rewarded and you just have to wait for it, and it will come. That's how it's always been.
If the price does come back, then it becomes obvious to the trader that he made the right decision, and therefore he is a good trader. And vice versa, being in a winning position, many traders quickly fix profits to feel the correctness of their decision and get rewarded.
In both cases, the emphasis is on doing the right thing or wanting to be right. Unfortunately, trading has nothing to do with being right. Most professional traders are right in their evaluations of less than 50% cases. Profitable trading is based on the ability to quickly liquidate unprofitable trades while keeping those that will make a profit.
But in order to learn how to do this, you have to have a very malleable mind. Capable of quickly adapting to changes in market conditions. And this plasticity of thinking can and should be learned. Self-rightness is the last thing professional traders worry about.
Being right and making money in the marketplace are not related.
The two problems discussed in this article are among the major psychological problems Beginning traders. In working on them, first of all, you have to realize and internally accept their existence. Sometimes just solving these two problems is enough to start earning by trading. That's what I sincerely wish you!
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