4/2 – Psychological Review for Tuesday’s session (4 trades)

WARNING – the material in this post may be difficult to follow – I have not tried to create logical in the flow of my thoughts here.  Remember that I am mainly writing this stuff for my own benefit, rather than for the benefit of the readers – so good luck in venturing through my brain and thought processes !!

Feb3 (Tuesday) trading session – 1W, 3L -1.15R charts are posted here

Key Points: Trading under pressure

  1. For each completed trade, who was in control? Was it the proficient trader inside me?  Or was it the destructive George?  What picture or image is evolving for both of these traders?
  2. How much of the trading session was spent “trading well”, and how much of the trading session was spent “trading badly”?
  3. How could I have increased the amount of impact that the proficient trader inside of me, had on the trading session?
  4. List and describe specific examples of good and bad trading from the day’s session.
  5. Why did I do the “bad trading”?  What, such as specific events, or patterns of thought, caused it?
  6. What other observations, in the context of Chapter1, can I make?

1. I showed good patience in entering the trade on each of the trades in terms of requiring completed candles and/or completed candle formation patterns.  This was something I improved from yesterday – so far so good.  So each one of the trade entries seemed to have the proficient Trader-George in charge.

In terms of management, I stuck to my rules and initial plans on all of the trades – for each trade I had selected targets either before, or shortly after entering the trade.  Some T1’s were more logical/apparent than others.  For the winning Cable trade I ended up resorting to using pivot lines.  And I did not let emotion or fear have the best of me in terms of moving the stops. I always gave price plenty of room to move and placed stops beneath lows/above highs of logical candles (good).  For now I am wanting to minimise the amount of SL management I undertake, in order to reduce the amount of potential anxiety and stress.  That’s what my strategy comprises – minimal position management.

However ‘Destructive George’ was in charge of the entry into the 2nd Cable trade.  At the time I was in a fairly significant loss (in R terms) on the long DAX position.  I did see a clear completed 123 pattern at the 1.51 key level of Cable.  However I did hear this voice telling me “Go on put on the trade.  You see the setup on the chart. Don’t be a wimp.  Put it on. Be a man.”  I think this should have been a good sign not to put on the trade.  It seemed I was wanting to try to make up for what looked to be a losing DAX trade.  Would this have influenced how I interpreted the chart?

Thus, in summary Proficient Trader 3 – Destructive Trader 1

I noticed that waiting for a clean breakout/pattern gave me more confidence in simply staying in the trades, and sticking to the original plans.  I had not doubt as to whether my entry was correct or not.

2. Although most of my actions seemed to constitute good trading – my thought patterns in the afternoon session – after coming back from lunch were not good.  In fact that space between 2.30pm and 4.30pm was terrible.  Once I had entered the DAX trade, and my thought patterns were quite negative, I was stressed and feeling under pressure – at this time I should stick to my original plans for the trade already open, and not enter more trades  If I am feeling like that, I am less likely to think straight and clear.  I am more likely to be swayed by my emotions in my trading decisions.  When feeling bad – regardless what that is caused by (currently most likely by losing trades) then halt action.

In summary, the morning session was mostly good.  The afternoon was mostly bad.

In neither session was I progressing with my planned DAX testing.

3.  How could I have increased the amount of impact that the proficient trader inside of me, had on the trading session?  Actually there is an easy (and great!) answer for that:  When starting to feel under pressure, then I need to reduce the amount of decisions.  The proficient trader is most in his element in calmer conditions, not when things feel out of control.  The destructive trader, ruled by emotions and greed and fear, will most be alive when things are stressful, when my body feels squeezed up – when worries are pressed on my head – when I am easily distracted by noises from my colleagues – when I feel tired and exhausted.

It is a well-known factor that athletes under stress can quickly falter depending on how they handle the stress – the best way for handling the stress is to (i) stay calm/relaxed [if possible!] (ii) to focus on your actions, not on the outcome (iii) to not equate self-image with the outcome (iv) to not

Searched for “performance under stress” and quickly found this superb and simple thread addressed to sports coaches.

In order to be able to be relaxed under pressure, the trader (or athlete) must expose himself to the stressful conditions as often as possible – so as to negate, or get used to, the situation – so that the pressure effectively quickly bounces of the trader.  The trader must also practice relaxation techniques away from the stressful situations.  All these approaches will feed and grow the proficient trader.  As the proficient trader grows stronger, the destructive will automatically play a less significant role.

Yesterday, once I was in the DAX and Cable trades I was starting to really feel the pressure and anxiety – this implies that I would be much more likely to crack.

The other, and much more general point, is that I assign a VERY VERY HUGE AMOUNT of significance to the outcome of my real trades – because I want to become a profitable trader, and have this fantasy that this will take care of me (and others – such as family, and potentially a partner) for decades to come.  Every profitable trade is a step in the direction of that fantasy.  Every losing trade is a step in the image of failure in life, of not achieving anything, of being useless.  I attach a huge amount of self-image/self-worth to the trading.  It’s the exact opposite of what I should be doing – so why am I doing that?

4. Bad trading – trading when feeling a lot of pressure – I was calm at the time of entering the first three trades.  however I was under a lot of pressure when I entered the second Cable trade.  Generally speaking, stress reduces performance.

Good trading – not sure.

5. What led to the bad trading?  Putting on another trade would give me a further chance of producing a profitable result and changing the result for the session.  And I attach a lot of importance to the session results  – to the live trading results (even to the testing results!).

6. Not completed.

I am trying to visualize how this all fits together – here’s an attempt for it:

Psychology Feb4

Other questions on my mind:

  • Why am I looking for continuous feedback on my trade?  Why do I care whether price is going up or down, when I am not going to let it influence my trade management in any case?
  • This morning I woke up with a feeling of fear – what if I have another losing trading session? What if I go on a massive losing streak like I have done in the past after winning 10R or more?  Why did I have these losing streaks? What impact will this fear have on my trading?  I decided to stay home for the first part of the morning and to think about this psychology matters – I think that was a good idea.  If I had just done as I had in the past – I would have gone to the office, probably put on more trades – under the influence of fear and worry, maybe lost more and make things worse.  Or I would have won and swept the feelings of worry and fear away, without understanding why they came to me to begin with.
  • How do I translate all of this thinking and these ideas, into action?
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One Response to 4/2 – Psychological Review for Tuesday’s session (4 trades)

  1. Pingback: April’15 Trading Psychology Wrap & Blue Print for this month! | George's FX trading blog

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