Trading psychology

Journaling, as we have seen, can be a powerful tool in your trading arsenal. Learning the psychology behind your trades can be just as enlightening as the more technical side of trading when it comes to turning a profit. For example, revealing your emotions in the moments before committing to a specific trade can give you a good look at why a specific type of trade just isn’t working out for you. If you tend to chase losing trades, this can be because you just can’t bear the thought of losing. Unfortunately, chasing trades is often a surefire way to continue to make losing trades. These trades tend to be less researched, and thus less effective. Journaling can make this fact very obvious.

Trading psychology, it has been stated, can be just as important as good trading technique. In poker, this phenomenon is known as “tilt.” Tilt occurs when emotion, of any kind, clouds or influences your decision making. In professional poker, it is very apparent that tilt can have a disastrous affect on play. So why it is not made more obvious in the high stakes world of trading that emotions can negatively impact your bottom line is a mystery. In order to be a Disciplined trader, you need to put aside the emotional aspect of your trades and focus solely on the facts. If you cannot do this, or have “buyer’s remorse” of any sort after you commit to a trade, the sad truth is that you are probably trading at limits above your comfort zone. A simple way to fix this type of “tilt” is to make smaller trades.

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