Control Your Inner Trader: Trading Psychology Made Easy, #1

The Challenge of Trading

MOST BOOKS ABOUT TRADING psychology are very complex:  this book is not one of them. Most books about trading psychology describe the difficulties faced by traders but fall short of describing processes to deal with those problems; again, this book is not one of those type of books.

This book outlines the challenges traders face with their psychology and then outlines simple strategies to deal with each of those challenges. 

The reason I can cover these in a book when I don’t know you personally is that the challenges of trading tend to evoke the same behaviors.

Let me list those behaviors now so you can see what I mean.

Problem Behaviors in Trading

ENTERING A TRADE WHEN there is no trade to take.

Frequently missing trades that you should have taken.

Entering trades too late.

Entering trades too early.

Revenge trading, where you lose control and start trying to make back losses.

Risking too much on a trade.

Risking too little on a trade.

Trading outside strategy.

Trading without a stop loss.

Moving a stop loss further away

Trading with too tight a stop loss.

Taking profits too early.

Taking profits too late.

Trading too many strategies and mixing them up.

Trading too many time frames and mixing them up

Trading too many pairs.

Being too influenced by other traders

Buying trading course after trading course

Searching for the Holy Grail trading system

Frozen Trigger finger (fear of entering trades)

All the above issues are symptoms of a wrong trading mind set, so why does that happen and what can we do about it?

Let me start with the foundational attitude needed to become a ‘Pro’ trader.  Notice I said ‘Pro’ trader, I didn’t say winning trader.  There is a profound difference in attitude between a trader working at increasing professionalism and a trader who wants to be a ‘winning’ trader.  So why should you work at being a pro trader?

Turning Pro

In his book ‘The War of Art’ a book which I highly recommend you buy, Stephen Pressfield describes the difference between an amateur and a professional.  Firstly, a professional is not defined by the result of their behaviour but by their seriousness about the process.  They must overcome their inner resistance which is their worst enemy.

‘Turning Pro’ as defined in his excellent book is a decision to commit no matter what the result.  To accept that things will be hard and miserable and boring, but your job is to turn up and do your ‘work’ to the best of your ability.

Pressfield defines ‘work’ as any activity that improves your life over the long term but in the short term is uncomfortable.  However, I think his analogy is more applicable to a creative act which is his writing but could easily describe the act of trading.  Throughout this book I will describe the desired trading mentality as ‘turning pro’.

Trading is the ultimate creative act, our trading systems whether they are our own design or not, require us to make a judgement that we know is ultimately subjective.  We decide to risk money on our ideas, and we have to decide on when to get in and out of the markets.   This requires an independent mind set and a commitment to excellence that most people never make. In other words, you have to treat your creative act like a profession.  But unlike most professions, you make the rules.  You turn pro when you abide by the rules you have made, even when you don’t yet know if they are valid.

The problem is that many people get into trading as a way of obtaining freedom from a job or profession.  They don’t want more professionalism, they want less.  They don’t want