About Pipsychology

Pipsychology Author If you can't keep your emotions in check when trading, you will lose money. Lots of it. Pipsychology was created to help minimize this from happening to you. The most significant action that you can do to improve trading profits is to work on yourself. Really knowing yourself and how you think can give you an edge that others in the market don't have. My goal is to share practical advice to improve your forex psychology without boring you to death. Hopefully you can develop the mental edge you need to become the best trader you can be.

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November 2009

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Forcing Trades

I was watching the Lakers play the other night on the tube. While I'm a big fan of Kobe Bryant, I was getting frustrated at him during the game because he seemed to, at least in my opinion, force too many shots. His teammate would pass him the ball, four defenders would run over and smother him, essentially giving him a .01% chance of scoring, but did he decide to pass the ball to an open man?

Eight times out of ten, that would be a negative. He loves to be in his "I'll score and not look for anyone else" mode. Kobe believes he always has a shot whether it's one guy defending him or five, whether he's dislocated his right shoulder, or broke his left foot. He will still shoot the ball and think he can still make it.

The scary thing is he probably could. I wouldn't bet against him. He's the greatest.

But that's not the point.

The point is because he forces so many shots when he could easily pass the ball to a teammate who is open for a shot that has a higher probability of going in, the Lakers lose.

You will get a similar outcome if you force your trades. I've learned the hard way not to execute trades just because I'm bored and there's nothing to do. The market doesn't always have a trade available so sometimes the best thing to do is the same thing Kobe should do...pass it up!

As a trader, what you should do is absolutely NOTHING! Be patient. The best action at times is no action at all.

What happens when Kobe forces a shot? He usually causes a turnover where the opposing teams rebounds the missed shot and scores on the other end. What does Kobe do after this happens? He gets the ball and tries to force another shot.

It's the same when trading. What happens when you force a trade? You lose and you force again and then lose again.

The key to becoming a successful trader is knowing when to stop yourself. You must know how and when to stop trading and stay out of the market. It's tough to stop but it's crucial to stop and walk away when the trades aren't going your way. You don't want a couple losing trades to turn into a losing streak like the Lakers seem to regularly be in.

If you can't stop trading, you will eventually stop...when your account runs out of money.

Unfortunately, it's not as simple a solution for Kobe. I doubt he'll quit forcing shots. It's a good thing they have Andrew Bynum, Lamar Odom and Pao Gasol to grab offensive rebounds.

Comments (3)

This is something I need to work on, sometimes its so tempting to sit down and trade when theres nothing to trede
I had the same problem yesterday. I was jumping into trades and not following my trading plan
A handy trick I've found when overly tempted to enter impulsively is this: 1.) Figure where I'd place my stop 2.) Enter at that price instead... This ensures I enter at a premium (short), or a discount (long) to the current market price. Also, now I'm trading against those that were less disciplined than myself and getting filled where they're getting booted. Nothing's guaranteed, but it sure increases probability of success.

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