Psychology

Losing streaks aren’t uncommon in the trading world. Every trader at one point or another hits a losing streak. Trust me, even the most consistently profitable pros have their slumps.

I would say that trading is arguably one of, if not the most, difficult career paths one could choose. It involves working under conditions that are full of uncertainties. This means that traders rely on probabilities to come out successful, which could result in unexpected outcomes. You may be swimming in pips one day and be down in the dumps the next!

Ever heard of the line, “Try and try until you succeed”? I’m gonna let you in on a little secret. Sometimes it doesn’t apply to trading.

Knowing that a lot of you part-timers are out there, we full-time traders should give a helping hand when we can, right? We know what it’s like to be in your shoes, so here’s a few tips to get you through the challenges of part-time trading!

Suppose you’ve just experienced a huge losing streak. What are you likely to do next? Are you the type of trader that becomes so depressed that you are unable to take clear trading signals, or are you the type of trader that’s able to easily shrug it off?

By now, I sure hope you have enough trade journal entries to help you recognize recurring patterns in your trading behavior. For those of you who think that you have more than one bad trading habits, don’t fret just yet. I wrote this article just for you!

What do Michael Jordan, Tiger Woods, and Justin Bieber have in common? They all excel in their respective fields and are always looking for ways to improve their skills. They expose themselves to different environments to try out different things to see what works best for them. In other words, they embrace change.

In life we usually develop repetitive behavior: we wash our faces when we wake up, we eat lunch around noon, we wash our hands after meals, and go to sleep at a specific time. We develop daily routines that help us get through the day.

Trading is a craft that demands a certain level of discipline. Not only do you have to stick to a set of trading rules, you also have to be able to keep your eyes on the prize at all times. This is what seasoned traders refer to as self-discipline.

S-T-R-E-S-S. Who doesn’t hate it? I know I did… until I learned that stress isn’t what the market or my trade does to us, stress is how we react to those external events or actions. Whether it’s good or bad is all up to us…

Still sitting on the fence when it comes to picking between a 100% mechanical system or a purely discretionary trading style? Well, why not try both? It’s called “Hybrid Trading” and maybe it could work for you!

When keeping a journal, it ain’t enough to just scribble your trade ideas and record the results of those trades. You also need to know what to do with the data that you have and how to interpret it to help you improve as a trader.

Adding positions to an open trade is an advanced trading technique that, although potentially risky if not done correctly, can magnify profits exponentially. But just like every other aspect of trading, this technique can have a strong psychological effect that may hinder your trading performance.

I’m willing to bet all my Apple-manufactured possessions (including my future iPad2) that at least once in your trading career, you’ve felt the need to take more trades even though you’ve already incurred more than your usual daily losses.

It isn’t always easy being a noob. Whether it’s in taking on a new job, starting your own business, or trying out a different sport, the degree of uncertainty in a new and unfamiliar undertaking can sometimes be overwhelming and push you to commit mistakes.

At its very core, positive thinking is simply being optimistic about things. It is the tendency to take a favorable stance on things, hoping for the best possible outcome in any situation.

In the most basic sense, fear is defined as the emotional response to a perceived threat. When someone is faced with danger of any kind, fear kicks in, which, in turn, elicits a response.

Now that a new year has begun, it’s time to put away your wish list for Santa and start on your to-do list for 2011. A handful of you probably have “Make a truckload of pips”, or “Bounce back from my losses” as your goals. But are these enough?

Happy Holidays! I thought I’d throw on a trading psychology article for your extended holiday reading pleasure. Taking a hit in the trading account is never easy, but it’s good thing your good ol’ Dr. Pipslow is here to give you tips on taking a chill pill with losses.

Sure, having a mechanical system can eliminate some of the emotions involved in trading, but the difficulties lie in trusting the indicators and sticking to your set of rules no matter what. Picking the type of mechanical system that’s best suited to your own personality could make it easier.