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The 10 Signs You Might Have a Fear of Failure

  
  Education
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The following are not official diagnostics but if you feel these criteria are very characteristic of you (‘very’ being an important distinguishing marker as we all feel these things to some extent), you might want to examine this issue further, either by doing more reading about it or talking to a mental health professional.

1. Failing makes you worry about what other people think about you.

2. Failing makes you worry about your ability to pursue the future you desire.

3. Failing makes you worry that people will lose interest in you.

4. Failing makes you worry about how smart or capable you are.

5. Failing makes you worry about disappointing people whose opinion you value.

6. You tend to tell people beforehand that you don’t expect to succeed in order to lower their expectations.

7. Once you fail at something you have trouble imagining what you could have done differently to succeed.

8. You often get last minute headaches, stomachaches, or other physical symptoms that prevent you from completing your preparation.

9. You often get distracted by tasks that prevent you from completing your preparation that in hindsight were not as urgent as they seemed at the time.

10. You tend to procrastinate and ‘run out of time’ to complete you preparation adequately 

A Psychological Checklist for Traders

  
Analysis, Education
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Here is a checklist that might be useful for self-evaluation:
1) Have you experienced one or more recent large losses in markets that shook you emotionally?
2) Have you experienced a recent painful loss in your personal life that has left you feeling more vulnerable in your finances and/or your personal sense of security?
3) Have you experienced a recent threat to personal safety that shook you emotionally, such as a violent attack or a serious accident?
4) Do you find yourself emotionally “overreacting” to what should be normal trading stresses and losses? Are you experiencing significant anxiety, frustration, anger, or depressed feelings when trades don’t work out?
5) Do you find yourself “overreacting” in your trading behaviors during what should be times of normal stress? Are you freezing up and not acting on your ideas or impulsively lurching into trades after losing periods in markets?
6) Do you look back on your trading and feel confusion, shame, or puzzlement over actions that you took that run completely contrary to your plans for the day?
7) Have you tried to reduce your emotional and/or behavioral reactivity to markets, only to see the same destructive patterns return during times of stress? (more…)

What As A Trader You can Control and What You Can not ?

  
  Education
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We can control:
How much we risk per trade.
How big a position size we take.
What time frame we trade.
What market we trade.
Our style of trading.
Whether we stick with our trading plan or go off of it.
If we honor our stop losses and trailing stops.
How we react to a winning or losing trade.

 We can not control:

Whip saws when the trend reverses on us.
Gaps in opening prices both up and down.
Headline risk.
Natural disasters.
Whether a trend continues or reverses the moment we open a position.
Whether any individual trade wins or loses.
How many winning or losing trades we have in a row.
 The battle for your long term trading success is won or loss in your head. The decision to whether keep going after losing money or to quit is made at the point of maximum frustration with the markets. To keep going you have to keep positive, and keep trading. Knowing the difference between you making a mistake or the market simple not matching your style will go a long way in keeping down your stress and negative self talk.

Common Mistakes for losing Money

  
  Education
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Trading is an evolutionary process. Nobody can wake up being a Master Trader. Unfortunately there is no book or magic trick that can turn you into the highly profitable trader. Although the belief and the hope to obtain those skills instantly is still in place.

The statistics say that only the ones with the self-dedication and discipline succeed in this business.

The most common mistakes leading to losses:

-Trading against the market;

-No trade potential;

-No serious buyers or sellers in the stock;

-Wide stop-loss;

-Fear of loss.

Traders should stay calm during the trading, this helps to observe and analyze the situation on the market much better, see some small details and make a competent decision.

Panic, stress or fear, always lead to mistakes.

One of the serious problems in trading is rush and mania to be present on the market all the times, opening positions when there is no potential for a trade or where the market is either flat or going the other direction.

Tips to resolve the mistakes:

1. Always look at the market. If there is no clear picture of the market’s behavior, don’t risk your money.

2. Always look at a trade potential. If you look at the daily charts and see that the daily bars are just 20 cents long, then look for other stocks, where the potential is at least 40 cents.

3. Always look either at the Open Book or Market Maker window and Tape. If you don’t see any order flow on the Tape or the order sizes are small (less than a 1000 shares), then don’t enter the trade.

4. Always know where you are going to place you stop-loss order. If it is more than 10 cents away from your entry point, don’t enter the trade.

5. If you’re just not sure, or if the situation is uncertain, don’t enter the trade.

Following these tips requires some work and changes to our habits. It is not easy at all! We always hear sayings that the trader should be disciplined. What it actually means is changing your old habits and training yourself to have new ones. It is not comfortable, but it brings positive results, which will be noticeable on your month-end P/L report.

Good Points on Trading psychology

  
  Education
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  • Stop trying to outsmart the market. NO ONE knows exactly where it will go.
  • With each decision you make comes stress:Forget about the “whys’ of the market. After all is said and done, the reasons will be known.FORU
    • The more decisions you make, the more likely you are to be wrong.
    • The more decisions you are used to making, the more pressure you’ll put on yourself to make even more decisions.
    • No one can be that right.
  • Don’t apply logic. Markets move on emotions — period!
  • Plan your trade and trade your plan.
  • Reduce the amount of decisions you make.
  • Make decisions and live with them (also a life lesson!).
    • Good decisions come from experience.
    • Experience comes from bad decisions.

Step Outside Of Your Comfort Zone

  
  Education
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Each of us has a comfort zone. That area where everything seems to work like we desire, stress is almost non-existent and we can basically move forward with our eyes closed and not worry.

This might sound like the best way to trade, however, if we never strive to grow, to adjust, to refine to get better, we will actually fade away and regress instead of remaining comfortable.

It is a challenge to try new things because once we step outside of the area where we know 100% what we are doing, we will experience nervousness, mistakes, criticism, stress and more.

There is also a great amount of success awaiting those who will step forward and grow. Once we move outside of our comfort zone and enhance our trading skills, increase our trading, add to our strategies, etc. we will soon grow into these new skills and environments and in a very short amount of time, this will be our new comfort zone which will be the reward for moving forward instead of sitting still.

Remember… everything is difficult before it becomes easy.

How do *your* coping efforts work for you?

  
  Education
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Take a look at how well you trade after a position has gone against you. Do you trade better after a drawdown or worse?

How about after you have a few winning trades, days, or weeks in a row? Do you trade better or worse? Breaking down your performance as a function of recent performance will tell you a great deal about how effective you are in coping with risk and reward.

The other excellent indicator of whether your coping is working for you is your emotional experience during trading. If you find that anxiety, overconfidence, frustration, and stress are pushing you into poor decisions, you know that you’re not coping well with the uncertainties of markets.

Finally, it is helpful to identify the sequences of coping behaviors that you utilize when you’re making good decisions and the sequences when you’re trading poorly. Knowing how your individual coping responses come together to form coping strategies can help you cultivate your coping strengths.

Tracking how you deal with challenges when you are at your most effective enables you to create a mental model of that coping that you can call upon during periods of high stress. We cannot avoid the stresses of trading, but those do not have to generate distress and biased decisions.

How bear markets affect our decision making

  
  Education
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READ THIS NOWAs of this Friday, the S&P 500 has gone 980 days without a 10% decline, according to Birinyi Associates, the fifth-longest such stretch on record. This past week’s nervousness, set off by the insurgency in Iraq and the surprise defeat of U.S. Rep. Eric Cantor, is thus the perfect pretext for investors to think about what they will do when the market takes a serious beating.

For, sooner or later, it surely will—and those investors who have honestly prepared for it will stand the best chance of surviving unscathed. In a downturn, you won’t be the same investor that you are now—unless you rely on rules and procedures, rather than willpower alone, to regulate your behavior.

New research shows that the kind of stress brought on by a collapsing stock market fundamentally changes how people make financial decisions. (more…)

How do *your* coping efforts work for you?

  
  Education
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effortTake a look at how well you trade after a position has gone against you. Do you trade better after a drawdown or worse?

How about after you have a few winning trades, days, or weeks in a row? Do you trade better or worse? Breaking down your performance as a function of recent performance will tell you a great deal about how effective you are in coping with risk and reward.

The other excellent indicator of whether your coping is working for you is your emotional experience during trading. If you find that anxiety, overconfidence, frustration, and stress are pushing you into poor decisions, you know that you’re not coping well with the uncertainties of markets.

Finally, it is helpful to identify the sequences of coping behaviors that you utilize when you’re making good decisions and the sequences when you’re trading poorly. Knowing how your individual coping responses come together to form coping strategies can help you cultivate your coping strengths.

Tracking how you deal with challenges when you are at your most effective enables you to create a mental model of that coping that you can call upon during periods of high stress. We cannot avoid the stresses of trading, but those do not have to generate distress and biased decisions.

Wisdom from Market Wizards

  
  Education
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Tony Saliba

“How do you lose money? It is either bad day trading or a losing position. If it’s a bad position that is the problem, then you should just get out of it.”

“Clear thinking, ability to stay focused, and extreme discipline. Discipline is number one: Take a theory and stick with it. But you also have to be open-minded enough to switch tracks if you feel that your theory has been proven wrong. You have to be able to say, “My method worked for this type of market, but we are not in that type of market anymore.”

“Until recently, I set goals on a monetary level. First, I wanted to become a millionaire before I was thirty. I did it before I was twenty-five. Then I decided I wanted to make so much a year, and I did that. Originally, the goals were all numbers, but the numbers are’t so important anymore. Now, I want to do some things that are not only profitable, but will also be fun.”

Dr Van K. Tharp

“The composite profile of a losing trader would be someone who is highly stressed and has little protection from stress, has a negative outlook on life and expects the worst, has a lot of conflict in his/her personality, and blames others when things go wrong. Such a person would not have a set of rules to guide their behaviour and would be more likely to be a crowd follower. In addition, losing traders tend to be disorganized and impatient. Thet want action now. Most losing traders are not as bad as the composite profile suggest. They just have part of the losing profile.” (more…)

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