My Journey In Technical Analysis

XRAY27

Well-Known Member
4. Mental Toughness
You could also think of this as being thick-skinned. The market will constantly throw losing trades at you, and you need to bounce back. If you feel discouraged every time you lose a trade, or your strategy fails to produce the result you expect, your life will be miserable. Losing trades are constant; most successful day traders will have losing trades every day.

The difference between a successful trader and an unsuccessful one is that most successful traders win slightly more on their winners than they lose on their losers and typically win slightly more often than they lose. If your wins are much bigger than your losses, you may only need to win 30% or 40% of your trades.

Other traders may win 60% or 70% of their trades, but their wins may be equivalent to, or only slightly larger than, their losses. In either case, losing trades happen. Daily profits can still occur despite those losses, but only if the losing trades don't discourage you. If losing trades cause you to lose focus, you're more likely to miss (or skip) the next trade, which could be a winner.

Losing streaks also occur. Traders must stay focused and rational through a losing streak and not let the loss of capital affect their judgment—which will make matters worse. It requires mental toughness to stay focused on executing your trading plan and realize when the market isn't providing you with good opportunities for your strategy.

A trader must withstand a continual barrage of punches from the market. Losses are a fact of trading, but it's how we act after some tough trades that make all the difference. After taking losses, move on, and continue following your trading plan. If you are following your plan, but you just keep losing, market conditions likely aren't right for your strategy. In that case, walk away until they are. Sometimes being mentally tough means making the hard choice of not trading.

5. Independence
Initially, you'll likely get some help with your trading, whether it's from reading articles or books, watching trading videos, or receiving mentoring. Ultimately, though, it's you who will place your trades and determine your success.

Eventually, traders must develop a sense of independence, no longer relying on others. Most traders choose this path because they find it to be the most profitable. Once you have a trading method that works for you, you don't want other people's opinions. You do what works for you, and that is that.

Other traders must learn independence the hard way. They bounce from mentor to mentor, or trading book to trading book, always feeling like they are missing something. Or the service they subscribe to shuts down, and now they have no idea how to trade because they relied too heavily on someone else. If you develop independence, taking responsibility early on for your education, profits, and losses, you won't have these problems down the road.

Independence isn't taking on the world alone. Get help whenever you need it. Independence is just developing a trading style that works for you (whether someone else helps you or not). Independence is about working to build a personal toolbox, so you can remedy your trading, instead of relying on others (who may not always be there when you need them).

If you are just beginning your trading journey, start developing your independence now. Take the information others to offer, analyze it for yourself, make it your own, and master it. That way, you don't need to rely on them anymore.

6. Forward-Thinking Trading
Day traders can't be stuck in the past. While day traders use data from the past to help them make trading decisions, they must be able to apply that knowledge in real-time. Like a chess master, traders are always planning their next moves, calculating what they will do based on what their opponent (the market) does.

As discussed in the adaptability section, the markets are not static. We can't say we will buy at a certain price in five minutes, and then ignore all the price information that occurs during those five minutes. Day traders are constantly planning their next action, based on new price information they receive every second. They consider different scenarios that could play out and then plan out how they will implement their trading plan (entries, stop loss, targets, trade management, position size) under each of those various conditions.

Talk yourself through what needs to happen for you to enter a trade. This self-talk will keep you focused on the price action, as well as reiterate your strategy within your mind. As a trade approaches, consider what could happen while you are in the trade (doesn't move, moves a lot or little, moves quickly for or against you, moves slowly for or against you), and how that will affect your psychology and trade.

Go through what you will do in each scenario so that you can quickly navigate the changing market conditions. That is forward-thinking, and with practice, it can become almost instantaneous.

Forward-thinking knows what you will do, no matter what happens. It allows you to act decisively, without hesitation. Have a defined set of protocols to use in rare but inevitable events, like losing your quote feed, for example. Forward-thinking takes practice and consumes a lot of mental energy at first, but the more you practice forward-thinking, the quicker and easier it becomes.

The Final Word on Day Trading Traits
Most day traders aren't born with all these traits, rather they possess a few and must work rigorously on the others. You can learn these traits, which is a positive thing because it means successful day trading is determined by you and not necessarily your genes. Some of us are prone to certain weaknesses, but we can offset these with strengths, which can help us mitigate the damage of our weaker qualities.

Take a personal inventory of what qualities you need to work on and what your strengths are. Ideally, take this inventory based on trading experience, since trading tends to expose vulnerabilities and strengths we didn't know we had. The personal inventory requires looking at your discipline, patience, adaptability, mental-toughness, independence, and forward-thinking

Source:https://www.thebalance.com/day-trader-traits-4025905
 

XRAY27

Well-Known Member
4 Ways Your Mind Is Tricking You Into Being a Losing Trader

BY
CORY MITCHELL
Updated November 20, 2019
Don't think your psychology plays a role in your trading? Think again. Every day, we do thousands of things we don't consciously control. This is a good thing most of the time, as we'd never get anything done if we had to actually think about taking each breath, walking, or moving our facial muscles to smile.
But the same auto-pilot programs that help us navigate the outside world harm us when it comes to trading. We can't turn these programs off, but we can become aware of them and take steps to re-program ourselves.
Availability Bias
What you most readily recollect isn't necessarily true, but your mind tends to think it is.
Research and thorough digging can usually route out inaccurate common knowledge, so all traders are advised to personally check facts and figures before proceeding to use such information.
What harms even more traders, though, are their own experiences. Say you read about a strategy online. Everything looks good, and so you start to use it. You lose five trades in a row. Your own experience now tells you this strategy is garbage. But is it? It could be, but you don't actually know. Your mind has just tricked you into assuming it is.
The problem with personal experience is that it is the most readily available data source, yet almost always relies on small amounts of data. Be aware of small sample sizes. You don't know whether something works until you test it thoroughly.
For a strategy, that means trading it for a couple of months or taking at least 100 trades. At least with 100 trades, you have some idea of how it actually performs.
Loss Aversion
Our mind views a loss as more significant than an equivalent gain. We don't like to lose what we already have.
When we have a losing trade, we may try to avoid actually realizing that loss, which means we open ourselves up to an even bigger one.
We rationalize it by saying the trade will come back in our favor, or we will give it a bit more room (expanding stop loss), or say we are right and the market is wrong. So we hold the trade out of spite for the market being so stupid.
All these reasons stem from not taking a loss when you should. Don't fear losses—even with lots of them, you can still be profitable. Instead, plan your exits before trading and stick to your plan.
Lottery Syndrome
This involves seeking out big payoffs, but typically with no real well-defined strategy. Gambles are taken. Money is thrown at the market, hoping to hit a big score, but losses just keep adding up before payday comes.
The error here is related to availability bias. Because it is very easy to find a price move in hindsight from which you could have profited handsomely, it makes it appear easy to pick big winners. They seem to be everywhere!
It's easy to forget that there are thousands of potential assets to trade. And you not only need to find the right one, you need to trade it at exactly the right time.
If you do happen to get into a big price swing, it also needs to be traded well. Most people have no idea how to handle this situation when it develops. They take a small profit, only to watch as the price continues to move favorably without them, or they hang on too long, giving everything back.
Trading with the hope of hitting it big on a few trades is a fool's errand. Practice trading common market tendencies. It's in those moves that money resides, not in the elusive unicorn trade.
Knowing Vs. Doing
Our minds often convince us that if we know something, we could do it if we wanted.
Take losing weight. Most people know that improving their diet and more exercise will help them lose weight. Yet rather than follow this, many people seek out new information instead—the latest fad.
Seeking information is often just a rationalization for not doing work that needs to be done. It feels productive, but it isn't.
Similarly, there are basic guidelines traders should follow to succeed, but which often go ignored. "I already know this," some may say. Yes, but have you done it?
These guidelines include making a trading plan, focusing on only one or two strategies, not deviating from the trading plan (so you can see what works and what doesn't), and trading in a demo account until the plan proves consistently profitable over many trades.
People read these but become desensitized to the ideas. They mistake or rationalize knowing a concept for actually following through and doing it.
Instead of following these core concepts, they go on another information binge. But more information is useless if you don't apply it. Eventually, you need to stop searching and start applying what you know.
 

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