What makes you miss a winning trade ?

 So we will talk about the things which have been holding you back in next few blogs coming in next months taking each specific problem at one time  - 

1. Cut winning trades short even though you know your trade setup is solid.
2. Failed to pull the trigger on a perfectly good trade because of fear of loss.
3. Let losing trades run hoping for a return to breakeven.
4. Added to a losing position in the hope that the market would turn around.
5. Made profits in the morning but gave them back in the afternoon.
6. Became more aggressive after losing money.
7. Took unplanned trades when the market suddenly moved.
8. Stopped trading or reduced position size after a loss.
9. Traded greater position size than prudent money management practice would advise
10. Held trades longer than they should have been held looking for a “home run.”
11. Failed to take a perfectly sound setup because the last two trades were losers.
12. After a day of big profits, your confidence soared and your trading suffered.
13. Consistently made small money but have been unable to elevate your trading performance.

These trading difficulties hurt. They not only hurt your account, but they also cause mental and emotional suffering. No other profession tests your psychology as does trading. These difficulties and unskilled trading behaviors arise from the underlying mental and emotional challenges traders face. Most likely you have made considerable eff ort to overcome these difficulties but the methods you tried have probably failed you. After a while, you may question whether anything will ever work, or worse, you may question your suitability for trading.

So Today in this Blog we will cover the first 

Personal experience and the experience of working and looking with other traders taught me that the conventional trading wisdom of controlling and eliminating one’s emotions from trading does not work till the time you have been doing it for part of your life in normal circumstances too. 

Quite the contrary, the more we struggle to try and control our feelings, the more our attention is distracted away from our trading, and the more erratic our trading becomes. Not only does the conventional wisdom not work, it is wrong. Countless traders have traded poorly and failed to learn the trading skills following conventional wisdom because trying to get rid of our thoughts and feelings in the usual problem solving way actually is the cause of our problems. We become stuck in a rigid and intractable mental pattern and our trading suffers.

So you sit watching the nifty50 all morning , waiting patiently for a trade. Finally you saw one setup - looking at the indicators and price action you qualify the trade, Everything is meeting your criteria.

Price has turned bearish and all indicators signaling short. "There's no flaw in the setup," you thought.

The trade started moving immediately. market moving down so nicely breaking a nearby support and then into clear ditch where no other support was located. the nifty is down for 50 points , But you are not on board. But you were not on the board.

You didn't take this trade , when discussed said : The same setup occurred yesterday. and you took it , but didn't work out. You had a loss. There was even a slight difference in favor of today's trade. 

One of the indicators did not confirm yesterday. Today’s setup was picture‐perfect. I kicked myself for not taking the trade. you don’t really understand why you didn’t take it. I wasn’t feeling any big emotions; you certainly weren’t fearful. I just thought that since yesterday’s trade failed, this one would, too. you were  wrong. Why didn’t you take the trade?” 

 

---------------  What failed you was your thinking, entering a natural mental blind spot  ( recency effect )

The recency effect is a cognitive bias where our mind weighs the latest information with greater importance than other data when making decisions.

At such times past outcomes weigh more heavy than the present " picture- perfect " criteria, leading to shunning the trade. 

Feelings and emotions are certainly important , you cant make make decisions without them. Strong emotions such as greed, anger, and especially fear can significantly influence trading and cause erratic trading behavior. However, emotions are not the only thing that can influence trading. Thoughts

and the way we think also play a significant role. Sometimes, thoughts ignite strong

emotions and thinking almost always amplifies them.

 

Our thinking can create mental blind spots that can shackle us, In fact, how we think and how we treat our thoughts are the most important aspects of trading psychology. 

Thinking is integral to being human. It is so much a part of us that we usually  don’t think much about thinking. If we pause for a moment and observe our thoughts, however, we begin to become aware of the activity of our mind. This is a fascinating study. We soon realize that we have a near‐constant, never‐ending stream of thoughts. The mind is tirelessly commenting and telling us things. Unless you practice, you will fi nd it impossible to quiet your mind and stop the fl ow of thoughts for all but a few seconds. Even with practice, quieting the mind for more than a few minutes before another thought involuntarily arises is elusive for most people. Two important characteristics of our minds thus emerge: thoughts are always with us and we do not have much control over them. This is essential data for traders.Because we have experienced our mind’s chatter every day for as long as we can remember, we are accustomed to it and rely on it heavily. We tend to accept whatever our mind tells us as an accurate reflection of reality. We rarely question or objectively evaluate our thoughts. Because thoughts are a natural part of us, accepting them seems natural, too, but in trading, this can be dangerous.

We will be looking at strong trader emotions in next blog - follow us for more . @wiseman trading | wisemantrading.blogspot.com

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