Forex Trading Psychology | 4 ways I sabotaged my currency trading
Trading psychology is so important
Hello Everyone! I want to share with you some of my greatest follies in currency trading (Thus far at least!) through my years of clicking away. Based on my experience, trading psychology is so important. And just for your information, it has been three years since I attended my TerraSeeds Tflow® Forex course.
I work hard and I trade and invest hard
For those who have yet to meet Dr Evil, here is a quick snapshot. I am a trained medical doctor who locums at a clinic in the day. In the evenings, I currently undertake manual labour at a metals recycling factory. In the nights, (weather permitting of course) I perform my role as an Internationally-Certified Tennis Instructor. I run the online and global business for the Malaysian fashion label Monica Quen. In between, I trade currency and stocks. Oh in case you wonder, I do sleep :)
Over the years of trading and investing, I had my share of ups and downs. You can say that my trading psychology took a roller-coaster ride. I have made money from Forex, Bonds, Stocks, and I have also lost money in Forex, Bonds and Stocks. Fortunately, I remain in the game till this day because earnings have triumphed over losses.
4 things I did to sabotage my currency trading
From my initial winnings when I recovered my course fees from the market in 11 days to doubting if I could ever trade forex again and back again, it has been a huge cycle. Looking back, these 4 are recurring themes whenever my trading starts going downhill:
1. No regard for position sizing – Here is what I did in a little ditty.
2. Lack of focus – I promised myself that I would only trade on the hourly chart and I would take profit once I reach the first target price. Did that for a while but soon I was looking at M5, M15, H1, H4, D1 all at the same time! I did this with 5 currency pairs. Then there were 10, then 15, then 20 charts! Major currency pairs, minors, then exotic ones followed by commodities, indices, almost everything.
3. Lack of risk discipline – When I got stopped out, I added positions to average down my entry price, re-entering the same trade the next minute I got stopped out, changing direction to trade the other way and sometimes changing again.
4. Over-trading – I gave myself 2 hours of trade-time per day (Mondays to Fridays of course!) – I began to trade during my lunch hour, dinner time, through the night, and I was even keying/editing trades during the weekend!
Trading is a battle against one’s own psychology
Only after currency trading did I get to know myself much better. It took discipline to avoid the mistakes I make. Whenever I operated according to rules, my bottomline did get better. It takes time but it must be done. In the meantime, here is a Doctor’s Checklist from me:
- Trading gives us a good insight to how we run our lives…
- How physically/ mentally/ emotionally disciplined are we?
- How convicted are we to finish what we started on?
- How strong are our convictions? Or do we fall prey to hear-say?
- How easily/ soon do we give up?
- When will the self-doubt and self-beating end?
Full time Medical Doctor, Certified Professional Tennis Coach, Partner of Prince Luzzy LLP.