Advanced Trading Psychology

Beginner Questions Trading Psychology
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Psychology is overly emphasized in the trading industry, but unfortunately, even there, most people suffer from complete nonsense without understanding what and why it is needed.

On the one hand, we can say that the results of our trading directly depend on who we are, but on the other hand, with a quality approach to trading, psychology may be of secondary importance. Personally, I am a proponent of an approach where the main factor remains the trading strategy, and psychology, as an assistant, allows me to implement it.

Unfortunately for most traders, psychology does not solve the problem. It looks something like this: one trader tells another not to give in to emotions, that you must be disciplined, and so on, but we are human beings and it is natural for us to have emotions. You cannot break the evolutionary process of brain formation and biochemistry. Discipline with a bad trading strategy is a sure way to lose your deposit.

I propose a slightly different approach to psychology, which I will discuss further.

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The first thing you need to understand is that your body is interconnected with your mind. This means that if you harm your body by drinking alcohol, smoking cigarettes, taking illegal substances, consuming too much sugar, and so on, then most likely the part of your brain responsible for emotions, the limbic system, will become overexcited, leading to emotional swings.

If you are going through a very stressful period in your life, this pressure can spill over into your body. But in general, everyone has the same problem: an overactive limbic system, a poorly developed prefrontal cortex, and hormonal imbalance due to high cortisol levels.

The first thing I would recommend is to get rid of alcohol, cigarettes, and illegal substances. If you don’t have any problems with these things, take a look at your surroundings (maybe there’s a crazy woman next to you who’s bothering you, ahahaha), maybe you’re scrolling through your social media feed… think about the harm you’re doing to your mind or body and get rid of it.

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You should not be surprised that you are not in control of your emotions if you are destroying your body and mind.

Now we’ll touch on the brain. Our brain is made up of four parts. The stem brain, we don’t control it. The limbic system, which is the emotional brain, the reptilian or primate brain. The prefrontal cortex is what makes us human beings rational. The pineal gland or the intuitive brain.
In most people, the bulk of the energy is concentrated in the limbic system, where all the neural connections are located. Unfortunately or fortunately, our society is not rational at all. The average mass of people has rather mediocre intellectual abilities due to poor education. And perhaps because of genetics, but it doesn’t concern us. Society moves forward thanks to the few, while the masses are most often mistaken.

All of this is also reflected in the markets… The crowd is stupid and they are wrong about the direction of prices. They take big risks in intraday trades and lose all their money trying to prove the importance of themselves and their ideas. Everyone thinks they’re not everyone…

Our task is to transfer the energy that is expended in the limbic system to the prefrontal cortex and then to the pineal gland.

The prefrontal cortex is where willpower, choice, reason and discipline reside. Essentially intelligence. And in the pineal gland is our capacity for intuition, which overtakes logic and emotion. Unfortunately, many people for some reason want to go straight to the intuitive level of trading, although they trade purely on emotions. I will tell you simply, if you have not realized the zen of life and have not gone into the spirit, then forget about intuition.

NOT YOUR LEVEL BUDDY )))

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This is roughly the cycle that occurs in the brain of the average person. Various uncontrollable thoughts come into their head, they either regret something, such as a missed trade, then they experience emotions and believe that what they are thinking about is important, and so on in an endless cycle.

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Summarizing the latest posts, we can conclude that it is necessary to eliminate harmful habits that destroy the body and brain, and that we need to redirect energy from the emotional brain to the rational brain.

There is no point in going round in circles with repetitive internal dialogues, emotions, and self-pity. As long as you remain in this vicious circle, all your attempts to trade normally will be futile. The first thing that can help with this is controlled breathing and exercise. Our task is to control our thoughts as often as possible throughout the day. This is an approach through the body aimed at controlling the mind. Another option is to carefully observe your thoughts and refuse to follow them, which is like stopping your internal dialogue. We need to break the cycle of endless thoughts about nothing. Shift your attention elsewhere, to your hearing or your breathing. You must reach a level where, through willpower, you can completely stop the flow of thoughts at will, but first you need to observe them.

You could also add the practice of writing down your crazy ideas in a journal… There’s no point in rereading them later; the main thing is to clear your head.
By the way… long walks in the fresh air are also an option… a couple of hours. Start with this…

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I suggest everyone search for these topics:

  1. Fallacies in Trading
  2. Fear and Greed Factors in Trading
  3. Effects in Trading: Thinking Fast, Trading Wrong
  4. Cognitive Biases in Trading
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I would like to caution you against working with psychology by working with your thoughts and brain; you cannot change psychology using psychology itself.

The pyramid of human identity.
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First, you need to build up your physical health and energy. If you are weak, sick, and poor, no amount of psychology or trading will help you. Get yourself in shape, get rid of addictions, and find a job.

After that, it would be better to work on your relationships, get rid of those who hold you back and only cause problems, whether it’s your girlfriend or friends, and in some cases even family. I would limit my communication with people who harm you and at the same time try to find like-minded people, at least online.

Calming your emotions is not an easy task. First, as I said above, you need to remove external irritants. In essence, emotions are simply biochemical reactions, so guys, you need to get your sleep in order, get rid of adrenaline and cortisol, and that means exercise and sleep. And I’ll say it again: don’t drive yourself back into a hole by hanging out with bad people and destroying yourself.

Understand how society and money work. Since you have entered the world of trading, you have a goal and an understanding of what you want to achieve. I don’t think most people have a problem with that, although I recommend reading Gustave Le Bon’s book The Crowd: A Study of the Popular Mind. Society is very unpleasant and structured very stupidly, but most people understand this and can’t do anything about it.

As a result, you need to develop your own personal beliefs and values in practice as you live your life, rather than listening to YouTube gurus like Andrew Tate or some silly streamer. This just goes to show that you are not an independent person, and as a result, you have no place in trading.

But mission and faith are personal matters, and I can’t help you with that.