Tapping The Power Of Mental Rehearsal
by Brett Steenbarger , Contributor to Forbes Magazine
Why should I read this and what does it have to do with trading. Give me an Example of Psychology’s impact or problems I will face Trading.
This is an excerpt from the Forbes article and points to why you may want to start with the psychology of trading first.
Let’s take an example from my recent work with traders in financial markets. A young trader has experienced early success and is now encouraged to increase her returns by taking larger positions in markets. Although this makes sense to the trader, she finds herself fearful of taking more risk and thus undersizes her market positions. She subsequently feels frustrated when her ideas work out and she makes little money, undercutting her confidence. The more she pushes herself to take increased risk, the more she falters when it comes time to enter positions.
He then gives you advice that is in the book and can be used for lots of other similar issues. Olympic athletes use it and Veterans with stress disorders use it.
This happens to everybody. When your position starts to make you money but does a normal retracement you get skittish and close to early missing out on the long run. There are also times you move your stop loss and stop following your game plan. Why? its in the book along with all the other reasons