Here is an article about trading psychology that is worth reading. This is not the ultimate article about trading psychology but it has basic message in it. I’ll extract some of the statements there and I’ll add some of it in relation to trading the Macfibo System.
[I]“If you are not psychologically prepared to handle the stress that comes with trading, chances are that no matter how good your strategy is, you will not be able to execute it properly and will most likely see your account deep in the red”
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How many times have the following situations happened to you when trading Macfibo? :
[B]You enter a solid signal, few minutes after that a positive 5+ pips gain have turned to -20 or -30 pips though an exit signal in the defined trading exit rule hasn’t been triggered, you panicked or frustrated and exited the trade (Fear)
You entered a trade, your position has gained 23 pips and it is still 14 pips away from your TP, then it started to shrink from 23 pips to 13 pips… you panicked that price might reversed… you exit the trade and cut your profit small (Fear)
You are in a trade, you are in the red of -42 pips and finally an exit signal triggered but you refuse to exit because you feel it could go up to alteast break-even or you checked Macfibo in smaller timeframe that price has hit 261.8 so logically it’s time for the current wave will be exhausted and your current position will move towards your direction (Denial, Hoping, Guessing)[/B]
One massive step you can make in improving your Trading Psychology is [B]GET TO KNOW YOUR SYSTEM[/B]. How? Study it and examine it via thorough critical backtesting. What do I mean by critical backtesting? Though the whole point of backtesting is to see how good the system is BUT more importantly to see HOW BAD can it go. Be very critical and be honest in your backtesting.
Once you’ve studied the system over atleast 200 test trades, I assure you that you have done a massive step towards trading with trading without negative impact of pSychology. Once you backtest a system thoroughly, you will define a trading rule that suits yourself, you might find something that i did not (as share it please) and make it your own trading edge, you’ve gained tons of information such as different types of market conditions etc…
Now from that one, you can trade your well tested system without fear or hesitance. You will trade with objectivity… even in a random sitaution, you cand decide with precision and objectivity. With tradng a well tested system by yourself, you can make grade A trading plan AHEAD OF TIME, so when it happens (a signal) you trade it with ease cause you’ve plan your trades AHEAD OF TIME.
I totally understand it is very very very very very very difficult to trade without fear and hesitancy. String of trade losses doesn’t help either. Sometimes it is not just your pocket that is hurting but also your mind. Trading profitably is possible but it is not easy. It requires hard work from us and if we are lucky, that we only experience below average PAIN along the way. But every successful people, not necessarily in trading, starts with hardship before they start to be successful. I like to use football/soccer as an example everytime I try to advice traders to ‘weather’ the storm… like Alex Ferguson, current football manager for Manchester United… if you just follow him or his football team like 2-3 years ago, you might not believe that behind the 20+ league titles and other tons of trophies he have won for Manchester United, earlier in his days as Man United manager, he almost got sacked by Manchester United board after 6 years of underachievement. But he kept working hard, believed in his own philosophy (well tested trading system) that brought him success in his previous football clubs with some adjustments (adjsuting your trading system according to market situation)… and now he is the one of the best european soccer coaches.
