Learning to recognize when you are mentally compromised is an essential aspect in trading.
Unlike trading robots, we do get tired after a certain time and the chart patterns all start to look like happy (or sad) faces and the lines all start to blur. It is also around this time that tunnel vision sets in and you start to loose track of why and how you got into this trade to begin with.
As I took note of my trading, I noticed that when I started my trading day, the first few trades are usually well executed, clear and concise and I ended up making pips. Even if I did not make money, I still traded my plan and felt good that I did not deviate from it. I have also found that I personally can be fully attentive for about 3 to 4 hours. After that, things can and have gone south very quickly and I return all the money I made a few hours ago.
All this to say is - be vigilant. Being mentally compromised is when you feel agitated, confused, doubtful and frustrated. You close positions early and take small pips or let run loosing positions and take large losses. All these are some of the symptoms of being compromised.
The best way to keep a clear tab on this is by having a trading journal and a section where you enter your “mood”, “Clear and ready to trade”, “tired and frustrated”, etc. By doing so, you can also clearly see a time during your trading day when you start to go mentally south. So put in big bold letters “Mentally Compromised!” in your journal. Seeing it over and over again will allow you to recognize when it starts to happen and pre-empt it by shutting your computer off.
Hope this has helped you identify and improve your trading. Good luck!
Excellent information. I have suffered a lot in the past and in the present as i am a newcomer and of young age.I never liked the idea of a trading journal but i can say that it does help… A LOT. Now the way i see it is that i have to examine the market carefully see what’s going on, prepare my plan and then when i feel like a true Zen Master, ready to break a stone with my bare hands i then execute according to plan. And when greed kicks in (yes day by day i control my emotions more easily) i act like a fool whose simply always in the wrong position the wrong time 100% of the time!
Another thing that can keep you motivated is tracking down the progress in your head visualizing the past. For example how your control over your emotions grows and how you execute your thoroughly designed plans until the very end no matter the outcome. Moreover you need faith in better days to come and having a positive attitude. Made some mad pips??? Congrats! When the day ends embrace your self into realizing that becoming rich is closer than ever! Had a horrible day??? Write down all your actions on your trading journal and note all your actions that will prevent the same mistake from happening again (remember, mistakes are there to be made so you learn the tough way!).Last but not least while you read your past performances and mistakes and come closer to the present you should see that your getting better even though your not there yet.This will keep you focused on achieving what you started out.
For example there are moments where i read my analysis on my trading journal and i’m like: Did i write this? That’s when i realize that i am better day by day. But still afar from my goal!
And remember, baby pips is a great website for starting out.That’s where i started and now i feel i know where i’m heading.
Above all we are human beings and it is quite common for we traders to get affected by the boredom or frustration. Only those who takes both the profits and losses equally and be able to maintain their business are the ones to excel in forex market.
I never wanted to take the time to make a trading journal when I first started either. I thought it would be a pain to keep up and that I was in control of my emotions and my trading plan, and that I could execute without writing anything down. I had a myfxbook keeping track so I thought I was fine.
Well this week I started my first trading journal here on baby pips. I already see the difference immediately. For me the biggest thing is that I have to explain in my journal why I take every trade. If I can explain it and it makes sense I feel fine taking the trade, but already I’ve taken the time to write out why I should take a trade I am about to execute and come up empty. When I read back what I’ve wrote to myself it makes me realize that the trade setup is not so good. I must have been taking sub-par trade setups this whole time I’ve been trading, thinking that they are good opportunities. I will forever keep a public journal to keep me honest to myself.
I have to fully agree with you and thanks for re-affirming how necessary a journal is. There is an actual study that shows when you put pen to paper, not just typing in a computer, but actually writing your thoughts down with a real pen on real paper (lol), there is a neurological effect where it imprints the results in your mind a lot quicker and deeper. So if you are recording your trading habits in a note book, then what happens is that the effect you hope to achieve happens a lot faster.
Not to mention, being able to see so clearly, all in one shot, the results of your actions, also helps initiate change with greater speed. All this to say is, I am all for trading journals, spreadsheets, etc. It just makes a traders journey so much more effective and lessens the learning curve. After all, it already is a HUGE learning curve, I will take any help I can get.
Well first and foremost thank you for starting such a productive thread!
Secondly, i wanted to say that i read on the web that if you can’t sleep because of thinking about something important in your life, once you write it down (either paper or computer) your mind “relaxes” and you can sleep peacefully.This research proves how important is to write down your thoughts and actions and criticize them! All in all to the newcomers, don’t go lazy on that trading journal!
“22) Quality trading time – I suggest 3 hours a day of quality, focused trading time; that’s about all your brain allows. When your trading being 100% focused; half way doesn’t work. Don’t even think that time spent in front of the computer watching the rates has any correlation to profitability; it doesn’t. Spend less time but when your trading be 100% focused on trading.”
That is the fact which most of the traders fail to realize. Thank you for providing the link to the article just going though it, this is an eye opener for all the aspirant forex traders.
