Do You Need a Trading Intervention?
There are a million courses and instructional videos on chart reading, economics, fundamentals, and quantitative analysis.
Most traders come up through the ranks by taking information from various sources and mixing it together to create an individual path.
You don’t need to be original or overly creative to be a great trader.
You must simply be able to curate strategies that work for your personality and trading style.
But the ugly truth is that a lot of trades desperately need a wake-up call.
Sometimes, we think we’re putting things together in a very rational and controlled fashion, but we’re still not getting the result we should.
That’s often a failure of mindset rather than of intelligence or natural trading acumen.
So we put together a list of 9 clear signs that you need a trading intervention.
If you suffer from 1 or more of these symptoms, then it’s time for a gut check!
1) You Suffer from Brain Freeze (and we don't mean the ice cream kind)
You do your best to learn a strategy or methodology, but when it comes time to implement it, you freeze up and do nothing.
Quite often, traders are more comfortable with the idea of risk than risk itself.
When traders find themselves freezing up, it often makes sense to dramatically cut position sizes to get acclimated to executing real trades.
2) You Make Conscious Errors
You realize that you are doing something that does not fit into a logical strategy, and yet you do it anyway.
This is a bizarre mix of anxiety and arrogance, as it’s based on two illogical beliefs: that doing something is always better than doing nothing, and that things will miraculously work out in your favor.
Both are wrong on all counts.
3) You Are Underconfident
You exit winning trades too early, stunting the potential of your winners.
As unusual as it seems, traders often have difficulty letting winners run.
Many traders want the security of having locked in a gain, which means they miss the bulk of a move.
The best traders look for clear signs of exhaustion in trends before exiting winners, because trends often last longer than may seem logical.
4) You Have Too Much Patience
You exit trades too late, allowing your winners to turn to losers, and losers to turn into bigger losers.
This comes back to the belief that things will somehow just work out.
Many traders have a problem with wanting more! more! more! out of a winning trade, even after it’s showing signs of of change in trend.
So they’ll let emotion take over, and they’ll watch a position decline in the hope that it will magically turn around and restore prior gains.
Traders also sometimes have a hard time dealing with losses, so they’ll sit and wait for them to turn around, even when they have no rational reason for doing so.
5) Not Enough Patience
You chase trades aggressively, giving yourself bad entries, which eventually causes you to get stopped out.
The fear of missing out is pervasive among traders. We see a stock go up $10 and we start to wonder if it’s going up another $5.
A smart trader accepts that sometimes, trades just pass you buy.
You’re never going to catch them all, and trying to do so means acting out of emotion instead of logic and analysis.
6) You Don't Take Responsibility for Your Results
You blame others for your problems trading problems instead of taking responsibility.
We can’t control anything in the markets beyond our own strategies and risk management techniques.
But since we all consenting adults engaging in an uncertain business, we must accept responsibility for our own results.
We’ve all stepped into this arena by choice. So we must own the consequences — both good and bad.
7) Your Stop Get Hit Constantly
You are dying of a thousand paper cuts, getting stopped out constantly, which adds up to huge losses.
Many traders set extremely tight stops, which is death in today’s volatile, algorithm-driven markets.
There is a misplaced belief that hard stops ensure limited losses, but that’s not always the case.
A stop strategy must be adapted to current market conditions, and if you are getting consistently stopped out, you must reassess your thresholds.
Quite often, traders that suffer from an overload of stop losses find that they’d actually have profited if they’d held on a little bit longer, or set their stops a little looser.
8) You've Forgotten That Trading Is Work
It’s easy to view trading as an unstructured entrepreneurial adventure rather than a job.
It takes a big streak of independence to become a trader. But beware of too much of a good thing.
Traders often find themselves living an unhealthy lifestyle, including bad sleep habits, heavy hunk food intake, and zero exercise.
If you want a healthy trading mind, you must take care of our body of first so you can show up ready to work effectively every day, just like any other job.
When you’re tired, unfocused, and unprepared, you are throwing money away.
9) You Are Not Compartmentalizing
We all have life problems.
But when we trade, they must be put away to be dealt with later.
You must be focused on the task at hand.
You can’t be thinking about the fight you had with your spouse the night before or how you’re going to make the next mortgage payment.
So when it's time to trade, stay focused on the task at hand.