1-Sharing Your Results With Relatives And Friends
It is obviously exciting when you start seeing profits add up in your account after many months or, in certain cases, years of learning, testing, practicing and being unprofitable. It is normal to feel accomplished, even though you are not out of the woods yet.
At any time, you can lose your focus and go back to bad trading habits such as revenge trading, oversizing your position, letting your losers run for too long and many more.
One thing that can trigger such bad habits to resurface would be the pressure to perform. This pressure can be expected from someone who shares their trading results with relatives or with their entourage.
Imagine that you achieved your first 10% return week. Even though you’ve kept your results to yourself, this is too big of an achieved to resist the urge of telling people about it.
What if, the next week, you end up with a 10% deficit? The first thing that’s going to come to your mind is: “How am I going to explain that I bragged about making money and lost it all the week after?”. Keep in mind that, to the average non-trader, losing money while trading is hard to understand. Why would you spend, say, 6 hours every day looking at your screen just to end up losing money at the end of the week?
Pressure is almost always going to turn out to be a negative factor to your trading. You are going to doubt yourself, miss a trade you should have taken or take a trade you shouldn’t have. There is almost nothing positive that can come out of it.
2-Setting Precise Trading Goals
There is no good reason why you should have precise expectations as to how much money you want to make every week. The market does not care about your goals, nor is it affected by them.
You could argue that setting goals pushes you to wake up early every morning and stay focused throughout your trading session. That could also be associated to a lack of commitment or simply to laziness, which can and should be fixed without setting goals.
What is more likely to happen, though, is that you will compromise on low quality setups if your goal has not been reached. Maybe you will take profits too late because you wanted to reach your objective. Maybe you are going to skip a good setup because you’ve already reached your profit target. In the end, the most efficient way of trading is by taking every single trade that respects your strategy.
A good way of changing your mindset would be to calculate the average profit you can expect from every trade you take. If you’ve made $1000 after taking a hundred trades, you are effectively making $10 for every trade you enter, win or lose. Why would you give up on a quality setup if it’s going to be making you $10 in the long run?
3-Getting Emotional During Or After A Trade
The first things that come to mind when talking about emotions during or after a trade are anger, anxiety, stress, disappointment and every other negative emotion you can think of. What if I told you that positive emotions can also be problematic to your trading journey?
We can all agree that it’s a pleasant feeling to check your phone to monitor a trade and to notice that the price has broken out, putting you in a very profitable position. There’s no problem with being pleasantly surprised by a trade. The trouble begins when you start feeling ecstatic, overjoyed and start thinking of yourself as a genius for placing that trade before the breakout happened.
It is likely that the happiness you feel when winning is what is causing the sadness and pain you feel when losing. You miss the joy that winning and being right brings, and start taking bad trades just to replicate that feeling. Most compulsive gamblers would relate to that attitude.
You should limit your emotions and avoid overreacting, whatever the results are.