Trading psychology is one of the hardest skills to develop for new traders. The reason is that, in general, trading can cause new traders to doubt their own abilities to learn how to trade and will create a host of negative assessments. Trading typically will also cause new traders to question everything about their own life and beliefs. I will doing a series of articles in the next few weeks designed exclusively for new traders but very helpful for experienced traders, as well.
Trading Psychology – First Steps for New Traders
Last week I wrote about the importance of thinking positively versus negatively. Basically, you project what your future holds with your thought processes. While they are an overall abundance of reasons why this holds true, both from a psychological and spiritual view, the bottom line is it works but is extremely hard.
Here is the first exercise before you ever take a trade, either demo or real, to begin with to improve your trading psychology. Beginning on Saturday morning through Sunday evening, keep a running list of thoughts you have throughout the day. Don’t bother with deciding whether it is a positive or negative thought — simply jot down all the different thoughts that pop in your head. On average we have over 15,000 thoughts a day and you are trying to record each one without bias. Just a small notebook will do for jotting down each and every thought. No filtering and be completely honest.
This step is designed to simply get you on the road to recognizing just how many thoughts you have on a daily basis. This exercise will only work if you adhere to doing it with a completely honest and straight-forward approach. Even if you are observing people, write down all the thoughts that you experience.
Next week in the next trading psychology series we will take these thought processes and look at what they reveal about you.