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Psychotherapy for Traders: Some pointers

December 24, 2008

Many a times, traders suffer from a ‘freeze’ , a psychological rigor mortis which stops a trader from doing what exactly he should. It often happen from an acute fear, extensive stimulus bombardment (often conflicting) which stops them from resolving their trading decisions. Or perhaps, a ‘one-time’ override of your trading rules. Often that ‘one-time’ thing is thrown out of the window when that trade went in your favour.

During my own trading, I found out some markers into my own behaviour. Anybody else reading this might prefer to conduct a similar soul-searching for himself, as one’s observation will be similar as well as different from others.

The pointers:

1. Whatever are your trading rules irrespective of its nature[technical or psychological], to soak in and execute it dispationately, you should internalise it.
Internalisation occurs only when you are passionately soaked in it. Its a mental conditioning and nothing less. Hence,whenever you are not trading, repeat your rules to yourselves, murmur them, imagine them. This will help you to condition yourself to follow those rules.
For more details on mental conditioning, Google: Pavlov’s Dog

2. Very important details: Flow with the market. Don’t have an adversary mindset and try to ‘get even’ with the market. Flow, flow like the water.  Its perhaps the most important thing, which has helped me on good days.

3. Realise, how much the market has to give you. Indicators, candlesticks or all those rules will help you to make this decision. Dont ignore those in to greed. If needed have and maintain indicator exits.Those who trade with multiple lot sizes, might prefer to resize and reallocate their holdings, once the indicators have fulfilled pre-decided exit condition and redecide your stop. And those who anyway deal with minimum lots, should anyway exit, assuming that they have a lot to ‘internalise’ both from a psychological as well technical perspective. So they would do good to follow the rules to the ‘T’.

So, Jump,why did you post this?

This post was more inclined to be a marker or reminder for myself, primarily so that, I am accountable for what I believe and the rules on which I trade on. Given the situation that I am still sharpening my tools, so this will do good to me, if I leave a trail of my development so that

a. I can come anytime , refer it back and reinternalise it.
b. Have a progress chart of my thought process, as I keep on trading.
c. And, of course, I would like to have your suggestions if any.

The topping on the cake could be, if it helps you.

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