15 COMMON DESTRUCTIVE PSYCHOLOGICAL TRADING ISSUES AND THEIR CAUSES

1.Fear of being stopped out or of taking a loss:

The usual reason for this is that the trader fears failure and feels like he or she cannot take another loss. The trader’s ego is at stake.

2.Getting out of trades too early:

The trader relieves anxiety by closing a position. He has a fear of the position’s reversing and then feeling let down or a need for instant gratification.

3.Wishing and hoping:

The trader does not want to take control or take responsibility for the trade or has an inability to accept the present reality of the marketplace.

4.Anger after a losing trade:

The trader has the feeling of being a victim of the markets, unrealistic expectations, or caring too much about a specific trade. He ties his self-worth to his success in the markets or needs approval from the markets.

5.Trading with money you cannot afford to lose or trading with borrowed money:

The trader feels that this is his last hope at success and is trying to be successful at something. He has a fear of losing his chance at opportunity, no discipline, greed, or desperation.

6.Adding on to a losing position (doubling down):

The trader does not want to admit his trade is wrong and is hoping it will come back. His ego is at stake.

7.Compulsive trading:

The trader is drawn to the excitement of the markets. Addiction and gambling issues are present. He needs to feel he is always in the game and has difficulty when not trading, such as on weekends. He is obsessed with trading.

8.Excessive joy after a winning trade:

The trader ties his self-worth to the markets, feeling unrealistically “in control” of the markets.

9.Stagnant or poor trading account profits—limiting profits:

The trader feels that he doesn’t deserve to be successful, that he doesn’t deserve money or profits. There are usually psychological issues such as poor self-esteem.

10.Not following your trading system:

The trader doesn’t believe it really works. He did not test it well. It does not match his personality. He wants more excitement in his trading. He doesn’t trust his own ability to choose a successful system.

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11.Overthinking the trade, second-guessing your trading:

The trader has a fear of loss or being wrong. He has a perfectionist personality, wanting a sure thing where sure things don’t exist. He does not understand that loss is a part of trading, and the outcome of each trade is unknown. He does not accept that there is risk in trading and does not accept the unknown. He is afraid to pull the trigger.

12.Not trading the correct trade size:

The trader is dreaming that the trade will be only profitable and not fully recognizing the risk or un- derstanding the importance of money management. He refuses to take responsibility for managing his risk or is too lazy to calculate proper trade size.

13.Trading too much:

The trader has a need to conquer the market. Greed. Trying to get even with the market for a previous loss. The excitement of trading (similar to Number 7, Compulsive Trading).

14.Afraid to Trade:

The trader has no trading system in place. He is not comfortable with risk and the unknown and has a fear of total loss, fear of ridicule, need for control, and no confidence in his trading system or himself.

15.Irritable after the trading day:

The trader is on an emotional roller coaster due to anger, fear, and greed, putting too much attention on trading results and not enough on the process and learning the skill of trading. He is focusing on the money too much and has unrealistic trading expectations.

15 COMMON DESTRUCTIVE PSYCHOLOGICAL TRADING ISSUES AND THEIR CAUSES

1.Fear of being stopped out or of taking a loss:

The usual reason for this is that the trader fears failure and feels like he or she cannot take another loss. The trader’s ego is at stake.

2.Getting out of trades too early:

The trader relieves anxiety by closing a position. He has a fear of the position’s reversing and then feeling let down or a need for instant gratification.

3.Wishing and hoping:

The trader does not want to take control or take responsibility for the trade or has an inability to accept the present reality of the marketplace.

4.Anger after a losing trade:

The trader has the feeling of being a victim of the markets, unrealistic expectations, or caring too much about a specific trade. He ties his self-worth to his success in the markets or needs approval from the markets.

5.Trading with money you cannot afford to lose or trading with borrowed money:

The trader feels that this is his last hope at success and is trying to be successful at something. He has a fear of losing his chance at opportunity, no discipline, greed, or desperation.

6.Adding on to a losing position (doubling down):

The trader does not want to admit his trade is wrong and is hoping it will come back. His ego is at stake.

7.Compulsive trading:

The trader is drawn to the excitement of the markets. Addiction and gambling issues are present. He needs to feel he is always in the game and has difficulty when not trading, such as on weekends. He is obsessed with trading.

8.Excessive joy after a winning trade:

The trader ties his self-worth to the markets, feeling unrealistically “in control” of the markets.

9.Stagnant or poor trading account profits—limiting profits:

The trader feels that he doesn’t deserve to be successful, that he doesn’t deserve money or profits. There are usually psychological issues such as poor self-esteem.

10.Not following your trading system:

The trader doesn’t believe it really works. He did not test it well. It does not match his personality. He wants more excitement in his trading. He doesn’t trust his own ability to choose a successful system.

11.Overthinking the trade, second-guessing your trading:

12.Not trading the correct trade size:

The trader is dreaming that the trade will be only profitable and not fully recognizing the risk or un- derstanding the importance of money management. He refuses to take responsibility for managing his risk or is too lazy to calculate proper trade size.

13.Trading too much:

The trader has a need to conquer the market. Greed. Trying to get even with the market for a previous loss. The excitement of trading (similar to Number 7, Compulsive Trading).

14.Afraid to Trade:

The trader has no trading system in place. He is not comfortable with risk and the unknown and has a fear of total loss, fear of ridicule, need for control, and no confidence in his trading system or himself.

15.Irritable after the trading day:

The trader is on an emotional roller coaster due to anger, fear, and greed, putting too much attention on trading results and not enough on the process and learning the skill of trading. He is focusing on the money too much and has unrealistic trading expectations.

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