Tips on How to Get Rid of Bad Trading Habits
One of the main goals of every trader should be getting rid of bad trading habits that slow him down on his quest to get to the well-known “holy grail” of trading.
Many traders are fully aware that their trading is influenced by their habits, which are, in most cases, losing them money, but they still can’t understand why they keep doing the same thing even though they know it’s not the right way to go.
Unfortunately, this phenomenon has made many traders go bankrupt, and others seek the help of a psychologist. So, what’s the problem that’s messing with our trading accounts?
One of the biggest issues today is that our trading habits are based on historical patterns of behavior that worked in the past. But time progresses and so do trading patterns, which, unfortunately, don’t work the way they used to, and that’s the biggest problem.
We’re all different, but the mistakes we make are, to an extent, quite similar, and they’re not only trading mistakes. How can we get rid of bad trading habits in a few easy steps?
1) Analyzing, identifying and eliminating bad habits
The first big step is for a trader to realize that his habits are a problem. When it comes to rookie or mildly experienced traders, their bad habits are pretty much all the same.
What links them all is the constant changing of their trading strategies and systems. Every new trader has gone through this, and whoever says otherwise was either very lucky or just doesn’t want to admit it. Rookie mistakes are the easiest to analyze bad habits, and that is because they’re well known and have been thoroughly analyzed.
If you’re still looking for new strategies after years of trading without having one that works, the only good piece of advice for you is: choose one strategy that has proven to have stable returns, and stop looking for the “holy grail”.
If you’ve adopted a trading strategy that you’re using for real trading, and that strategy worked well for you on demo accounts, but is coming short on real accounts, then you have to start a trading journal and write down everything from preparing a trade, through setting Stop-Loss, to exiting a position.
After a while, you need to analyze and assess everything where you strayed away from the pre-established rules.
Even though a trader might think he isn’t doing anything differently than on the demo account, it’s possible he couldn’t be further away from the truth. When a trader starts keeping a journal, he often finds out that when executing real trades, he was willing to make slight changes, and that could’ve cause the whole account to drop. And that exactly was the bad habit that needed to be eliminated.
2) Creating new, “good” habits
When you find out that the eliminated bad habits haven’t been replaced by any that would help make your trading strategy successful, you need to start looking for, or create new habits that would work.
But be careful! You need to keep in mind that you can’t replace the old habit with one that hasn’t been analyzed and tested enough. Best case scenario, quick replacements like that end up being habits just as bad as the previous ones, and, worst case scenario, end up having unforeseeable consequences.
The best new habits can be picked up from professionals, and so if you know an experienced trader who is willing to share his knowledge and experience, don’t be shy and ask for it. If you don’t know anyone like that, try to seek someone who used to have the same, or similar, problem as you, and try to ask that person to share his knowledge and experience.
Many traders may regard this articles as logical and unnecessary. They might be thinking: “Duh, isn’t that clear?”. But the reason why people keep making the same mistakes is that they don’t even realize they’re making them.
About the Author
Team Purple Trading
Purple Trading is a true and 100% fair ECN / STP forex broker providing direct access to the real market. High speed orders execution, no trade-offs, no limits for any type of trading, the most advanced trading technologies. Explore more about Purple Trading at www.purple-trading.com .
P.M. Purple Trading is a trade name owned and operated by L.F. Investment Limited., 11, Louki Akrita, CY-4044 Limassol, Cyprus, a licensed Cyprus Investment Firm regulated by the CySEC lic. no. 271/15.