Reward yourself for “good” behavior

Discussion in 'Forex - Currencies Forums' started by Daniela-TFC, Jun 27, 2014.

  1. Daniela-TFC

    Daniela-TFC Active Member

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    As a foreign exchange trader you certainly are familiar with these situations when you look back at a historic chart of a certain currency pair you traded that day while telling yourself: “I should have done this and this”… In retrospect everyone can take “optimal” decisions – missed profits are part of the game.
    Looking back and analyzing the chart pattern you might get annoyed by the fact that you did not react fast enough at that time or that you took the wrong decision. Due to your decision you missed out on a big profit that day – you experience a so called “emotional loss” despite the fact that you actually did not lose any money.

    Looking at a historical chart you certainly are able to spot missed opportunities – these trading opportunities that you should have taken are easier to spot looking at a historical chart than in real time. While analyzing past price action you see that you did not spot a chart pattern or a support level in real time.

    Frequently you will find out that you “jumped” on a trending move which had already advanced a lot. These entries were triggered by your emotions because you were afraid to “miss out” despite the fact that such an entry is not part of your trading plan because these trades usually have a poor risk reward ratio.
    Sometimes you might be lucky and realize a profit with these emotion-triggered trades but a gain in these kind of circumstances is not necessarily for the benefit of your trading career because it programs your brain for bad trading behavior.

    Your brain will associate it like this: “Trading profit = Money earned = Very Good=Repeat”. While it is possible that you got lucky once or twice and made a profit this does not mean that this trading behavior will help you survive in the market for the long run.
    If you repeatedly take these emotional trading decisions chances are you will wipe out your account sooner or later.
    But how do you get rid of this behavior?

    If you feel the urge of entering into a trade after the move has already advanced a lot just because you are afraid to miss out you should take a breather and leave your trading desk. For some traders it is even necessary to switch off their screen and leave the room in order not to “jump” on an existing trend without waiting for a countertrend correction. Your brain has to “learn” that spontaneous entries are not the way to go in these kind of circumstances.

    After you have switched off your computer or your screen you then should reward yourself, for example with a piece of chocolate. (I like chocolate…, you might like something else…) You should congratulate yourself and tell yourself: “well done! – I only put on the trades which are according to my trading plan”. Avoiding emotionally triggered entries will help you to eliminate poor trading behavior. The Forex Championship is the place to practice good trading behavior – without any risk involved!
     
  2. dianethare

    dianethare Senior Investor

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    Thanks Daniela-TFC for that chunk of advice, it more or less reminds me of this article that i was reading about gambling, about how you can't move away from the slot machine because you are extra-fixated that you will win, sometimes its not all emotion related but a part of the brain called the Insula is to blame, so it might also be when it comes to Forex trading...just when i thought our brains wouldn't mislead :(
     
  3. Smadypickney

    Smadypickney Guest

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    I believe that we should practice rewarding ourselves when we make a good trading behavior because many times when we do good we think to ourselves I should have done more, I should have traded with larger sums of money hence I would have received more. Often we may it hard on ourselves to praise and accept when we do something right. Rewarding ourselves will help us to mentality accept that we have done a good job so thank you Daniela-TFC for making this known.
     

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