Sooner or later if you’re serious about trading you’ll see that as well as people quoting the fact that 80% or people that try just fail you’ll also notice people writing that trading is 80%+ psychology… This simply can’t be a co-incidence 😉
As previously stated part of the reason for me writing this blog is to show that it can be done and to provide a better understanding to others about what is actually involved as a retail person. I’d define ‘retail’ as someone opening a minimum sized spread-betting account and trying to build it from the ground up. Yes, I’m a complete masochist apparently! If you’re reading this as a ‘newbie’ then you probably are too…
Anyway – trading is mostly psychological. If you have issues then being able to analyse your own reaction to dilemmas when trading is going to become a very important skill – and now I’m just waffling in order to avoid getting to the point of this post.
So I basically spent Thursday night awake dealing with the implications of realising that the major challenge I have and have always had (in life and not just trading) is that I’m afraid of being wrong.
As you might appreciate with trading this is a major problem because as a beginner you’re going to be wrong a lot and even as an expert you will still get things wrong. No-one trades with a 100% win rate – if someone knows someone that does then please can they put me in touch and I’ll ask to learn from them…
I’ve been able to break this all the way down to understand the root cause of this fear. I’m not going to detail where this problem came from but I’m happy to explain the implications as far as trading goes.
The fear of being wrong means: –
- Hesitating to take good trades and missing opportunities
- Lack of confidence in general with regards to my own ideas
- Overly focussing on the possible negative outcome
So in summary? Being too pre-occupied about the possibility of being wrong sucks. You can probably extrapolate a whole lot more from this and it definitely reaches out to areas of my life outside trading.
It’s not even the being wrong that’s the problem… it’s the fear of getting something wrong that reaches out and stops me taking the right action. How f**ked up is that? In regards to trading I know the result of being wrong is that I will get stopped out and ’cause I’m not a moron that’s really not going to have any significant negative consequences.
Thing is though the ‘fear’ part was written into the back of my skull an awfully long time ago and has remained there for decades.
The major silver lining of course is that now I’m aware of the problem it’s something I can sort out – it’s impossible to change behaviour if you’re not aware of it. I’m delighted to have finally figured this out because I’ve been able to join the dots between this one thing and a whole stack of things I need to change. It’s a huge step forward to be able to combat something I can see and I expect tackling this to improve my trading of course.
Psychology in trading? It’s not just important, it’s impossible to escape it. Bring it on 😀