I just want to disclose a thought process of losing trader in a trade, this may relate to some of you or early in your carreer? Let me know if you guys still have the issue thinking this way, or how do you manage to overcome that. Step 1: Market breaksdown on strong bearish candle "I see this pattern before, market sure will break down 100 points, if I dont get in now, I will missed the trade of my life, the risk and reward is so great I don't care if my stop is 10 points away ” Step 2: Market breakdown 2-3points and start reversing against me "I am going to be patience and let the trend develope. Now market approaching my stop, I am going to average down big into the trade since my stop is so close now I can close it with little risk." Step 3: Market now trade beyond my stop "I am going to cancell my stop so the institutions can't pick my stop". Market now grinding higher and higher "This may be the overshoot before the market break, I am going to set my stop further away beyond next resistance.” Step 4: Market went even higher. "I cant take it anymore, If I don't stop I will blow my account, and since it went that far, Market must be very strong, and I finally close the trade, and since it is that strong, I am actually going to reverse to long, and get on the train for the swing and set high target and I can get back what a had lost in my short trade " Step 5: Once I decided to reverse to long, market immediatly break and go to the original direction I desired "Oh my god, What did I do to the whole to deserve this punishment" And the samething looping and looping. "I'll find a way to make back all my money in one trade!"
You are losing because your trading plan sucks. Go back to start and improve or replace your trading plan by something you tested and with a clear positive expectancy. So the problem is not the thinking, the problem is the trading plan. You are not able to find the correct point to enter the trade (in this case too early, entering based on noise, not the trend).
What if I had a plan but I couldn't stick to it, isn't it become an issue of my thinking? Like according to my plan, market will go down, but I am not discipline enough to wait for a pullback because I am too afraid of not getting in a big trade.
If you had a proper plan that you know is gonna work out in the long run you would not derive from it
The two problems are marked red. If you miss the trade just take the next one. Your life will not end after the missed one. FOMO (fear of missing out) was very clear in BTC the last weeks. People still bought at crazy high prices because they were afraid for FOMO. And believers were pumping people to still buy at these levels. The only thing they did not lmiss was the loss.
Theoretically correct, but in real life not. Many people have psychological problems at the moment they should act. The brain is controlling them and makes them take wrong decisions. The human brain is not made to take rational emotionless decisions.
right. If the problem is due to the right brain, then fix the right (and not left ) brain. If the problem is due to the left brain, then fix the left (and not right) brain.
I think now when I am about to do dumb thing I actually know that it is not right to do that, but I did that any way and say to myself this is the last time but I keep on repeating it. How do you train your brain to do the right thing?
Easy to say, very difficult to do. If it would be so easy, traumas would not exist anymore. There are people who need lifetime treatment just to be able to live with a trauma, as for them it is not curable. Read this article: https://thewespot.com/the-elephant-and-the-rope-what-you-believe-is-powerful/