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Psychology of Trading
By Laetitia Vaval | November 1, 2007
I have now been trading with a real account for about two weeks and wanted to write a little bit about the psychology of trading. When I was working on the Demo, I would enter trades, calculate where I was going to place my stop (and perhaps also my limit price), enter those into the computer and then walk away — confident that my calculations were rational and that every thing would be “ok” since I knew exactly what I was risking.
However, now that I am trading “live” I find it hard walking away from the trading station while having an open position. I’ve found myself coming back to the computer to check rates every couple of minutes. But even worse….I’ve also made a couple of strategic mistakes because I was simply unable to “detach” myself emotionally. Last week I wrote about a EURUSD position I had bought at an interesting price. However, I kept going to my computer to check the prices and ended up just being “scared out” of my position as soon as it started slightly ticking against me. When I had entered this position a week ago, I believe the EURUSD would trade all the way up to 1.45 and had plans to stay in this long position for a while. Nevertheless I exited the position one day after opening and capturing a mere 50 pip profit. Of course, yesterday the EURUSD did indeed briefly touch 1.4505 as anticipated. Had I completely “detached” myself and kept my position open, I would have over 700 pips since i had even opened a second position at 1.4183. I’ve written about this issue before but now that I am trading live and that I can put a “price” on being emotional while trading, I really intend on working on this issue.
noneTopics: Wall Street Warrior |