Many successful Traders are taking trading decisions by doing lots of analysis, building strategies, back testing scenarios and study various behavioral patterns of the market, but still failed many times, Why?
It is because of their EGO, stopping them to follow trading discipline.
Ego in Trading, How?
A successful Trader does a lot of analysis and spending a lot of times to take trading decisions and after finding out he/she made up his/her mind saying that this strategy will definitely win in the market.
But if the market behaves in an unexpected way, they failed to convince their EGO to accept the reality and trust that the market will go in their expected direction even though they have methods to address it, resulting in a negative outcome.
I’ve said it before, and I’m going to say it again, because it cannot be overemphasized: the most important change in my trading career occurred when I learned to DIVORCE MY EGO FROM THE TRADE. Trading is a psychological game. Most people think that they’re playing against the market, but the market doesn’t care. You’re really playing against yourself. You have to stop trying to will things to happen in order to prove that you’re right. Listen only to what the market is telling you now. Forget what you thought it was telling you five minutes ago. The sole objective of trading is not to prove you’re right, but to hear the cash register ring.
–Marty Schwartz,Pit Bull
Some typical symptoms of egotizing trading would be the following:
· Not putting in stops. The ego doesn’t want to be proven wrong.
· Hesitating before putting on a trade. The ego wants reassurance before it begins.
· Overtrading. The ego wants to prove itself big time.
· Getting stuck in a trade. The ego has intertwined itself with a trade and is holding on for dear life. It cannot cut out. The ego doesn’t want to be wrong.
· Adding to a losing trade. The ego digs its hole deeper in a massive effort to crawl out.
· Grabbing a profit too soon. The ego wants a pat on the back.
–by Ruth Barrons Roosevelt in his Article: Trading Without Ego
How do we separate our ego from our trading?
One way to separate your ego from your trading is to build healthy boundaries between yourself and your trading.
Who is a real successful Trader?
A successful trader is the ability to control ones’ psychology and emotions at the most vital decision-making moments.