Another Great Article

Here is another article which contains many gems of wisdom: http://www.learntotradethemarket.com/forex-currency-trading-blog/why-your-not-making-money-trading

I can particularly relate to this excerpt:
You have a very nice trade that hits your profit target almost exactly, you feel good, the market feels ‘easy’, you start looking for your next trade right away because you’ve got a little more money to “throw around” now. Before you know it, you’ve entered the market on what was not a very good signal and your trade is negative, it continues to go against you turning into a loser. After it’s over, you think to yourself, “That was a stupid trade and I knew it, why did I enter it?”

Indeed I've committed that trading sin before, in fact just last week. The trades I had then were profiting nicely so I made some sub optimal trades with the mentality that "It is ok, my risk is well managed, at most I'll lose that trade but I'll still be in profits overall." Lets just say the outcome wasn't too pretty... :P So yep, it takes a conscious effort not to over trade and take inferior setups, as doing so is natural to our human psychology.

Great Article

http://www.yourtradingcoach.com/Articles-Learning-To-Trade/The-Three-Steps-from-TA-Amateur-to-TA-Professional.html

Trading Psychology

Recently a lot of the things I read in books start to make sense. No I'm not referring to trading strategies, I'm referring to the psychologically aspect of trading. I've talked about the mistakes and things I've learned in the previous post. I'm sure there will be many more mistakes and heartaches in the days ahead, but these are inevitable and I have to embrace them and grow from them. I still feel the sting today and I know that to a certain extent it is affecting my courage to take new trades. However I must get over it, still look for good setups, and most importantly not trade for the purpose of taking revenge on the markets. Honestly a lot has went through my mind, and I'm so grateful that I've read "Trading In The Zone" before so I know that the thoughts and emotions I'm experiencing are not common to myself but to all traders.

I guess trading psychology is something that can't be learned through books, you have to experience the ups and downs of markets and master yourself and your emotions through it all. So anyway, I chanced upon this article today and feel that it is a good read. I especially like the following excerpt - "Sometimes the market will randomly reward you for such behavior. This reinforces our emotional reactions and tricks us into thinking that this kind of behavior works." It is precisely because ruinous behavior sometimes rewards us that we continue doing it. An example would be to ignore a stop and have the trade go back in our favor. As a result we ignore our stops in future and you know what the outcome is.