Trading Psychology

I have been doing a lot of thinking about psychology this week while I have been working on my Forex Lessons.

Got this from Van Tharp:

Putting the Process Before the Outcome

People can imagine themselves taking gradual steps, while great heights seem totally forbidding. Yet, when you take enough gradual steps, you’ll reach great heights.

If you are concerned with the final result — the outcome — then you will probably have problems attaining the outcome. However, if you concentrate on the process of getting to the outcome, then you are much more likely to arrive at your destination.

Every outcome is proceeded by a process. You will not make money trading unless you follow a predetermined plan and continually stick to that plan. That’s why you should pat yourself on the back every day if you can honestly say that you totally followed your rules throughout the day. Every "market wizard" arrives at that stature by taking one trade at a time. The primary difference between that person and the average trader is that the market wizard probably continued to follow his plan every single day.

Concentrate on the process of trading — following your rules. In fact, at the end of each day ask yourself a simple question, “Did I follow my rules?” If you did, pat yourself on the back. If you don’t have any rules, then you obviously didn’t follow them. Think about it.






So for me, personally, this means one day at a time, one trade at a time. But mindful of the measurable results that will eventually lead to the desired outcome.

Every trade that I follow my "rules" is a good trade, even if it loses. Every trade that I deviate from the rules, is a bad trade, regardless of the outcome. If I "win" on a bad trade, that is just reinforcing a bad habit. If I lose, though, hopefully that teaches me a lesson.

I am not focussing on what I want to happen in three years. I am focussing on what I want to accomplish this month. And every month that I reach my goal, I am one step closer to where I want to be in three years.


My trend-following strategy works on a daily chart. Daily charts *SUCK*. They barely move - they are BORING.

Boring is good. ;)