Trading – How to Get Past "I'm a Loser Baby"

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  • #1456

    Michele
    Participant

    I wouldn’t expect to take a year of tennis lessons and then play at a Wimbledon tournament. Trading Forex is different though, the minute I enter a trade on a live account I’m participating with traders with many years of experience as well as institutions with teams of computer programmers dedicated to developing profitable trading systems. As soon as anyone opens a live trade they’re there with all levels, there’s no A division, B division on a trading platform. Trading at home and knowing few traders I lost sight of this at first but thinking about it now it makes sense that as a beginning trader I got beaten up with strings of losses sometimes for weeks on end. It wasn’t fun and there were times I felt like the guy in the Beck music video “I’m a loser baby”’.

    I think trading becomes a better experience though if we can get past feeling bad or mad about losing trades as soon as possible. I’m better with this than I was so I’ve been thinking about what made taking the losses easier. Everyone says you can’t take losses personally. The market doesn’t know you and doesn’t care that you lost a trade. True, but if like me, it’s important to you to be right and your self-esteem is tied into succeeding a change of mindset will help.

    Both time and trading with appropriate risk helped a lot with changing my mindset and detaching trade results from how I felt about myself. Continuing to take trades, continuing to experience losses appropriate for my account size and seeing that nothing really bad happened. Eventually it became clear if I kept trading with appropriate risk I wouldn’t have to face one of my worst fears; that I’d have to explain to my husband why I needed more money to fund my account again. If you manage risk properly and take appropriate sized trades or demo trade for much longer than you want to you can continue to trade through the ‘loosing trader ‘phase. Hanging in there through this phase made me more willing to accept a loss trade without beating myself up. In psychology terms this is the principle of exposure. If we expose ourselves appropriately to a feared event or outcome often enough and see nothing really bad happens we loose our fear of the event. Traders can ask themselves what fears come up when they loose trades and then think about how realistic are these fears and what do they need to do about them.

    The other mindset change that helped was going from seeing a loosing trade as saying something about my self worth to seeing a series of loosing trades as evidence that at the time of the trade I didn’t know enough to have that trade be successful. I didn’t know enough either about trading, market conditions or my own vulnerabilities. It sounds like common sense now, why would a loosing trade or a series of loosing trades have anything to do with anyone’s value as a person? For those of us that prefer to be good at things though we have to let go of this desire to do well for a while with trading for a while. It sounds counterintuitive but it was easier to accept losses when I stopped adding up trade losses and gains every week or even every month. I stopped trying to have a good trading week or month and instead I shifted my focus on improving the rate at which I followed my trading plan and avoiding hasty and emotional trades.

    I think it can also help when we’re loosing trades consistently to provide balance by focusing on areas of our life where we’re succeeding. After a loosing trade we can consciously choose to do something we’re good at. It doesn’t have to be something major. If trading isn’t going your way go do something else you know you’re good at for a few minutes. Or if you don’t have time to do this at least think about the things you do well.
    There’s some research out now on the relationship between kindness and happiness. We feel better about life and ourselves when we help others or show kindness to others. A study of 3000 people found that 95% of people feel good when they help someone. In another study, Elizabeth Dunn found when people were given $50 to spend, the people who spent the money on others were happier at the end of the day than people who spent the money on themselves. If loosing trades is making you feel bad about yourself or trading switch your focus to something you’re good at or do something to make someone else’s life a bit better.
    I’m going to try this. For the next 3 months every time I close a trade in loss or am stopped out I will give a bit of money to someone who needs it or do something nice for someone. Perhaps it will result in loosing trades having even less of an emotional impact.

    One last thing that helped with being less emotional about loosing trades was not to analyze what happened with a loosing trade right away. Later though, when the loss had stopped stinging, I looked at the trade to see if I could learn anything to help with future trades. Sometimes there wasn’t much to learn, the trade was a good set up and price just didn’t go as I expected. More often than not though I can see some mistake I made or some way in which I was vulnerable to placing a trade that didn’t meet my criteria. Around the end of the year I go back and review a lot of my trades, the unsuccessful and the successful ones to see if I can learn something from them. If you find looking at loosing trades painful you could just review your successful trades and remind yourself of times when trades worked out well.

    Next time I’ll talk about what happens with our trading when we get too excited about successful trades.
    Thank you for reading.
    Michele
    Resources:
    Exposure Therapy
    Research on Kindness and Happiness
    Karen Foo 7 Minute YouTube Video on Trading Forex Without Emotion

    #1457

    JamesP
    Keymaster

    Hi,

     

    It is a very useful post. Thank Michele. I like the idea: “I followed my trading plan and avoiding hasty and emotional trades” & some resources.

    Hope to read more.

     

    Nice day!

     

    PS: I learn something new in your resource

    Research by Elizabeth Dunn at the University of British Columbia found that people given $50 who spend it on others are happier at the end of the day than people who spend it on themselves. The same goes for a work bonus of a few thousand dollars – even though, beforehand, people say they’d much prefer to spend the money on themselves. We are even happier when we remember buying things for others than when we remember buying things for ourselves. And the more generous we are in general – the more money we spend on gifts and donations – the happier we tend to be.

    So giving is pleasurable, but what about helping? It might seem easier to spend money on others than to spend time on them, but it turns out both forms of kindness make us happier. A study of more than 3,000 people found that 95% of people feel good when they help someone, 53% of people feel happier and more optimistic, and those feelings last hours or even days for 81% of people. The “helpers’ high” is a real phenomenon.

    A 2001 study found that regular volunteering increases happiness, life satisfaction, self-esteem, and sense of control over life. And it works for young and old alike: black inner-city teens who tutor younger children have more positive attitudes toward the self, others, their education, and the future; and elderly people who volunteer are more satisfied with life.

    In this TEDx talk, Botlhale Tshetlo explains how gratitude led her to perform 38 random acts of kindness for her 38th birthday, and the impact it had on her

    http://www.youtube.com/embed/QDGLoIxFZLk

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