[Education] Trading Psychology Tips by a 6 Figure Prop Trader

11 באוג׳ 2023

1. You don't know when to enter or exit your trade.

You don't have a system to tell you that. You are always going from one trading strategy to another. You followed another person's analysis and signals. You don't have anything that belongs to you. You don't want to put in the work. You don't want to take responsibility from your decision.

Once you have decided to take responsibilities for your trades, you will find yourself following your trading plan. You will not deviate from your trading plan. You have a lot of backtested data to fall back on.

This is when profitability will come to you.


2. You focused too much on technical analysis.

You know that trading is 92% psychology, 8% technical, yet you don't focus on it.

Why is psychology so important, but people focus on technical analysis so much more? Because backtesting and focusing on the technical provide us with instant gratification.

It feels good knowing what returns you would have gotten on that trade, over the past weeks, months, or even years. It's feels good to instantly know what you will get out of your backtesting session.


3. Be honest in your backtesting sessions.

You have to be honest with yourself during backtesting. Since you will be using your backtesting data to set an expectation on how you will perform in the live market, you should trade exactly how you would in the live market.

If you had a glimpse of what will happen in the future, that will affect your bias and thus your backtest results. You should be backtesting candle by candle.

Imagine you cheated during your backtesting session, telling yourself "Oh, I should have entered here and exited here, giving me a 10% return.". You have the hindsight bias here and you would not be able to enter that trade in the live market. You will expect yourself to get that 10% return in the live market. When you don't get that trade, you blame yourself and deviate from your trading plan.


4. Set realistic expectations.
Backtesting allows you to catch almost every single trade that fits your trading plan, that's if you backtested correctly.

In the live market, it is impossible to catch every single trade. No traders are able to do so.

I became a full time trader to have time freedom, and not to stare at my chart for 16 hours straight.

Sometimes, you will miss winning trades. Sometimes, you will miss losing trades.

Sometimes your trade reverses on you when you're 1 pip shy away from your take profit.

Sometimes your trade will be taken out by 1 pip and price heads towards your take profit.

Anything can happen in the market. Just keep your mind open.