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Andrew Aziz

Share your Psychology Experiences (get a FREE chat and class access $447 value!)

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[PROMOTION NOW OVER. WE WOULD LOVE TO READ ABOUT YOUR PSYCHOLOGY EXPERIENCES IN ANOTHER POST]

 

Hi traders,

 

I am working on a trading psychology book. Share do's and don't of traders, and how they can control over their emotion. I am looking for contributors to my book, people who share their ups and downs, recommendations and other useful stuff.

 

I plan to use the experiences in my book (you will be given credit and mentioned in the book: with real or pen name or annonomys if you wish).

 

I am more than happy to offer a full year of class and chatroom (worth: $427) to anyone who contribute more than 1000 words!

 

Thank you! Shares your ideas here and email me your article [email protected]

 

Let our community write a book together.

 

[PROMOTION NOW OVER. WE WOULD LOVE TO READ ABOUT YOUR PSYCHOLOGY EXPERIENCES IN ANOTHER POST]

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I think Andrew said in the chat that the deadline is end of day Sunday, Jan. 28 (tomorrow).

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Hello Andrew,

I have been trading for about 16 months. The first 6 months was on a simulator and the last 10 months has been live. I have had my ups and downs and I probably have told myself 8-10 times I was going to quit trading, but I kept persevering through. I have learned many lessons as I have progressed and would like to share two key psychological lessons to beginner traders that might help. I feel it is a 3-4-year process to learn the intricacies of the market and overcome personal psychological challenges to be a consistent successful trader. The psychology of trading is so important. It’s very difficult to maintain a level head, not get overly emotional, set proper expectations and discipline yourself. I really wished someone would have saved me from major mistakes by drilling in my head these two very important psychological lessons at the beginning of my trading:

 

1. SET REALISTIC EXPECTATIONS: As a beginner you just cannot set an unrealistic daily profit goal. I personally set a $200-day goal for myself at the beginning on a $10,000 account is what I started with. Knowing what I know now, that was way too much to expect. I should have just set a $20 a day goal. That would have stopped me from losing $8,000 in my first 6 months. I cannot express enough how important this is for you to do as a beginner. I would have rather made $100 over 6 months than to lose $8,000. It’s almost enviable you will lose money in the beginning so if you set the right expectations you will limit your losses or allow yourself to be even minimally profitable which doesn’t feel like a win, but it really is. If someone would have told me you should be extremely happy with making $100 in 6 months trading I would have thought you are crazy, but I realize now how great that would have been.

 

I was like most beginning traders, I looked for great mentors and good chat rooms like Andrews to help me. But it is easy to try to immolate what they do and have the same expectations to make $700 to $1500 a day like they do. But this is just not reasonable expectations as a beginner. When my expectations were too high it forced me to do too much share size or made me push the trades too far and not take profit and let go red or break even. My winning trades started to become losing trades because a $50 win on a 300-share size trade was not enough, I wanted $100 or $150 win and that just was not reasonable.

 

I saw my mentors or others making $700 on a trade so I thought I should be doing that, but it just did not get it in my head it was all relative. My mentors were using 5000 share size trades, capturing profit in the small moves. They were able to anticipate trades faster than me so when I was buying they are about to sell and I was holding my positions too long looking for bigger moves but that didn’t work. So, I told myself ok the problem is I am not trading big enough sizes. So, I increased my sizes to 1000-1500 shares. Guess what happened, I traded scared, could not make smart decisions, stopped out of trades too soon, made more mistakes because it just was not a comfortable size for me, so I started losing even more money.

 

As a beginner I was unable to anticipate trades, I waited for more confirmation which is a smart way to trade, but I had to understand I was minimizing or shrinking my profit zone. I was not taking the relative profit for my share size in the profit zone that I should have been taking. I thought I was failing taking $50 profit on 300 share size trade when Andrew would make $500 on same trade so I felt I was losing but in reality, I was winning the same as Andrew. He traded 4000 shares compared to my 300 shares, it was all relative. It took me a long time to realize my expectations were wrong as a beginning trader. I could not set my expectations based on my personal needs or goals. I had to set them based on my experience level, knowledge and account size (comfortability of money I was trading). I had to learn to be patient, grow with experience, grow with proper expectations, which my expectations would align with my share sizes. As a beginner start small, start with realistic expectations and be ecstatic with $20 net profit after commissions wins!

 

2. Be Disciplined Trader: Once your expectations are reasonable and in-line with reality of your trading knowledge, then you must adhere to a great amount of discipline which was the second hardest thing for me to do. It is easy to write down a daily goal of $20 but it is not as easy to be ok with only profiting $20 for a day’s work in the market. It was incredibly challenging thing to stay disciplined on my share sizes, stay disciplined on my expectations and stay disciplined on only trading my top strategies. I would have an $150 profit day and then tell myself yes, I can do this, I can do $150 every day. And guess what, the next day I would lose $300 because I tried to increase my share size or push my trades too far. Then the day after that I would want to make up for the $300 losing day, push even harder and lose another $200.

 

There is also the fear as a beginner of missing out or not maximizing your winners (buying the bottom and selling the top). In the beginning I would get very disappointed missing a trade or selling too soon. This anxiety would cause me to lose my discipline. I would take bad setup trades. I would not sell when I should be, trying to sell at the top. As a beginner this is a must to be disciplined with. You will very rarely hit the bottom and top. Don’t bet your self up on these things especially as a beginner. And always remember if you miss a trade, there will be another one right around the corner. There is always another trade for money to be made.

 

You must learn how to discipline yourself and sticking to your realistic daily expectation regardless what happens the day before or the day before that. Every day you start with the same $20 or whatever reasonable expectation you have each day. Write down and post it on your screen or put a $20 bill next to your screen to remind you every day. Ask yourself every day would you rather lose money today or make even just $20 today? Because at the end of the day, you will either lose your money or your discipline will create the results of being a consistent profitable trader. It will be one or the other, please chose discipline!

 

The market is extremely fickle and unkind. It will eat you alive in seconds. There are no excuses or manipulating the market, it has no emotion or feelings. You must be extremely quick and decisive decision maker. One tiny mistake, one misstep in your discipline and you will lose money every time. Be patient. Be realistic with your expectations. Trade proper share sizes that align with your expectations. Plan your trade and trade your plan based on your expectations. Trade only your best strategies. Be extremely disciplined with all above. You will be a consistently successful trader!

 

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Scotrounds, thank you for your post, it helped me to keep my cool. I am a beginner, and I agree with everything you said. I try to focus on my P/L percentage as it really reflects my results, that way I don’t get disappointed by comparing dollar amounts to others, with way more knowledge, experience, and account size.

 

Andrew, sorry I couldn’t manage time to write you.

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Thanks Scotrounds. Your post put things into perspective for me. It's all relative. Don't expect Andrew's big wins if you're a beginner with a small account and small share sizes. It takes work to become a professional.

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Thanks Scotrounds. I am going on 6 months in simulator right now. I am on that bubble of feeling like I can go live. After reading your post, I don't think I am ready just yet.

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Thank you Scotrounds, that was an excellent read. Can you also email it to me so I can have it in my data base for appreciation offer?

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Hello OOTrader. I just wanted to respond to your post. I am not experienced enough to be giving anyone advise but I would recommend if you have already spent 6mos on a simulator and you feel comfortable with some good setups you can stay disciplined with and only trade those setups for a while, I think you need to start live trading. It is so much different trading live than simulation because it adds the psychological part of trading that I think you need to start experiencing. Simulator will only allow you to practice technical part of trading, now you need the psychological part when its real money. But if you do go live please just trade 100-300 shares, stick with just your few setups and don't push your trades, take the small $20-$50 winners all day until you start to feel more and more comfortable.

 

Scot

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Hi guys,

I would like to share my article with you all. Hopefully you will enjoy it. I know it is a little late to submit it but I was really busy lately and couldn't get a chance to finish it on time. Feel free to give your comments and thought about it. But please no destructive criticism. Thank you.

 

I started trading for about 9 months ago. I spend most of the time on trade simulator and read books how-to day trade. As I started to get really cocky and overconfident that I can easily beat the game, I began losing a big chunk of money in my bank account. It took me a long time to forgive myself for what I have done and try not to beat myself up for the mistakes that I had made. I had learned a very valuable lesson from life by paying a heavy price for my dumb mistakes. Now I realize one thing is that even if you know everything in stock market, but you don’t master your mental attitude and the right thinking, you will lose all your money. I believe psychology of trading is so important that it is worth to learn and practice before you can master anything else.

So, the question big question is how can you master your psychology or how can you control your emotions? I would suggest a few set of principles that can help you go in the right direction. First, don’t be greedy and learn to walk away when you lose. It is very difficult to maintain a level of balance when you lose or win money. For example, if you lose your money in stock market, you want to get even and try to regain those money you had already lost, you will eventually end up losing more money by over trading and taking higher risks. Ask yourself, would you rather lose 200 dollars than 2,000 dollars or even 20,000? You must quickly learn to walk away from the losing game and come back when you are ready with the right setup and your mind is being clear from negative emotions. When you walk away from your lost, it doesn’t mean you are going to quit the game. It means that you need more practice and learning a big lesson behind your mistake so that you can careful planning your next trade. However, even you do everything correctly, you may end up losing money. That doesn’t mean you are a bad trader. It just simply means you need to take a break from the game. The best way to cool your head down is to go to the gym, play your favorite sport and read your favorite books on how to control your emotions. I would also suggest learning few mediation techniques that can help you relax and calm your mind. It will also uplift your inner mental state and create joy to your spirit. When your mind doesn’t focus on fear and worry, you will do so much better in planning your trading.

On the contrary, if you win a lot of money and you don’t know when to stop trading, you will eventually end up giving all the money back to the stock market. Greed is the emotion that cause your account to go bankrupt faster than the speed of light. Greed will tell you to stay in the losing trade when you should take all your money and run away. It will also tell you to keep put more money in losing stock and not knowing when to give up. To overcome greed, you must set a realistic goal. For example, if you set your goal at the level of 200 dollars per day, you must stick with your goal no matter what happen. Someone may say that is silly because you will leave more money on the table if your stock goes up higher. But what happen if your stock doesn’t go up and continues to drop? You may end up wipe out all your gain and your entire account. I always tell myself that I would rather win 200 hundred dollars than lose 200 hundred. It can be very challenge to stick with your goal because greed will convince you otherwise. That is why is it important to maintain your level of mental power and not to let greed get in your way. Keep in mind that when you set your goal of no more than 200 dollars lost in a day, you should also stick with that goal. You may want to quit trading for a few days until you get yourself ready. When you ignore your goal setting, you will blow up your entire account.

Finally, you need to be nice to yourself and reward for every trade that you have win no matter how big or small. After all, you always put yourself in a stressful position in trading the stock market and facing many challenges each moment when stock jump up and down. If something that you want to do for long time and you never get a chance to do it, you should do it right away because you know that you deserve it with your hard work and dedication. By reward yourself, you have more reasons to stay focus and win more trades. You may hit a few setbacks even now and then, but your will not allow it to control your emotion and become a major obstacle. You will see the new challenge as a speedbump and not a major roadblock. You will learn from it and not to repeat the same mistake again. Make sure your keep tracks with your progress and continue to set your new goal as you become expert in trading. Nevertheless, not only you treat yourself nicely, you know to how to talk to yourself in a positive way. Instead of tearing yourself down when you are losing a trade, you should reframe it in a constructive way. For instance, when you make a mistake or breaking a trading rule, instead of tearing yourself down, you should ask yourself “why did I do that?” and “what can you learn from it and how you will do better next time?”. Ask yourself all kind of questions and write down every answer so next time you about to make the same mistake, it will prevent you from going down to the same path. I suggest you start reading “What to Say When You Talk to Your Self” by Shad Helmstetter. It is a great book that explains how negative self-talk can lead to destructive behavior. As we should know, it will have a negative impact on how you think logically. By talking to yourself nicely and constructively, it will uplift your mental state and you will not be prone to the same mistake and error again.

 

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Thanks to both Scot and Ryan. Those were both really good reads. It isn't easy putting yourself out there for everyone to see the mistakes you've made. I've been in the simulator for ~1.5 to 2 months. I've had mostly negative days. I am nowhere near to being able to go live, but I can say that I have had a roller coaster of emotions already since I've been red so much. I don't plan on giving up anytime soon but it is very emotionally draining when not even making good trades in the simulator to think it will be even more difficult when I do eventually go live. Thanks again for sharing your experiences!

 

Mick

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Hey Mick. Thanks for the response. I am glad your sticking with it. I wish I could tell you it gets easier before it gets even harder but it doesn’t. It takes a long time unfortunately to learn this craft and be a expert at day trading. I have been trading live for over a year now and I still struggle a lot but I can tell you every day gets just a little bit easier.

 

I feel your pain on how emontial draining it is daily. You do get down on your self a lot atleast I do. There is just so little room for error with trading and there is so much to master to be consistently profitable. But it helps to talk to other traders and know it’s just not you with the struggles. Keep at it. It took me forever to finally get disciplined to only trade one or two setups and that is it. I highly suggest you take the top one or two setups you like and only trade those til you are profitable doing that than move on to other setups. Even if you don’t see your setups for the day you don’t trade that day because eventually you will start to see your setups more and trade 2-3 times a day and you will start to see your success rate on trades go to 70-80%. Disciple was the hardest thing for me in the beginning and still is at times. But you start getting disciplined real quick when your losing 1000s of dollars which I have done. Good luck to you Mick.

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