As all professional traders know, a good mindset is one of the most important ingredients for successful trading. You can know all the technical indicators under the sun, know all about risk management and have an encyclopaedic knowledge of the forex markets but if you don’t have a handle on your emotions you will never make a successful trader.
All traders have their psychological flaws and all traders have to work on them in order to succeed. The problems of self-sabotage will never go away until you start practicing good habits consistently.
Taking trades you know you shouldn’t
A sure sign of self-sabotage is taking trades that go against your trading plan. Deep down you know that you shouldn’t take the trade but you do it anyway. You also know that you will regret it as soon as it’s done and this causes two problems.
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Firstly, you take poor trades and throw money down the drain in commissions and secondly, you then have a live trade in the market which causes you even more emotional stress. Do you close the trade immediately because it wasn’t part of your plan and take a quick loss? Or, do you wait, in the hope that this one will run into a profit and you’ll close it then. As you can see, one wrong move in the forex business can quickly snowball into a difficult situation.
Not testing your system thoroughly
Not testing your system thoroughly is another sign of self-sabotage. You know that your system needs to be tested on out of sample data and analysed statistically but you trade it anyway without doing those necessary steps. While this could be put down to laziness, it’s also a clear signal of self-sabotage and will impede your ability to make money. Ask yourself why you are choosing to trade without doing everything you can to make money?
Not studying your results
Again, not analysing your results can be a product of laziness but it is also an indication of much more. If you want to improve your bottom line, studying your results is an absolute must but some traders simply refuse to do it. By studying your results you can see where you’re going wrong and make much needed improvements to your technique.
The bottom line
If you are guilty of self-sabotage you are not alone. Many traders face this problem and the trick is to recognise it and act accordingly. Self-sabotage shows up most in traders who have hidden, emotional baggage that they refuse to deal with. This means they will turn to trading as a way of dealing with stress, just like an alcoholic turns to drink. For these traders, making and (inevitably) losing money can actually stoke feelings of shame and regret.
Self-sabotage is therefore the biggest obstacle for traders to address in order for profits to grow. After all, if you are not looking at your results, not following your plan and not verifying your system, you are simply clicking buy and sell. In other words, you are gambling.Get the 5 most predictable currency pairs