According to Psychology Today, all habits are linked to an instinctive action. These constant behaviors eventually form into a habit and dictates your level of productivity. All traders should have a good trading plan. One of the worst bad habits a trader can have is trading impulsively and without any guidelines. Traders who take the time to make a trading plan are much more likely to succeed, but even with a plan in place we can develop bad habits.
In order to break bad trading habits, traders need to base success or failure on each trade by how they stick to their trading plans and not simply on whether they make or lose money. If you make a bad trade (that is, an undisciplined trade, one not part of your trading plan), but make money on it, you still have to view that as a failure; you cannot congratulate yourself. By congratulating yourself, you are offering a small reward for something done incorrectly.
A great way to start attacking your bad habits is to spot them as they are happening. Once we attempt to break the old and undesired pattern and train ourselves with the new and desired one, we create new constructive habits. This transition is fragile. Good intentions are vulnerable to losing their momentum and old habits and patterns can re-surface quickly. To solidify the new thinking pattern, it is important to establish habits that will help support the new approach.
Human beings have innate need to be in control of situations and surroundings. After all, it is loss of control that elicits emotional responses like fear and anger within which leads to developing a bad trading habits. As a result, in trading we often do ourselves a great deal of damage because this need to be in control ultimately sabotages our trading efforts. Our need to be in control as we trade the market, causes the following problems: Over-trading, Cutting trades too early before they have a chance to play out, Risking too much because we think we know what will happen next, Trying to avoid taking losses by trading without stops / moving stops etc.
Bad habits can threaten a sustainable career in forex trading. The main reason why most traders feel anxious is because of lack of belief of their trading plan especially for beginners. Over time, these patterns can evolve into a mindset that results in less productivity and inefficiency. To prevent habits from affecting trades, acknowledge the negative habits and apply better practices. Make sure to track any positive changes and reevaluate habits that need more improvement.
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