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How Trading Psychology Affects Performance
Our mind’s duty is to keep us alive and to fight for our survival. It was never built to thrive in the uncertainty and intricacies which characterises the financial markets. 

Too many traders allow their own mindsets to become their enemy. To cure this is to be your own best ally in the financial world. Whilst wise traders develop this ability to be their own best ally many other financial traders fool themselves into perceiving they are their own best ally. The contradiction is that in actually thinking this, they make themselves their enemy and the reason for their failure. They are committing nothing more than illusional self-sabotage.

To become a successful financial trader over a long period of time, one requires to become self-honest based on true self-assessment. This also comprises an honest understanding of one’s own abilities, improved by the development of mindset and behavioral skills needed to prosper in the financial market for the long-term.

This is true whether that is hedge fund trading, bank trading, dealing, market making and even pure execution. And it doesn't matter if you're trading forex, equity, fixed income, commodities, derivatives or anything else. Nor whether you're running a pure quant strategy or pure intuition or anywhere in between. Mindset rules.



What factors affect trader's mindset?
 

Initially it would appear that certain trading events affect trading mindset. We all know making mistakes and making some losses is part of the learning process for becoming a good trader. Some traders are capable of learning from these mistakes but many feel guilt, regret, and shame rather than truely understanding that it is a complex process. Sometimes it's just a bad run where there is a string of losses and this affects the trader's ability to focus calmly and appropriately.

And if we look past these more superficial factors, we see that traders are influenced by media, family, friends, society, environment, and parents. By the time they are at the stage of their life that they are trading, all these influences tend to cause trading with mental processes that are usually flawed in someway. Trying to change these already developed patterns is really tough.

At this point, they need high quality performance coaching. “Tradingpsychologie” is a well known German book written by Norman Welz. Published in 2012, it is well known amongst certain traders. The author’s specialty is his deep knowledge of trading psychology. According to him “trading is the most insecure business you can be in”. He says that trading is the only profession that deals directly with our emotions and reflects from the trader’s personalities. He also asserts that financial market activities epitomize money. According to him, “We don’t just trade assets and money, we become the money”. He declares the importance of the right mindset that is necessary for successful trading. Nothing is more difficult than to keep us detached from the group of factors that have developed our trader’s mindset and that guide their brain to function accordingly. 

 



It Really All Is in the Mind
 

In order to understand the importance of trading coaching, it is essential to understand the link between psychology and the brain. The belief that psychology is important for trading is not new. Welz says that trading is one hundred percent psychology. Traders could never assess trading risks and evaluate trends without psychology. Mental strength is a basic thing for trading success and about 90-95% of human actions are subconscious. It is thus vital for traders to keep in touch with mental trainers.

With FinTeXec traders can overcome their fears, failures, and disappointments. Hypnosis or hypnotherapy is the most effective therapy for traders and bankers these days. Trading is 90% psychology. If a person holds fears and unnecessary beliefs, it may create difficulties, not only in trading and also in all aspects of life.

Financial trading is one of the hardest, if not THE HARDEST, mental challenge that these traders will ever face in life. If one choose two traders and give them the same tasks, both of them will produce totally dissimilar results even though they were using the same system for trading.It is all about their mindset, mental integrity, and their ability to follow the rules under the huge pressure. Nobody is flawless in trading,even the successful traders do blunders from time to time, and require good psychological coaching or monitoring to overcome their failures and regain their focus.

Mark Douglas is another great psychologist of this age. In his famous book “Trading in the Zone” he asserts many facts that can prove the relation between a trader and a psychologist. He says,“I haven’t seen much correlation between good trading and intelligence. Some outstanding traders are quite intelligent, and a few aren’t. Many outstanding intelligent people are horrible traders. Average intelligence is enough. Beyond that, emotional makeup is more important.”

He mainly highlights the misconceptions that common traders have about Forex trading. Lot of people assume themselves an active traders on Forex market because everyone feels himself/herself very intelligent. According to Mark,intelligence has a very less connection with trading performance. Would Issac Newton or evenEinstein have become good traders? Simply not.

The financial market is filled with common or average minded people. No doubt,you need a common sense, just like for every profession. The fact is that it is the sound mind that wins the trading market.Many high-school dropouts are now trading legends.

 



Trading and Psychology
 

In the following,we will see how a psychotherapy or hypnosis can give birth to a winning attitude that can lead to higher profits.

1. Avoid Analysis Paralysis

Of course, most traders performance various forms of analysis before putting on a trade. This may be technical analysis or fundamental or relative value analysis or relying on information from research or peers. At this stage it may all seem pretty objective and even here, the trader’s personal beliefs, personality characteristics and personal background take all the collected information and digest it into what forms their basis or foundation for trading. After that, they take this insight to the finance market. This can be both frightening and exciting. Sometimes, with luck, traders have a smooth ride, but if luck doesn’t help, traders can start losing face difficulties, not just in their PnL and also in their psychology. No matter what trading strategy has been used by the trader, every trader sees a loss in any part of his/her career and that loss put them in the gut. They start feeling a sense of disparity to see their trading position unravels much faster than the time they have spent to gain it.

This is exactly the moment that having seen a coach or hypnotherapist will help them to regain their focus. Current loss doesn’t mean eternal failure in the trading world. There are millions who have seen many failures at the beginning and now they are icons - the key is how to psychologically deal with that failure.

2. Accept the Fact that Financial Market is not fully Predictable

Understanding of the fact that much of the movements in financial market is random is important. We know this intellectually but when real money is on the line it can easily be forgotten. Market patterns don’t remain the same all the time. This is a key point in becoming profitable in trading. One can’t predict the happenings in trading. Every trader has some key points or key perceptions about market but elite traders know that even key points don’t work in the market all the time. These key levels must only be in the mind. No doubt, a trader's analysis matters a lot, but their timely moves plays a great role in profitable trading. It doesn’t mean that traders should not made any analysis,but the point is that that they should not have any emotional attachment with their analysis that can put them in a gut after the failure of their analysis. Again hypnosis would be helpful for them to be focused.

3. Trader’s should focus on their equity curve

Most of the traders believe in keeping their eye on their winners or losing trade.The fact is that it is more important to review their equity curve then to checkout individual’s trade. Trading curve allows the traders to have a deep knowledge of their trading performance that can help them to be a profitable trader. At this point, a psychologist helps traders how they can reduce fear of taking risks that is a part of the financial market. In short, a relationship between trading and psychotherapy is interdependent. For a profitable trading, a trader is no doubt a need of professional psychological coaching. FinTexec is a name of professional psychological coaching with hypnosis therapy. Check out our services, We believe that you will never regret after spending your time with us. 

 


 

Fix My Trading Mind
Your Coach
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Ronal Shah

Ronal is fully dedicated to powering you forward to achieving your ambitious goals. Prior to coaching, Ronal was General Manager at a mid sized insurer and Head of Equity Derivatives at a large structuring desk. Born in London, he has lived and worked all over the world, including Japan, Netherlands and the US. He holds an MBA from London Business School and a BA Economics from Cambridge University.
MSc Finance
Master Hypnotist
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