1. “I have to win this !”
2. “Give my money back!”

Regardless whether you are day traders, swing traders, Fibonacci traders, short term investor, long term investor, regardless of your trading system, once we have even one of those evil thoughts, we are guaranteed to revoke our success in the long run. Let’s see in a bit further why they are….

“I have to win this !”

Let say there was a bit of pressure on our side and we really need to win this particular trade that we want to enter. Any kind of pressure, for example: this is our last chunk of money in the account (if this one lost, that’s it, all gone) or we really need this trade profitable because otherwise you will miss the mortgage repayment – or even worse – that’s what left from what suppose to be my kids college fund. Or if you don’t win this trade, you cannot buy food for the rest of the week.

Then, still using our trading system you spot a trading opportunity. (It’s double the evil if because of the pressure, we simply ignore our trading system). “A, ha ! This is it.. I have to win this!” WIth this evil thought in your mind, let see what happened if we win and lose:

Yes, the market let us win

OK, of course we’re happy… but deep down in our mind we may make one or some of mental notes below:

• “See.., if I have enough reasons and confidence. I can do it”
  Then what happened if we stumble into the next pressure and that time we lost, we will blame the market, we blame the trading system, or we will blame something else because we already have the expectation to win. Then a step further, we will make tally that the market owe us one this time.
• “Yes, I conquer the market ! Easy !”
  We will develop ‘over-confidence’ which we assume that the market will give us whatever we want

No, you lost this trade.

Well, awful result.. But what is going on in our head is even uglier. We would start blaming the trading system (must be something wrong with it) or we would start blaming your luck (“That’s it I have no luck. I am cursed”) or even worse we would start destroying things around us to compensate our anger. We will also start to justified that the market owe us money. We may also feel that the market has betrayed us.

So, if you have this “I have to win this” evil thought, no matter you win or lose, you put a time bomb for your trading journey.

“Give my money back !”

After a few losses – especially losing streak – and suddenly we spot a good opportunity for trading based on our trading system. “OK. Give my money back!” Perhaps additionally you increase or double your position (from 1 contract to 2 contract, from 1000 shares to 2000 shares or from $2000 to $3000) with the intention ‘double or nothing’. We want to make up our loss. Again, wIth this evil thought in your mind, let see what happened if we win and lose:

Yes, the market let us win

You will feel that you just beat the market. Not only over confidence, we would also develop some false premise that the market has taken something from us then it’s about time to give it back to us. Unfortunately, it not always like that.

No, you lost this trade.

We would be angry and ruin the rest of the day, wouldn’t we ? We have just increased our lost. And that seeds on our deep mind to get revenge would start to grow now. “I’ll get you tomorrow, market !”

The disaster to come

Starting with these 2 little “innocent” thoughts, we can produce unlimited “disastrous” outcome.

When we got hurt, our subconscious will not just do nothing, it will activated our pain-avoiding mechanism. So the next time we try to do a trade again, we would be hesitated or making unnecessary mistake or become groggy or less confidence or miss a trade or  always blaming on something when something goes wrong. All of those will produce more bad result. At the end we will not be able to do anymore trade and fed up with everything. “That’s it! It’s not for me”.

When you got over confidence, you are bound to hurt yourself as well. It’s 100% guarantee that ‘the market’ will get you sometimes. And when that’s happened but you believe that’s not supposed to happened, you will get hurt even more.

The Solution

Mark Douglas in “Trading in the Zone” give the exact solution. The result of every single trade – yes every single one of them – is random. Any trading system or signal or methodology that we apply only increase the probability to a certain edge. Say from 50% win – 50% lost, to 70% win : 30% lost. That’s all.

So when we enter any single trade that we are about to enter. Do not expect anything. The result is random. We should never care the result of individual trading, we need to see in the long run.

What should we feel?

Let’s do simple exercise. Get a coin, a pen and a paper. Write number 1 to 500. Then flip the coin for 500 times and record the result. Go a head ,get one ! We know the probability is 50% head or 50% tail. Now, start flipping and do the tally on the paper.

Really do the flipping now! You will be able to feel what you should feel during trading. Just flipping, don’t try to guess any result.

Every single flip, you will know exactly the result: it’s head or otherwise a tail. Either one. Do another flip. Do not try to guess, just observe whether it’s head or a tail. Do another flip. Watch again (remember don’t try to guess). Do another one. Now try to observe your feeling between the flipping and seeing the result.

Did you feel excited? No.. it’s either head or tail nothing really special.

Did your heart beat faster? No… we know the result, either head or tail…

Were you sweating to see the result ? No… don’t be silly…

Well, that’s it… That’s exactly the feeling you need to experience during the trading. No need to expect anything because you know the result, it’s either win or lose. No need to be excited, no need to pump the blood more rapidly, no need to sweat.

Have not feel it yet ? Try another 50 times of flipping. Observe your feeling between the flipping and just before seeing the result.

On another note, take a look on the paper. After 500 flips, is it nearly 50% ? Yes it would. But look at your note.. Is there any 5 or more consecutive ‘head’s? Yes, it would. That’s your trading. You might get 5 or more consecutive win or loses, but at the end the probability is in your side. (Say 70% or more, otherwise your system got a flaw! In this case ‘back testing’ is the one you need to do)

Conclusion

If you have not read Marks’book and you are into share-related trading, go buy one. You will need it. Not just because it’s a good reading, but it provide practical solution of our problem. The problem is not in the trading system, it’s not on the signal, it’s not on the timing. Everything is on our mind.

If you have read the book. Read again! Not until you read it 5 times and implement it, only then you will see the improvement of your trading ! That’s a given promise !