Monday, 2 May 2011

Compulsive contrarian behavior

I watched a webinar about trading psychology and it really hit me over the head and totally recognized myself in the presentation of the teacher.

He is talking about a trader, his patient and his own looking on his trading.

Guy says:
1. I consistently pick wrong side of the trade.
2. I let loosers run and cut winners short
3. I'm buying the highs and selling lows.
4. I micromanage the trade.
5. I'm unable to trade with the trend
6. My losses have made me question everything I have done.

This is something I have been doing over and over again. There is a quick test also, so you can check are you compulsive contrarian trader (just count your yes answers)

1. Do you always prefer the road less traveled?
2. Do you often do things the hard way?
3. Do you develop strong directional biases in trading?
4. Do you rely heavily on intuition in your trading?
5. Are you focused on picking tops and bottoms even during strong trend?
6. Do you typically get in too early?
7. Do you regularly average down?
8. Do you tend to get stopped at swing highs/lows?
9. Does a pullback in an uptrend usually feel bearish to you in real time?
10. Does a pullback in a downtrend usually feel bullish to you in real time?

I must say I have 9 out of ten symptoms. Hope you did the test better then me. There are some actions that should be done to reduce that behavior, I'll talk about them in my next post.

1 comment:

  1. I think that most of the trader overcomplicated, this is a fact.
    You don't need be trading all the time, you can do one trade per day but you need to have sure of your analysis.
    You need ask yourself, "do I trust my system?"
    some trade have great systems, but the emotions destroy it, because they trade high lot size, or close the trade when shouldn't
    For example I post a simple MA strategy daily on my blog is more a long term strategy, but that can work for you.

    see u