Bad trading decision? I am just about to make one

An explanation of why traders lose and then make it worse...

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Bad trading decision? I am just about to make one 저자: Mind Map: Bad trading decision? I am just about to make one

1. This is how the amygdala* THINKS: - I haven't got enough - I am done for if I can't get this right - It's now or never - I have to get even - F***ers! I'll show them! Eventually.... - F*** it. Who cares? I am buggered anyway. - There's no point in trying - Why me? - There's something wrong with me, this always happens to me


2.1. I am uncomfortable, slightly panicked, I know there is something wrong but I cannot seem to regain control

2.2. But the part of brain than can alert me to this switched off

2.3. What I need now is for the PFC to come back on line so that I can see that my thinking., perceiving and behaviour is coming from my lizard brain

3. This is how the amygdala* BEHAVES: - Moves to stops to avoid being stopped out - Takes trades for no good reason - especially counter trend reversals to 'get my money back...' - Stays in trades through announcements - Closes trades spontaneously to 'save losses' (usually at the worst price) - Stays in trades even when they are not working 'just in case' - Stares at the screen and checks prices on my phone

4. This is how the amygdala* PERCEIVES trades: - If I don't get in now, it will run away without me and I will be furious and a failure - If I don't get my stop out of the way, it will clip it and then move right back in my favour. - I have to get my money back - I have to be right - the market will come back and I'll get a huge win - I'll show them! - Never mind about the rules, I'll obey them next time - It's gone one pt below key level so quick, close now then I will lose less than them - Sod it. I am just going to leave it open and let the market do it's thing. See if I care!

5. Long term, strategic thinking is switched off, focus is narrowed to the screen and I want immediate relief of the discomfort by taking action on the perceived cause of it - the markets.

6. *amygdala is much more complicated than this, but for these purposes, in this situation, I am interested in how is affects my decision-making

7. Why I get so attached to trades, take dumb trades and close winners early

7.1. If I am not in the market my mind will tell me to trade when I am in this state because it believes that that will fix the problem: no trade = no chance of getting my money back = no chance of feeling better (surviving/regaining power). This is completely WRONG

7.2. If I am in the market my mind will tell me to stay in for the same reasons

7.3. Trades become personal and immediate so I stay in trade using thoughts such as "It can't go any higher (for shorts)" or "It can"t go any lower (for longs)" and "I must be right " and "If I get out now the market is bound to make a huge move in my favour"

7.4. If trade is profit I close it to relieve discomfort . INTERPRET PA to say, "I should get out now" and "If I don't get out now the market will immediately go against me." Grab it, so that the market can't take it away from me

7.5. First step is stop DOING anything in this state - nothing else - just don't ACT

7.5.1. Accept that my mind is not friend in this situation

7.5.2. Make releasing my priority, especially after a mistake or stop out

7.5.3. Do something - anything - to get my stress levels under control

7.5.4. Do not look at the screen. You have to walk away.

8. This state is triggered by mistaken perception of SCARCITY and MORTAL DANGER - so my mind is speaking to me using a wildly overestimated estimation of how threatening the situation is to my well being, based on false information and the desire for short term relief of the discomfort

8.1. It feels very uncomfortable and I know there is something wrong but i don't seem to be able to act on it

8.2. PFC is switched off so the only way to regain control is get away from the screen and regain focus and rational mind through cold, breathing techniques or even just a distraction to re-balance my brain chemistry

9. And the things that is most likely to lead to this is missing out:

9.1. When I have missed on a great trade that I thought of but didn't take

9.2. When I have just missed out on a trade that the room has taken

9.3. When I have just been stopped out

9.4. If I see a trade I should have taken but didn't and it worked

9.5. I feel really really angry and I feel victimised and then hopeless

9.6. I look for someone to blame

9.7. I take a trade against advice and I stick with it even if it obviously going against me and I have lots of opportunities to get out

9.8. And I lose, and then I feel angry and the whole cycle starts again