Lesson 17: Psychology

Reread this chapter whenever you fail and think you can’t do it. I’m sorry to tell you that you will keep losing and burning accounts without the proper psychology, but don’t worry; we’ve all been through it. I also had many problems, especially at the beginning; I was over-trading, was wrong in Risk Management, and did not understand why my attitude was terrible. My psychology changed when I talked to a successful trader who changed my perspective. Now, I will bring you the main steps he taught me to strengthen my mind. +90 % of traders do not fail because they are not good traders or because they cannot read the market well, but their biggest problem is with themselves. If we dig deep into the problem, we arrive at the solution.

You are not profitable. Why?

“Because I didn’t follow my plan and I didn’t use proper Risk Management”

Why didn’t you follow the plan?

“Because I don’t have the correct discipline to follow it.”

Why don’t you have the correct discipline to follow it?

At this point, many begin to attack me because they do not accept that they are, at the moment, losers. Keep Calm.

“You see traders daily earning 7-8 figures in a very short time, and then you get impressed, and you want to become one of them, especially if you have already experienced a 9-5 job. Think about 90% of the world’s population who work all day for a meagre pay, and then some traders earn millions of euros in one day from their comfort room. How do they do it? Do I deserve it?” Nobody talks about this shit, but it’s the hard truth. I begin by telling you that many do not succeed because their self-esteem contradicts what they want to become. They want to reach that goal, but they feel they don’t deserve it inside them. This is the work of the subconscious. I’m sorry to tell you that 90% of your thoughts are subconscious, so either you settle inside or you won’t get anywhere. Cognitive dissonance happens when we find ourselves in this situation when two of our ideas are inconsistent for reasons of internal logic or in contrast with cultural norms or our previous experiences. In this case, people feel discomfort. We’ve all been through this stage. When we set a goal, we must be sure that our subconscious also assimilates and accepts it. You must accept the new person you will become and your new goals. One way to accustom the subconscious to your new self is to repeat aloud every day: “I am a successful Trader, and I deserve to receive all the abundance that the universe offers.” Repeat this every day as much as possible, and you will see how you feel better.

You will see the difference day after day. Your vision will become your reality. Reread the sentence with which I opened the paragraph. Oh yes, even Muhammad Ali knew that the subconscious could ruin you. Instant gratification. This is the real problem for many. We live in a world where we are used to have everything immediately. Our life has been programmed since we were children to have instant gratification. Why do you think there are video games and billions of dollars have been spent on fast connection? Or why could we buy fast tickets when our parents took us to the park? I believe you can easily answer. Trading requires patience:

• Patience to increase our capital
• Patience to wait for the perfect moment to enter
• Patience when we are in a trade
• All those who approach trading believe that they will become millionaires overnight. They dream of a Lamborghini within a week, a new home and new travels. We don’t talk bullshit; everyone approaches trading for this reason. You are money blind. We’ve been used to instant gratification. Well, if you have already tried to get rich overnight with trading, I think you have already experienced the pleasure of burning accounts, regrettable. Many of us are 20 or a few years older; if you buy a Lamborghini at 30, is that a problem for you? Does the Lamborghini lettering in bold attract your attention? Here, it is the money problem and the instant gratification. “But I want to speed up the process.” OK, so sit at your desk, and instead of fooling around and hanging out with friends, find your mistakes, write down the mistakes you make and correct them. Don’t waste your time. There are no shortcuts in trading. I recommend you read Mark Douglas’s “Trading in The Zone”; the writer is not only a great trader but also a great trader psychologist. This book will be the cherry on the cake for your trading career.

5 Key points:

• Anything can happen. You cannot predict 100% if your entry is correct, and you cannot know if sellers or buyers will continue their journey. Maybe you entered the worst scenario.
• You don’t need to know what will happen to make money. The important thing is to have a strong Risk Management and a R:R adequate to your plan.
• Random distribution of wins and losses. You cannot know if, in the trade where you bet 1%, you will win or lose; the same is true for the trade in which you bet 10%. What if you lose the 10% trade and you win the 1%? Always keep the same risk.
• You play on probability; you will never know if your actions are 100% right. Nothing is 100% guaranteed.
•  Every moment in the market is unique. “If I have the same set-up as the previous one where I won, will I win this too?” NO. Even if the set-up looks the same, it is not, and the price will never behave in the same way as the previous one.

To be profitable in trading, there are 7 principles:

• Objectively identify your set-up
• Accept the risk behind every trade
• Act without hesitation
• Withdraw whenever the market is favourable to you
• Monitor every trade that went wrong, trying to understand the error and
• if it could be avoided
• I never break these rules if I want to be successful

One last thing. The system is created to make us fail. Do I have your attention again? Trading has become accessible to everyone; there is no need to have studied; just open MT 4/5, have a WI-FI connection, and you can place, if you have a fast finger, up to 20 orders per second. The trader told me: Trading is simple, but not easy. With the correct discipline, you can do it safely. Remember that every day, you are lucky enough to wake up and be together with your family; you have a house where you can sleep, food and love.

Money is secondary; enjoy this process every day, because trust me…it’s worth it.