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Thread: Appreciating the good

  1. #1
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    Appreciating the good

    Hi traders!

    In many trading books you can read this example – person is asked to choose between two options. If he/she chooses first one, he/she will receive 100 USD immediately with 100% probability. If he/she will choose the second options, he/she will get 200 USD with 70% probability.
    Unsurprisingly, most people will choose the second option. We like guaranteed outcomes – it’s our human nature that pushes us to avoid uncertainty.

    And that maybe reasonable… just for 1 outcome.

    But what if I change conditions of this small task?
    What if you should compete with other people how will also try to make such choices, and if you will underperform, you will get charged for some amount of money, and if you will win, you will get additional prize and for example, double your gains?

    This decision is much more tough to make – in such circumstances you are no longer having «comfort zone», you will be either pushed by possible punishment or pulled by possible gain or both.
    How do you think, who will win in the long run, if the experiment will be long enough? It’s hard to say, it will depend on various conditions but the second choice is considered to have more connection with «trading thinking».

    What is «trading thinking»? We can say many words about it, but it has one feature that I want to talk about in this article. «Trading thinking» involves perception of risk not just as a thread and possible harm but also as a possible gain.

    We tend to forget about that, and we tend to focus on harmful outcomes much easier than on positive ones. I’m talking now about the situation when you are trying to turn bad trading system into a good one simply convincing yourself that it is good  None of that.

    I’m talking about feature of our attention – neuropsychologists call it «negativity bias», it occurs when we are very easily focusing on worst case scenarios and in general, are experiencing more pain when we are losing than joy when we are winning (earning).

    It’s considered that «negativity bias» is a pre-default feature of our brain and is inherited from our ancestors – dinosaurs. Really, when they had immediate threat for their existence, they were producing one of three possible scenarios of behavior – fighting, «freezing» (pretending dead) and escaping. Human era is pretty young whereas those creatures, out ancestors were living on the planet 100 million years ago. Well, you may not believe this, that’s just a hypothesis, but we can admit that «negativity bias» exists for whatever reasons. Its existence is proved in numerous experiments and every trader knows that by experience.

    For trader this feature means potential low emotional pain threshold, inability to switch to new profitable trades after series of losses and inability to build on your strengths. We like to blaim ourselves – «why have I sold here?», «I should have closed this position» e t.c. But we achieve real progress when we stop blaiming ourselves and start praising ourselves for small (or not small) successes.

    What is the cure?

    After every trading day, write down – what exactly have you done right today? What was the reason for that? What conditions helped you to do so?

    For example, you understand that today you have picked a good entry for your trade but later on, as the day developed, this positions was closed to breakeven. Some trades would say – oh, it’s a wrong trade.

    But in case you havent’ veered from your trading plan, you should pay some increased attention to the fact, that your entry was just perfect, and admit the fact that you were not revenging the market after your positions was closed.

    If you practice it for long enough, you will have positive experience, coaches call it «human potential sponsorship». In a nutshell, when you pay attention to something inside you, it will become stronger. The more attention you pay to your trading strengths, the more ability you will have to develop competence, and then – expertise.

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  2. #831
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    Quote Originally Posted by samprazaan View Post
    [lang=id]keep learning and practicing will make them get the knowledge and skill, that will make them understand to trade in the market with follow the price on the right track, earning profit is only the results from what have been prepared by us before, so all depend to us in this business[/lang]
    Yes sir learning is all that matters because Forex is a business of skills and smart work. I think major part of learning comes with real trading experience. Experience teaches us not only to make good analysis but also to stay safe when our analysis goes wrong. Reviewing our trading performance will help us to know our mistakes. We can then take corrective measures to overcome our trading flaws.

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