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Why Traders Lose Their Discipline

Discussion in 'Forex Discussions' started by painofhell, Aug 8, 2016.

  1. painofhell

    painofhell Content Contributor

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    When traders lose money, they often attribute the problem to a lapse of discipline. Such a lack of consistency, however, is actually the result of many different problems--not the cause. Traders lose discipline with trading for the same reasons that dieters lose discipline with dieting or people getting in shape lose discipline with exercise. Quite simply, our moods, needs, and mind states of the moment tend to overwhelm our longer-range intentions. We pursue short-term pleasures (and avoid short-term discomfort) at the expense of longer-term rewards.

    Here are some common reasons why traders (and most other human beings!) fall short of being fully intentional:

    • Environmental distractions and boredom cause a lack of focus - All of us have limits to our attention span and these are easily taxed during quiet times in the market;
    • Fatigue and mental overload create a loss of concentration - The demands of watching the screen hour after hour make it difficult to be sharp, creating fatigue effects that are well-known to pilots, car drivers, and soldiers;
    • Overconfidence follows a string of successes - It is common for traders to attribute success to skill and failure to situational, external factors. As a result, a string of even random wins can lead traders to become overconfident and veer from trading plans--especially by trading too frequently and/or trading excessive size;
    • Unwillingness to accept losses - This leads traders to alter their trade plans after trades have gone into the red, turning what were meant to be short-term trades into longer-term holds and transforming trades with small size into large trades by adding to losers;
    • Loss of confidence in one's trading plan/strategy because it has not been adequately tested and battle-tested- It is difficult to tolerate even normal drawdowns unless you have confidence in your methods. This confidence does not come from mere positive self-talk. Rather, it is a function of testing your methods (historically and in real-time) and seeing in your own experience that they truly work;
    • Personality traits that lead to impulsivity and low frustration tolerance in stressful situations - Psychological research suggests that some individuals are more impulsive than others and less conscientious about adhering to plans and intentions. These personality traits often are accompanied by stimulation-seeking and a high degree of risk tolerance: a deadly combination.
    • Situational performance pressures - These include trading slumps and increased personal expenses that change how traders trade and lead them to place P/L ahead of making good trades. By worrying too much about how much money they make, traders can no longer follow markets with a clear head;
     
  2. Mistalee

    Mistalee New Member

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    They just got carried away and it is the worst thing that could happen to them and could result in losing each cent of your capital.
     
  3. platinumtraderfx

    platinumtraderfx New Member

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    That's why we should always use SL and TP. You can win 10 trades trading without Sl but your 11th trade can wipe out your deposit just because you entered at the start of a trend that goes against you.
     
  4. Mistalee

    Mistalee New Member

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    Yeah...! It may be useful for some users the trading method that you are suggesting but I don't think that this method will also always yield them profits. Thus we need to change it time to time
     
  5. Sharon Higgins

    Sharon Higgins New Member

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    I think too much wishful thinking is the obvious reason why people lose discipline and start attempting stuff which they should never do, but this not the end and neither it should be, I believe we can always bounce back, we just need to be positive and confident, it’s okay if we have made mistakes in mistake, it’s important what we do in future (present), if we work it out rightly then everything else will easily fall in place itself, it’s ever easy with OctaFX broker and that’s to do with their small spreads from 0.1 pips for all major pairs plus there is also mighty rebate facility that gives 50% back on all trades, so it’s seriously beneficial and allows us to work nicely.
     
  6. Blossom

    Blossom New Member

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    Most of the traders make the Forex gamble instead of business because of no proper education. If each and every body takes proper education and guidelines from the seniors then the chances of losing will be decreased.
     
  7. Mistalee

    Mistalee New Member

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    Yeah, Forex could be a job, it could be a business, but never consider it as a Gamble. When you consider it as a Gamble, you lose everything as you just rely on luck if you do that.
     
  8. Sharon Higgins

    Sharon Higgins New Member

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    Mistalee, I don’t really understand how you are calling it a job? I mean there is clear difference between job and business, it’s important for us to understand it. Anyway, I do agree that this is not something we need to think of like gambling, it’s definitely far from that. I go with OctaFX broker where they have rock solid conditions with small spreads starting from 0.1 pips to high leverage up to 1.500 plus there is also magnificent bonus which is up to 50% and is use able too, so that’s why I like it a lot and is something which helps me up with performance, so I never have to do anything crazy yet I can make steady profits.
     
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