Avoiding Impulsive Trading

Here is a sequence I observe among many  losing traders

Trading Day begins with uncertainty. The trader isn’t having any trading plan, Just saw global cues but not  sure which way the market is going, but feels the need to make a trade. Instead of sitting back , making a plan and let the level to come to initiate a trade , the trader is leaning forward, felling impulsive to take a trade.

The market moves higher and trader feel he is left out in this current move, and the urge to enter is so overwhelming followed by frustration of missing a great move.  The trader now expresses frustration, “I should have bought there.”

The market comes down, then up.Consolidating the gains of the recent move. Suddenly the market move up one more time and the trader can’t take it any more and jump into the market without confirming. He is doing urge surfing, trading based on urge not on his trading system.

There is no profit target or stop loss articulated. This is not a trade designed with good risk/reward parameters, because there *are* no parameters. This is a trade basically an impulsive trade taken “TO BE IN MARKET”

The market suddenly reverses and retraces its recent gains. Now the trader either has to get out with a loss or hang in there and hope for a reversal. His frustration builds, leading him to continue his over trading, and making it more likely that he will stick with–and even add to–losing trades.

Most of retail  trader, trades not to make money but more to satisfy EGO and EMOTIONS. Once he becomes attached to the need to trade and make money–most of traders will only look t find top and bottom of the market, They are not much bothered about the move but more intrested in catching the top and bottom of market, When they miss it they try to satisfy their ego by giving 100 of excuses and finally when the margin call trigger need to exit the market. And the cycle keep repeating again and again.

How to get Rid of these bad trading habits

  1. Develop a trading strategy
  2. Develop your trading rules
  3. Practices them again and again till they are itched in your subconscious mind
  4. Mentally rehearsing trade again and again.
  5. taking a break during the trading day after Loss
  6. Trading in your comfort zone
  7. More you know about yourself better trader you will become.

8 thoughts on “Avoiding Impulsive Trading”

  1. soniya and vandana
    have you taken any trading course by brahmesh sir? if not pls have a course and believe me its really useful. just follow his trading plan and you will feel money will automatically come to you. thanks
    i have taken course and it is very useful. for any other query you can ask me on my mail.

  2. As a trader you need to create your own plan based on the strategies you have learnt.. You cannot depend on anyone.. Its a business and need to work like professional..

  3. Please do note get into derivatives, in fact i would say better not to get into real traders, you start with the levels of Cipla which you feel are good supports and exit at levels which you feel are resistances, pracetice this for sometime, getting confidence for yourself, then it is preferable to get into real trades… off course, it is very easy to say but let us not forget that it is not impossible also, what one needs is self-discipline.
    All the best

  4. sir ……………..nothing………………………..nothing to say….it seems u just seen my ledger and trading style……this is wat i am doing since very longggg………plz plz plz tell me how to get rid of this and get longitivity in my equity curve…….???

  5. Hi Sir,

    I want to practice trading as per rules and advice provided by you in your various articles.
    I am making the same mistakes that you have discussed above, hence want to practice trading in cash in Cipla with small number of shares so that I can practice making a trading plan and exit and entry points etc.
    Request you to provide me with some charts and Gann analysis for CIPLA if possible for you.
    Once I have mastered making trading plans only then will I trade in Futures.
    I have selected Cipla because I have been observing its price for some days now and its future is within my budget and lesser loss per lot if the trade goes against my plan

    Thanks & Regards

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