People will go to great lengths attempting to avoid discomfort. And as traders, much of what we do is in response to being uncomfortable. This is an extremely critical concept to understand and explains many trading problems and mistakes.
One of the most basic of human instincts is to avoid pain and to seek comfort. No one wants to experience pain; we prefer pleasure and comfort. Will You Prefer going to Walk at 5 AM or Get up at 9 AM and relax. In trading, however, pursuing what’s comfortable is frequently not a good idea.
The problem is not in being uncomfortable per se, the real problem is that our efforts to avoid discomfort can easily end up making us feel worse. If you can understand why you’re uncomfortable and what your typical default reaction is to being uncomfortable, you will be well on the road to trading success.
Many New Traders have habit of closing winning trades prematurely. It feels good to take profits, naturally, but closing trades early leads to limiting profits and missing the larger gains available when a sound trade is working.
The flip side is also seen. Many traders won’t take a loss. Instead, they make a riskier choice. Often, they hope the market will return back to their entry for a chance to close the trade at break even. These decisions give avoid pain (at least temporarily), but they usually are not the best ones, especially over the long haul. When traders cut profitable trades short for the comfort of locking-in the sure gain and let losers run to avoid the pain of taking a loss, the small gains will eventually be wiped out by larger losses.
Below are the Few Discomfort we see in Trading Everyday
You avoid the discomfort of boredom by taking marginal trades.
You try to avoid the discomfort associated with the fear of missing out by chasing.
You deal with the anger of getting stopped by taking a revenge trade.
You try to avoid the discomfort of being wrong by hesitating or freezing, or holding the position past your stop to prove you were ‘right’.
See the pattern? Most trading mistakes can be viewed as behavior in response to some type of discomfort.
Mistakes must be seen as learning opportunities. And that’s not just a cliché. If you don’t learn from your mistakes
1) They become emotional baggage that weighs you down.
2) You will be destined to repeat them.
For this reason alone, it helpful for you to learn about the patterns of your discomfort. Yes, discomfort often does come in patterns, but we are so focused outward on the chart that many people do not recognize the emotional sequence going on inside.
What Traders Can Do
You can’t eliminate your emotions but you can learn to control (or ‘re-condition’) your response (your reaction) to the discomfort by being aware of and understanding your emotions. Part of what I do with my coaching is teach them to be aware of their internal patterns and how these internal patterns correspond to what they see on their charts and in their actions.
- Become aware of how you think. Start to recognize when you are making decisions to seek comfort over perceived pain.
- Be willing to be uncomfortable. Although not easy to do, it’s also not impossible. Know that making the correct trading decision often involves discomfort.
- Commit to the high value trading action. The high value action is letting the winning trade run, using stops and taking losses when wrong, and taking solid trade setups as they occur.
- Understanding Psychological state of Helplessness in Intraday Trading