SanDiegoMagaPede Trading Plan Lesson 4: Emotional Control and Trade Set ups "The Drunk or the Sniper"

You have good money management, realistic expectations, great risk reward ratio. Now its off to build your trading plan and start making money in the Forex market right?

Well NO, not so fast. You need to hear this before you start your demo account (Or God forbid start with real money)

The biggest obstacle you will face when trading is not the market per se, but yourself.

Now you are probably asking what I mean and that is a fair question. You see, when trading any commodity, whether its Forex, Stocks, or futures there are two MAJOR emotions that can (and WILL) consume a trader for the worse

#GREED & FEAR

Both these emotions appear in traders at the worst times when trading. Without getting into specifics these emotions change your brain and literally make you a dumbass.

So instead of placing well timed trades you begin to act like a drunk and start making trades based on feelings and hunches.

And we all know that drunk people make the best decisions right?

So the trader will become drunk with emotions based on either Greed or Fear from winning or losing and begin making really bad trades.

Soon their account begins to dwindle because of all the bad trades which then makes the emotions even worse. It creates a positive feedback loop that keeps stacking up getting worse and worse. Much like a gambler at the casino, eventually they run out of luck and cash.

The key here to remember is that it does not matter how good your trading plan is, if you are drunk with emotion you will NOT follow it and begin to relapse into bad habits/behavior and make bad trades.

So how can you overcome this?

You have to 1st walk into trading with a different mindset and next practice dealing with this mindset.

You need to walk into trading with the mindset of a sniper.

You need to wait patiently, and then when the conditions are great you take the shot.

You remain still, calm, cool and collected, despite the pressure and make high probability shots.

You need to become an emotionless robot so that your logical brain can take control and make good decisions.

You must master this state of calm and lack of emotion despite pressure (It still gets to me at times)

When you enter a trade and you keep watching the trade go back and forth, you will experience a roller coaster of emotions and that can be very difficult for new traders to handle.

#You must understand that your own brain is trying to sabotage your efforts and take steps to prevent that.

This is a major reason why demo trading is so important. It acclimates you to your own emotions during trading. You don't wanna get emotionally drunk when you are trading with live money.

So to recap

1- You need to understand you WILL experience Greed and Fear during trading

2- These emotions will make you make stupid mistakes

3- You must actively change your mindset to that of a calm, cool, collected logical individual

4- You must practice in the demo account to experience these emotions and practice controlling them and reaching the state of "No emotion"

5- Failure to do so will jeopardize your own trading results

Lesson 5: https://www.reddit.com/r/Forex/comments/6vuj7z/sandiegomagapede_trading_plan_lesson_5_make_your/

Lesson 3: https://www.reddit.com/r/Forex/comments/6or3db/sandiegomagapede_trading_plan_lesson_3_risk_and/