Trading Mind Games: Psychology

I attended a seminar last week that was trying to sell me a product called "HomeTrader" - I will blog about that company later - but for now the topic is about trading being a mind game. Trading shares, forex or any other equity involves what I call the "Trading Mind Game". As human beings we are influenced by our environment.

Trading the markets is about Psychology - controlling the way you feel, you confidence levels and your emotions. The conflict happens because traders are human beings - we have feelings, emotions and confidence levels that are and can be influenced by the outside world; the news, influential people, business contacts, internet websites (like this one), internet forums and close friends.

Now the factor that got me started on this topic was after I attended the seminar, the salesperson called me up to setup a meeting to discuss the opportunity of joining their HomeTrader program. So, with an open mind I went to their Sydney offices based in Crows Nest. This is where the a part of the "Trading Mind Game" intensifies.

The "Trading Mind Game" begins when you wake up and doesn't end until you give up or quit trading. The game is played at all hours of the day, when you read about your stocks, look at the stock charts or talk to your associates, friends and family about stocks or your trades.

When I stepped into the office for "HomeTrader" the "Trading Mind Game" is on a higher plane. I came into the office with baggage - trading experience that I have had, a certain level of knowledge and a certain level of confidence about my trading. You know what I came out with? Of course my trading experience can't be taken away but my knowledge was highly challenged and my confidence was shattered.

This is the way they (HomeTrader) sell their programs - for total beginners they force feed you a bunch of information, wowing people about the potential returns - they have people earning more than 500% in some financial quarters - all this information is posted in the seminar room walls. Of course they say "Past returns is not an indicator of future performance." Still, their "Trading Mind Game" starts there. For those greedy beginners, they would be wowed by the returns and hence join the program. If they are persistent and follow the HomeTrader program, success will no doubt follow. Greed has no place in trading.

Now, for those traders with some experience - this is how HomeTrader sells to them... for people like me. Well, I guess they target traders who are losers. The traders who trade but simply can't get returns - if you're one of them - please keep reading this blog, keep an open mind and start reflecting on your mistakes! So I attended the 1-on-1 meeting. I have to say - the salesperson wasn't really a good salesperson. I felt the way he sold the product was amateurish and unprofessional. Basically the one hour meeting was setup to undermine my own trading system (that I have created by trial and error on my own), undermine my understanding of the markets , to tell me that there was a better way of trading. Of course there could be a better way of trading... but I felt their system was a rip off - I glanced at their training program and schedule - there was hardly any content - you could probably learn more about your trading by reading stuff online, books and by reflecting on trades. They also had a selling point about how people spend tens of thousands on university degrees and this program is a steal at this price. But basically, I'm peeved off at how the salesperson took a high and mighty stance of my system is better than yours because every buy or sell is quantified and planned as well as back tested... Of course - it works with some persistence - anything works with persistence. I wonder how many losers they have following their system as only the winners were posted on the boards.

You shouldn't trade when your confidence is shattered. That's why I took a short sabatical just to collect my thoughts, read over my trading logs and reflect over what really happend. Hope you learnt a thing or two about the "Trading Mind Game" while reading this entry.