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Trading Psychosis – The Vendors Dream

I have wanted to address this subject, and after a few beers this Memorial Day weekend, sat down and banged it out. It should resonate with most folks, even traders that have eventually enjoyed success. But I’m simply trying to lay out the mental/emotional workings that surround the difficult process of finding a way to trade successfully. And it includes the role that almost all vendors play in that discovery as they prey upon the relief of pain that’s encountered by those who diligently attempt to master the market.

So, here’s a skeletal breakdown of what typically takes place … 1-16 of what steps the trader experiences as he or she enters the arena of the market.

1. I see how basic the market moves, either up or down, and how easy money can be made.
2. I open an account and trade with an initial strategy and lose money again and again and again.
3. I begin feeling frustrated and feel the PAIN of losing.
4. I don’t question my capability. I know it’s because I don’t have a successful method/strategery.
5. Someone has to be making money and so will I, but I need help.
6. The search: reading trading books and hunting down a good course that promises to teach me how I can make my fortune, or at least a living, for a fee.
7. That nominal multi-grand fee is reasonable since I’ve lost that much in my trading. Whew, thank god I’ve got support now. My PAIN is gone, replaced by relief and excitement.
8. The course marketers/vendors will teach me to make money.
9. But it’s not working, and I’m still trading like a retarded monkey.
10. IT MUST BE MY FAULT because I am obviously not trading the paid-for strategy correctly. They’re doing great, and I hear about it. But I’m still losing.

Reality Check:

It is our nature to accept the FAULT for not using the education we paid for in the right way. We’re too “invested” in it. This is how and why trading education marketers make so much money. They are simply offering to relieve your mental anguish – your PAIN. And any time you don’t achieve success, it’s your fault, not theirs or their method. This is human nature! This cycle of thought is reinforced by the promotional success stories, testimonials and apparent legitimacy of the training or the company.

11. Eventually I finally realize something is rotten in Denmark and not with me.
12. I look for the “real thing” training company/person/mentor/method/chatroom etc.
13. I pay for more education … but that doesn’t work either.
14. At this point I’m even more frustrated, angry and still suffering PAIN!
15. I’ve questioned myself and now question all courses and if anyone really does make money trading.
16. WTF do I do?!?!?!?

I don’t have “the answer,” but I believe that I can offer some useful and real insight into how to maximize your potential success to trade for a living. And let me assure you, I’m very, very qualified to address this subject for numerous reasons. I’ll follow up within the week.

Any and all comments and feedback are welcome here on this thread in the interim. Seriously! They can only help add to the follow up blather that I write, making sure I cover every element of importance and with substance that will hopefully help or assist those who’ve found themselves in the “trading psychosis” loop … as I’ve been there myself a couple of times early on during the past two decades of my own experience in this crazy, challenging and potentially rewarding endeavor.

I've included my regular chart analysis with just a few of the indicators I use to discern market behavior.

Click image for original size
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Above chart is a joke ... my bad! And I had so many more indicators and lines I wanted to draw on it, ha ... but ran out of beer (and time) and have to go to bed. Looking forward to following up on this topic and also some good trading for everyone visiting mypivots and sharing analysis and charts here!
I'm OOC (out of commission) for the next week or so. I thought this would be a good thread to start with very fertile and useful information and interaction. Folks, feel free to jump in and offer some good chit chat that pertains to the theme of the thread. I believe it would be very useful for just about anyone. And thanks for your comment to help facilitate things here myptofvu!!
haha.. this is funny.. and so true. I am now at point 13, but pretty confident i will succeed now.
Hi all- I'm new to this site and forum and have found it very helpful.
Thank you Monkey for knocking some sence into me and saving me some money with regards to the vendors. I've completed most of your 16 steps (more than once over the years), and I'm still floundering trying to learn new strategies. I wanted to post regarding money management and some proof for anyone who is not yet a believer in strict money mangement. My trade results for the last half of June (18th -30th) had a win rate of 43%- dismal at best, yet my drawdown was less than 1%. I attribute this to a very strict money mangemnet rules. I'm starting feel like "I get it" regarding money mangement and wanted to share. Now for the strategy and phsychology aspects of trading any and all help, suggestions comments would be greatly appreciated. Good trading to all!!

New to the forum ... came to this thread 1st. Great words of wisdom to be found here. Wife says I've been gambling too much (and I try some God-awful rationalization on her to win her confidence back).

I trade ForEx ... 3 margin calls this month in my Micro account. She says I'm not sticking to strategy.

Read a couple of books before testing these waters. This forum is the only place where I've come across the concept of the CONTRACT.
This is an exert from page 2 of this topic;

Money Management
(all $ amounts are net)
1 Max drawdown $500
2 If $300 profit, never
go below $0
3 Booking profits:
profit book
600 250
700 350
800 500
1000 600
1200 800
1500 1000
2000 1500

I was wondering if anyone does anything like this? I tend to start trading at around 8:20 when gold and bonds open and trade all the way till 4:00 and on trend days/high volume days I'll trade till 4:15. And I block my P&L at the bottom of the trader dom and TRY to only watch it when I am out of a trade. But I would be willing to try this at least on paper and see if it works better.
I think that's some good info, Joe. What I'd add, is that each person should write down what $$ numbers work for them. And they have to make sense in the overall scheme of things with their trading. But the numbers aren't too far off (in a percentage perspective) from what makes and saves a trader from day-to-day, week-to-week, month-to-month and year-to-year outcomes.

That's definitely all about a "safety net" that should be employed by virtually ALL traders (me included) or we find ourselves melting down.

Just reiterating what I've written for myself and what I think is the most important aspect of surviving and then thriving as a trader.

And I'm pulling this from the Psychology and Discipline MSWord document that I posted on page 2 of this thread. I believe there's some good stuff in there!
Those numbers look good to me on a per contract basis for my scalping account as for swing trading it wouldn't work. I would multiply this by 5 and make it weekly as well as daily....i.e. if your up 1500 for the week per contract and you revert back to $0 trading should cease for the rest of week.
I've wondered about the appropriateness of my posting here as I'm trading ForEx and not emini contracts. I suppose the principals are the same. How long have you guys been at this?
Originally posted by JMSummers

I've wondered about the appropriateness of my posting here as I'm trading ForEx and not emini contracts. I suppose the principals are the same. How long have you guys been at this?

I have been a full time trader for almost 5 years. And profitable in stock options for 2 years back in the day (the internet boom)

Is there any significant advantage to forex over the eminis, or the stock market?

Since this is psychosis thread I have been trying for the better part of a year to become a larger contract trader but become frozen and panicked when I trade out of my comfort zone. My trading significantly changes when I go from 3 contracts to 10. I would love to trade a 50-100 lot with the same attitude as I do with 3, and for the record I have never traded over 20 cons I got slammed 3 years ago and still can't mentally get over it, although I recovered most back that day and all back in 3 weeks, I have rewired my thinking to large trading equals large loss. I have tried many times to increase my "size" but to no avail. If any other trader has dealt with this and has found away out I am all ears. I am wondering if the way to it is wake up one morning and say I am going to do a 20, 30, 40 or what ever lot, then going down from there. I still have a calender on my desk of where I ought to be now in # of cons. I had planned to double my base bet every contract change.
This guy must have read my post on page one!
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