Trading Psychology Archives

Inspirational Trading Quotes

Taken from Joe Ross – Trading is a Business: “Some of the greatest trading stars have been people who have had a bulldog approach to trading. They have withstood the enormous financial strain and pressure of being net losers in the markets until they mastered their chosen profession. Along with staggering financial losses, they have […]

The Lake Wobegon Effect

The Lake Wobegon Effect is a cognitive bias and is named after a fictional town called Lake Wobegon. It comes from a radio show in the U.S. called A prairie Home Companion and each show finishes with the words, “All women are strong, all children are smart, and all men are good-looking.” The Lake Wobegon […]

Let’s Talk in Percentages

I often receive emails or phone calls from people saying, “Help! My trading account is down $5000 and I don’t know what to do.” It’s usually followed by “My partner is going to kill me.” My first response is “Let’s take a step back. What’s your account size and what percentage does the $5000 represent?” […]

NIck Radge, Professional Trader, on managing losses

How Does a Professional Stock Trader Manage Losses?

Nick Radge explains how professional stock traders manage losses. An amateur trader will try to avoid losses but this is not the correct way to trade. In this video Nick mentions our new US Momentum strategy that has just been released. I want to talk about a situation; when you come home from work, you’ve […]

The Markets Will Chew You Up and Spit You Out

My interests in the financial markets were initially very brief and, interestingly, in 12 year cycles. Starting when I was around 12 years old in the mid 70’s when I use to look up my Dad’s mining stock prices for him once a week – generally penny dreadfuls. I do remember his stories about trading […]

Drawdown Diagnosis – what’s wrong with my trading?

Drawdown diagnosis – aren’t all drawdowns the same? After all, a loss is a loss, right? Wrong. Not all drawdowns are equal. A drawdown is a decline in your trading account or strategy. Handling a drawdown is one of the hardest thing for traders (alongside sticking with their strategy). Analysing Drawdown I came across a […]

Trading Psychology 101

It was recently suggested that I should write a book on trading psychology. Unfortunately I’m not the right guy. I have street smarts, including sitting on a couch for 6-months talking it through with a therapist, but I’m in no way qualified to write a book. I do see many issues each week that traders […]

How to Manage Winning Trades

This stock trading question about winning trades comes from Jacob G. whose #1 challenge is… “My challenge is managing winning trades and knowing when to close a winning position…” This is a very common question, mainly because there are various psychological issues at play. The fear of giving back existing profits is probably the most […]

How to Handle Drawdowns

This stock trading question in regards to how to handle drawdowns comes from Ben B. whose #1 challenge is… “Working with a system where the drawdown is so big that I can’t sleep at night?” A great question. Let’s start by defining drawdown. Drawdown means the largest equity decline your strategy will theoretically have in […]

How to be a Disciplined Trader

This question about How to be a Disciplined Trader comes from Mirko M. who asks… “There is no strategy that can work if I am not disciplined to apply [it]…and I am not. So how do I become disciplined?.” First, let’s define discipline. Discipline is essentially doing what you know you should do, whether you […]