Trading Psychology. It tells you what kind of trader you are.
If we really spent some time upstairs, between your left and right ears, what kind of thoughts would see and hear swirling through your head?
Trading psychology, as touchy and feeling as those words are, are detrimentally important to your overall success as a trader. There has never been in my life, something that required such deep introspection and careful consideration and planning. I've found myself so emotional at one point, that I was sitting in a corner of my walk in closet, in bitter violent tears, with my hand on my heart feeling my pulse and nearly hyperventilating at the thought of what I had risked trading only moments earlier. I'd made a decision that put my entire account equity at risk trading the emini S&P...nearly $15,000 in the heart of a FED announcement. If you don't think trading psychology is critical to your overall success as a trader, you're living in a delusional state. If your're one of the 10 people on earth that don't have an issue with trading psychology - the voices in our heads that drive our decisions all too often - congratulations.
I ask new traders that come to BackToTheFutureTrading.com a series of questions now, that help me determine some things about them early on in the process - things that they may never have considered especially if Trading Psychology was never really a focus of theirs. I ask them to look at a chart and tell me what they see. Do they see trend moves that went on forever, or do the reversals and counter trend setups stand out to them more clearly? Do they think the trades took too long to hit targets, or not long enough? Questions that help me understand who they are in their mental core - questions that most traders unfamiliar with trading psychology don't ask themselves until its far far too late.
I recently came across a very valuable link, to a free Trading Psychology personality test. 35 questions, the likes of whom you'll struggle to understand why you're being asked about in the first place. But at the end of the test, you start to see a pattern emerging, and in the free report you're sent, a picture of who you are - right now - as a trader. Something that helps you understand exactly what's going on in your mind, and why you do the things you do consistently. Trading Psychology, in a free report.
Go here if you'd like to see for yourself: www.tharptradingtest.com
I took mine, and when I was finished I thought - yeah, that makes sense, actually.
Sometimes an outside perspective is important with these things. People see things about us that we're unwilling to admit about ourselves. Trading Psychology is about understanding those strengths and weaknesses, and setting yourself up for success before you walk onto the battlefield each day with your account.
It's encouraging to know that there are other people out there like VanTharp that have put 2 and 2 together in a test that helps us drill down deeper into ourselves and work out all the cobwebs before we lose countless thousands in the process.