What is the hardest bad habit to change in trading?
The trading market is a magical place where once you enter, the desires and weaknesses in your human nature are infinitely magnified. Sometimes, after a period of frenzy, you may look back and realize that you don't recognize the self that was trading.
This phenomenon is quite normal, and many people have experienced it. It's not too distressing to have some bad habits in trading because we are all human, and everyone is going through the same things. The difference lies in whether we can become self-aware and then exercise self-discipline to correct them.
Many people are not focused in trading and have too many ideas.
A friend of mine, dissatisfied with the poor performance of the stock market, decided to switch to futures trading. Initially, he asked me if it was feasible to bottom-fish lithium carbonate. I checked and it indeed seemed to be at the bottom. He then mentioned using a very low leverage and topping up if wrong. I thought it was okay and reminded him to make a plan and execute it.
A few days later, he told me he was now watching iron ore, silver, stock index futures, rebar, coke, gold, soda ash, crude oil, and I felt a bit of a headache.
After a few more days, he said that his long position in soda ash was stuck, but the opportunity for lithium carbonate had arrived. Should he enter or not? If he entered lithium carbonate, the positions in both varieties would be too heavy, but it would be a pity not to, after watching the opportunity for so long.
As an onlooker, I can clearly see that this is due to greed, hoping to look at more varieties, grab more opportunities, and make more money. It's the same as my early trading, where I felt that the market was full of opportunities to make money, and it was a pity to miss any. I was calculating that as long as the market fluctuated by 1000 points (in forex), if I could catch it, it would be 100,000 dollars, and with more varieties, it would be a compounded income, so my mind was full of the idea of capturing all opportunities, wanting to make money from everything.
At that time, I was also a player in the game and couldn't see where my problem lay. But we must understand that a man who is not focused is not a good man, and a trader who is not focused is not a good trader.
We need to face reality; the trading market is even more ruthless than the ordinary workplace. If we can do well in a few varieties, one type of market trend, and thoroughly study some varieties, it is enough for us to make money.
My own later approach was to make a spreadsheet, listing out each of my trading processes, including the process of the trade, what I did, if there was a loss, what was the reason, if there was a profit, whether it was executed according to the trading plan, or was it due to luck, and so on.After listing everything, by summarizing and reflecting on a weekly basis, I realized that the mistakes I've been making have been recurring, and I've noticed that being greedy for various opportunities leads to losses in the long run of trading (I used to be immersed in the highlights of my profitable moments, not realizing that I've been losing money all along).
So, I started to correct and narrow down my approach bit by bit based on this table, which proved to be a very effective method.
Many people also have a habit of counting money during trading.
Once their orders are placed, they fixate on the profit and loss amount, becoming very happy at the slightest profit; when the profit begins to retract, they start to worry; and if they happen to incur a loss, their mood for the entire day becomes very bad. They check the market every two minutes on average, and after a few market fluctuations, their mindset deteriorates, causing them to feel extremely uncomfortable, sometimes to the point of having to close their positions, only to see the market take off afterwards, leaving them full of regret and frustration.
Some people also harbor resentment towards closed orders, for example, after a long position has been stopped out with a loss of 1000 yuan, which has become a settled matter, but they just can't let go, watching the market rebound and calculating that if they hadn't stopped out, they could have lost 500 yuan less. At this point, feelings of regret, frustration, and even anger towards the market grow stronger, and they start to feel an urge to make up for the loss. Unable to resist the voice in their hearts, they begin to trade frequently and heavily without a plan, eventually leading to losses.
Every time the market fluctuates, they have to calculate internally how much more they have lost, and how they could have made more if they hadn't done so.
This is a complete lack of a holistic view of trading.
We must consider that we are not making just one trade, nor are we gambling; we simply want to earn some money through trading to improve our lives, so we must make plans and preparations for long-term trading, possibly involving hundreds or thousands of trades.
If you have no trading plan and just dive into the market, focusing on every minute change, it's natural to be carried away by the market trends.
We should have long-term goals for profit and loss; what we should look at is whether we can make money after 100 trades, not just one or two instances of profit or loss.Moreover, it is quite normal to incur losses in transactions; one should not always expect to profit without losses. As long as you control the losses and grasp the profits, our gains and losses will offset each other, and the final outcome will still be profitable. That is sufficient. This is also why I always emphasize the importance of focusing on the profit-to-loss ratio and success rate of the trading system; these are the key factors that determine whether you can ultimately make a profit.
Additionally, after placing an order, try to avoid checking the market frequently. Set your stop-loss and take-profit levels and let the market run its course. Extend the time intervals between each check of the market; do not constantly count your money or indulge in fantasies. We should maintain a certain distance from the market to improve our execution.
Also, do not think that you can solve all bad habits at once. There are many bad habits in trading, and I have only mentioned a few that I consider more serious. We have been carrying these bad habits for so long, and it is difficult to correct them all at once, as I mentioned earlier. It is still necessary to list them out, inspect them one by one, and then correct them gradually from easy to difficult.
In fact, after making these corrections, you will feel a sense of achievement. Although it may sometimes be as painful as scraping the bone to treat an injury, once it is healed, it feels like a rebirth. You will also take pride in overcoming the weaknesses of human nature.
I hope everyone can engage in self-reflection and self-improvement.