The psychology of my trading and what I’m going to do about it

As many other traders, I always had a problem with emotions before/during/after I make a trade. I know I cannot fix these issues because I’m simply human, but I know I can be aware of them and control them. That’s why I decided to create a small list of emotions/biases, write down how do they affect my trading and how do I struggle with each of them. On the other side, I would like to write down how/what should I think and how should I act during these emotional phases:

  1. Fear of being wrong
    Current thoughts: „I can’t have another loss“, „I can’t tell others that I had another loss or losing week/month“, „I can’t be wrong with this trade, it’s an A+ setup“
    Current actions: Failing to pull the trigger and avoiding trades, cutting winning trades, closing losing trades to early.
    New thoughts: „It’s not possible to have 100% winning trades“, „This trade is according to my plan and I should stick to it“, „This is currently a losing trade but it’s according to my plan“
    New actions: Leave the trade as it is and try to forget about it. Close the trade only if there is a strong indication that the price will go into the opposite direction.
  2. Fear of losing money
    Current thoughts: „I need a better trade setup to reduce losses“, „I am in profit. I cannot let this trade turn into a loss“
    Current actions: Continuously looking for perfect trade setups, Seeking for high win rate, Closing winning trades too early.
    New thoughts: „There is no perfect trade setup“, „My take-profit level is according to my plan and I will not change it“, „I have to accept the losses because they are part of the trading game“
    New actions: Leave the trade as it is. Stop-loss and take-profit are according to my plan.
  3. Fear of missing out a trade
    Current thoughts: „The market is moving without me“, „I missed the last setup like this recently“, „I cannot miss this trade“
    Current actions: Jumping into unplanned trades, Entering the trades too early.
    New thoughts: „This is not the first trade I missed and surely it’s not the last one. This will happen from time to time and I have to accept it.“
    New actions: Forget about the trade I missed and focus on next trade(s).
  4. Fear of leaving money on the table
    Current thoughts: „I’m on a hot streak and I should increase position size and make some serious money“
    Current actions: Holding trades too long and moving profit target too far from the initital take-profit level.
    New thoughts: „I have to stick to my plan“, „I will not increase my position size because it could increase my losses“
    New actions: Stick to the money management rules from my trading plan.
  5. Fear of market randomness
    Current thoughts: „I’m not 100% sure in which direction will the market go“
    Current actions: Missing the trade
    New thoughts: „Markets are mostly random and I will never be 100% sure about the direction. This trade is according to my plan and I have to take it“
    New actions: Take the trade if it’s according to the plan.
  6. Overconfidence Bias
    Current thoughts: „Last X of my trades were winning trades and this one will also be“, „I am a professional and I cannot lose money on this trade“, „My trading system is bulletproof“
    Current actions: Making trades which are not 100% according to my plan.
    New thoughts: „Markets are random and I can’t predict the future“, „My system is designed to find patterns which are not random but it still doesn’t mean I will be right every time I make a trade“, „Last X trades were winners but this one could be a loser“
    New actions: Stick to the rules. Stop thinking I’m the best trader ever. 😊
  7. Recency Bias
    Current thoughts: “Last X of my trades were losing trades and this one will also be“, „I will lose money on this trade“, „I have to try another trading system“
    Current actions: Missing trades which are 100% according to my trading plan.
    New thoughts: „My system is designed to find patterns in the market which are not random and that’s why I have to continue trading my system“, „I will never know if I have an edge if I’m avoiding trading after a few losses“, „The next trade could be a winner and could cover my recent losses“
    New actions: Forget about the losing trades and focus on the next trade(s).
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