Page 37 - Psychology Course Study Manual

Most traders when analyzing charts and “back-testing” trading systems fail to realize how

different the results would be if they actually where trading with real money as the market is

unfolding instead of looking at the market after the fact. This is why I am not a “back-testing”

fan, because the results usually are no where near the reality of how YOU would actually trade.

Most new traders fall victim to their own fear and greed when trading which causes them to

prematurely exit profitable trades or enter trades on the excitement of the moment. We have
all felt the anxiety that can creep into our souls as a trade becomes profitable in a short period

of time. That anxiety wants us to exit the trade now and take the quick profit. Taking the quick

profit will relieve the anxiety and make us feel good. Maybe the cause of the anxiety is the

greed to take the quick profit or the fear that the market will turn against us and cause a loss.

Whatever the reason, exiting the trade on anxiety is an emotional trade and good traders do
NOT trade on emotions.

Or perhaps you have trouble “pulling the trigger” and entering trades when your trading system
indicates you should. Most often, fear is at work here. The trader fears another loss! Not

trusting your trading approach and yourself can leave you a victim to fear. Or perhaps you live

in the past and not the present and you are again afraid of reliving past losses or even failures.

Or perhaps you don’t like using “stops,” correct “trade size,” or adhering to “stops” you have
already set. Dig deep enough into your psyche and you will uncover the reasons, most of which

have to do with your psychology.

This is why I say that I could give a good solid trading system to 100 traders and almost all of

them would trade it slightly differently based on how their emotions caused them to trade. In

the end, only those traders who can best manage their emotions will win have a chance in

winning consistently.