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Getting “Hooked” in a Losing Mindset

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  • Getting “Hooked” in a Losing Mindset

    Had a client this week that got "hooked" into a mindset that worked against him. Thought I share the trades as MANY traders do the same mistake and blame the losses on other things than what's real, their mindset, gets “hooked”.

    I mentioned this topic before, but a trade example may make more sense and hit home for you.
    Our minds are conditioned to LOVE patterns because they provide certainty, security, comfort and are predictable. That’s all well and good in our normal lives but for traders it can wreak havoc with trades, and cause repeating one losing trade after another. Here’s an example:

    Joe, (anonymous) 10 yr. veteran, was trading the DAX this week. He likes to scalp and leans towards Long vs Shorting trades (working on flexibility) See attached image.
    Anyway, when the morning started out the market made a higher highs. (above the small circle) and he went long at #1 and closed at #2. He was now in the mindset it was going to be a LONG day and would buy the at breakouts, to maybe catch THE BIG move. He took a long at #3 and exited at #4, took another long at #5 exited at #6, another long at #7 and exited at #8. Finally took the long at #9 added contracts at the breakout midway and closed at #10. For a nice profit. But he should have noticed, waited, and exercised patience until a support level was formed to take the best long.
    He had 3 losing trades before it worked, He missed the pattern his mind was in and he was “HOOKED” into PROVING he was RIGHT. That’s being hooked. Afterwards, looking at it, it was obvious but, in the moment, he was blinded. This is caused by conditioning the subconscious mind into bad pattern. This then creates and builds up an emotional block that will trigger and repeat the same bad pattern any chance it gets. The trader is NOT working from his conscious mind but trading from his subconscious memory.

    IN reviewing his trading day, we found another set of trades that were identical. Looking back, it was clear but, in the moment, when trading it wasn’t and he didn’t catch it.
    So, what do you do? 1) MUST DO THE WORK - examine a losing trade immediately and figure out the error and work to a new solution. 2) MARKET READ – work to read the market for what it IS, NOT what you want it to be. Know support and resistance levels 3) If it happens over and over and you can’t fix it, you must get help to remove/disconnect the block. 4) STOP TRADING – if you lose once and don’t stop than have a second loss, and a third STOP trading. The hook is more powerful than you. And you are on a slippery slope. Time to re-group thoughts and adjust your criteria. You run the risk of repeated losing trades. Get help if you need it.

    As always great trading and visit: www.RobinDayne.com and take the free “Emotional Trading Test” on the home page >right corner, for link. Or email: [email protected] - Robin Dayne Ask about the 30-day Personal Trade Accelerator Series and take your trading to the next level!

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