ICT Forex - Trade Psychology & Effective Journaling

Trade Psychology and Affective Journaling

In this module, the focus is on major psychological barriers in trading and effective journaling. The speaker shares his personal opinion on solutions for overcoming these barriers.

Fear of Missing Moves

• Fear of missing moves is rooted in not fully understanding your setup.

• Traders should have a well-defined plan and know their setup intimately to avoid anxiety about missing a move.

• A valid setup should be directly linked to time and price, with consistency in when it forms.

• Novice traders often lack this luxury and are unsure when or how to take a trade.

Fear of Losing

• Fear of losing comes from not having a plan or method that has consistency in hindsight and backtesting.

• Embrace uncertainty as a trader, but also determine if trading is right for you.

• Overleveraging and overtrading can lead to fear of taking losses, which can be fixed by lowering leverage and slowing down frequency of trades.

Effective Journaling

• Journaling can assist in trader development by providing insight into emotions, thoughts, and behaviors during trades.

• Effective journaling involves being honest with oneself, identifying patterns, setting goals, reflecting on progress, and using the information gained to improve future trades.

Impatience in Trading

The section discusses how impatience can affect trading and how it is a byproduct of lack of experience. It also highlights the importance of waiting for the best scenarios for your setups.

Impatience and Lack of Experience

• Impatience arises when traders are waiting for a specific level to buy or sell, but the setup is taking too long to form.

• Novice traders often lack experience and do not have the patience to wait for their setups.

• Inexperience can lead traders to take trades that are not part of their setups, leading to losses.

Importance of Waiting for Setups

• Experience teaches traders that losing sucks, so they should try not to lose too much when they do lose.

• Traders need to wait for the best scenarios for their setups instead of jumping ahead and anticipating them.

• Trading involves statistical guessing, so there is always uncertainty. Forcing trades or jumping ahead leads to wider risks.

Social Media and Trading

This section discusses how social media affects trading and why novice traders should be careful about comparing themselves with others on social media.

Effects of Social Media on Trading

• Social media can make novice traders feel like they are not good enough because everyone seems better than them.

• Many people on social media may be lying about their success in trading, so it's important not to compare oneself with others online.

Dealing with Social Media as a Novice Trader

• Novice traders who are easily affected by what they see on social media should avoid it altogether.

• Experienced traders who have a thick skin can engage other traders on social media and benefit from feedback.

Developing Discipline in Trading

In this section, the speaker discusses the importance of discipline in trading and how to develop it.

Fear of Not Being Good Enough

• The fear of not being good enough is a trap that exists only in one's mind.

• Engaging with others on social media while developing can be detrimental.

• It is important to focus on surviving long enough to appreciate and develop as a trader.

Fear of Losing Streaks and Drawdown

• Fear of taking losses or experiencing losing streaks is related to poor money management.

• Implementing a process or protocol for managing losses can help remove the effects of drawdown.

• Discipline comes from forcing oneself to follow a set of rules that are concise, detailed, and binary.

Lack of Discipline and Following Rules

• Humans have an innate tendency to break rules, but discipline can be developed through practice.

• Rules must be rigid, concise, detailed, and unambiguous.

• There should be three conditions for every decision-making process: go, no-go, or sit still.

Searching for the Next Best Thing

• Many traders fall into the trap of constantly searching for the next best thing.

• It is important to find what works for you personally and stick with it.

• Price action using open high low close (OHLC) data provides all necessary information.

Importance of Scheduling Time Away from Trading

In this section, the speaker emphasizes the importance of taking breaks from trading to avoid anxiety and burnout.

Taking Breaks

• It is important to schedule time away from trading to avoid anxiety.

• Knowing when certain things should happen can help reduce anxiety about missing a move.

• Taking a break can be fruitful for personal development in terms of discipline and experience.

• If you are doing well, it is even more important to take a break and force yourself to stop trading.

Finding Something That Works

In this section, the speaker discusses the importance of finding something that works and sticking with it.

Sticking with What Works

• The best thing you can do is find something that works and stick with it.

• No matter what system or method you use, there will always be losing streaks.

• Effective journaling can help you stay disciplined and follow rules.

Journaling for Performance Review

In this section, the speaker talks about how he uses journaling as a tool for performance review.

Personal Journals

• The speaker makes a daily entry in his personal journals at the end of each day.

• He does a weekly vlog on Saturdays where he reviews his total week's range on two pairs that he trades - predominantly euro dollar and cable pound dollar.

• He spends time planning and investigating certain setups before making trades.

• He tries not to trade more than two pairs because he wants to use his time most economically.

Overall, the speaker emphasizes the importance of taking breaks from trading, finding something that works, sticking with it, and using effective journaling as tools for personal development and performance review.

Understanding the Mindset of a Trader

In this section, the speaker discusses the three types of mindsets that make up a trader: analyst, trader, and gambler. The speaker emphasizes the importance of adopting an analyst mindset to stay disciplined and avoid impulsive decisions.

Three Types of Mindsets

• Analyst: Focused on numbers and not worried about uncertainty or fear.

• Trader: Weighing things in terms of outcome and seeking opportunities.

• Gambler: Impulsive, undisciplined, and pushing more leverage than they should.

Importance of Adopting an Analyst Mindset

• Sticking to what you see in the chart and your process is crucial for success.

• The gambler mindset can lead to toxic thinking and negative outcomes.

• Personal life events can affect trading decisions; it's important to have discipline and avoid trading when emotionally compromised.

Maintaining a Healthy Mindset

• Journaling how you feel going into the trading day is essential.

• Physical health affects trading decisions; avoid trading when sick or physically ill.

• Having hobbies outside of trading helps maintain a fresh perspective.

• A healthy body leads to an alert mind going into the marketplace.

Importance of Journaling

In this section, the speaker emphasizes the importance of journaling for traders. He explains how journaling can help traders to be honest with themselves and avoid acting impulsively due to emotions.

Benefits of Journaling

• Journaling helps traders to be honest with themselves and debrief after trading.

• It allows traders to release negative emotions such as stress, anger, or anxiety that may affect their performance.

• Traders should record their concerns or fears while watching price action in a trade or not in a trade.

• Screen captures and notations can help traders learn from their mistakes and reduce emotional attachment to ideas.

Consequences of Not Journaling

• Not releasing negative emotions through journaling can infect a trader's mind and performance.

• Without keeping a journal, traders may forget important lessons from bad trades they should have never been in.

Conclusion

The speaker concludes by emphasizing that journaling is crucial for a trader's development. It helps them stay organized, calm, and collective.

Importance of Journaling

In this section, the speaker emphasizes the importance of journaling for traders. He explains how it helps identify weaknesses and provides an opportunity to reflect on past experiences.

Benefits of Journaling

• Helps contrast personal expectations with actual results.

• Identifies weaknesses and opportunities for development.

• Provides a clear conscience by releasing emotional stimuli.

• Helps cope with uncertainty by detailing coping mechanisms.

How to Journal

• Reflect at the end of each day or week.

• Keep it simple by stating facts without adding emotionalism.

• Detail where you felt uncertainty and how you coped with it.

Final Thoughts

• Journaling is not a short-term activity but a long-term habit.

• Be honest in your evaluation and use journaling as an opportunity to develop yourself.

Coping Mechanisms for Trading Stress

In this section, the speaker discusses coping mechanisms for dealing with trading stress.

Discovering Effective Coping Skills

• When faced with a stressful situation, it's important to focus on coping mechanisms that have worked in the past.

• Coping skills used in high-stress trading environments can also be effective in other stressful situations.

• Journaling can help identify effective coping skills and positive experiences in trading.

Examples of Coping Skills

• Fidget spinners or playing cards can keep you distracted from market fluctuations during trading.

• Practicing palming or keeping a coin in your hand can also be helpful.

• Reading a book or stepping away from the charts can provide a mental break during trading.

Positive Self-Talk

• Use positive language when reflecting on successful trades and following predetermined rules.

• Cheerlead yourself by using adjectives like happy, pleased, or proud when reflecting on successful trades.

Importance of Honesty

• Be honest when journaling about your experiences but avoid being too negative or mundane.

• Reading your own words in your journal can provide comfort during periods of drawdown.

Journaling Suggestions and Psychological Well-being

In this section, the speaker discusses the importance of journaling and how it can positively impact a trader's psychological well-being.

Importance of Positive Language in Journaling

• Negative language in journaling can have a detrimental effect on a trader's subconscious mind.

• Traders should avoid using negative terms when journaling to prevent their minds from associating trading with stress or failure.

Personal Experience and the Value of Journaling

• The best trading book is the one that traders write themselves through their journals.

• Personal experience is invaluable in trading, and journaling allows traders to record their experiences and learn from them.

Using Journals to Identify Classic Setups

• Recording classic setups in a journal can help traders identify patterns and signatures that indicate potential trades.

• Traders should use their journals to build context around charts, including notations about what they think will happen based on market conditions.

English Keeping a Trading Journal

In this section, the speaker discusses the importance of keeping a trading journal and how to use it effectively.

Importance of Screen Captures

• Taking screen captures at the time of setup or confirmation is crucial.

• Focusing on only a few markets makes it easier to take screen captures.

• Personal notations should be kept private, but references can be made in the journal.

Adding Details to Charts

• Noting areas of stops and expected price movements is important.

• Making charts personal and unique helps with comfort and information retention.

Using Power Three Concepts

• Projecting ranges using Power Three concepts can help with identifying potential stop runs.

• Applying one standard deviation below the low can help identify distribution areas.

Overall, keeping a trading journal with screen captures and personal notations is essential for effective trading. Adding details to charts and using Power Three concepts can also aid in identifying potential market movements.

Optimal Trade Entry Form

In this section, the speaker discusses an optimal trade entry form and how to run projections on it.

Using Projections for Optimal Trade Entry

• The New York setup has an optimal trade entry form.

• Projections can be run on the fit to determine a 400 extension overlapping with one of the levels already arrived at.

• Several tools are used in these screen captures, including measuring from the highest body to the lowest body and recording daily high-lows.

Learning from Mistakes

In this section, the speaker talks about learning from mistakes and using them as opportunities for growth.

Adverse Trading Conditions as Exercise

• The speaker views adverse trading conditions as exercise that strengthens their skills.

• Recording expectations and actual outcomes builds confidence in their abilities.

• Being wrong is viewed as a learning opportunity rather than a defeat.

Forecasting Closes

In this section, the speaker discusses forecasting closes and using tools to predict market movements.

Power Three Applied to Weekly Range

• Power three is applied to weekly range on opening vertical line by hitting control Y.

• Thickest trendline is used to draw right on top of that then deleted with a little horizontal tick representing open.

• Focuses more on what if they're bearish and what highs will be rather than projecting close.

Hallmarks of Trading Strategies

In this section, the speaker discusses hallmarks of trading strategies and equal highs.

Equal Highs

• Hallmarks of trading strategies are outlined.

• Equal highs are mentioned in higher time frame scenario and conditions video for 2017.

Conclusion

In this section, the speaker concludes the presentation and invites viewers to visit their website for more information.

Visit Website for More Information

• Speaker concludes presentation.

• Viewers can visit website at the inner circle trader.com.