In this episode of Truth About FX, Walter talks about the impulse control and the psychology of overcoming this trading barrier. He shares some cognitive tricks that can help you work on your trading impulses. He also lets some other tricks off his sleeves on how you can work around your trading discipline and manage your risk.
Download (Duration: 04:18 / 4.93 MB)
In This Episode:
00:42 – impulse control
02:03 – trading partner
03:26 – tackling subconscious
Announcer: Sometimes, forex trading is a wild and wooly place to be. That’s why Hugh is here, to post your questions to Walter, the naked forex guy. Hugh’s got questions and Walter’s got the answers. Here at the Truth About FX Podcast.
Hugh: Hi, Walter. A trader wrote in and asked — is asking — this person has a lack of discipline. What should they do?
Walter: There’s like a gradiance to this. What I would say is if you completely have problems with what we call in psychology “impulse control” and you just can’t stop. You just can’t like you go and gamble all the time in Las Vegas or whatever — Atlantic City or wherever. You go to Macau or wherever the nearest gambling center is. In Australia, it’s the nearest pub. They’re everywhere.
If you do that then maybe it’s just trading is not for you but if you feel like you still have some shred of discipline and you can make this work and you really believe that, you can ask people.
You can ask five of your closest friends and say, “Would you say that I would ever be able to restrain myself from doing X?” — whatever your thing is or whatever you love to do — and if they all say, “No, man. You’re not going to be able to stop doing it.” Then, maybe it’s just not going to work.
There are different ways to do it but I’ll link some up for you in the show notes that you might want to look into that will help you with your impulse control because that’s what this is called from the Psychology point of view.
People can’t control themselves. They’re just impulsive, impulsive people. What I would say is maybe work on that. There’s another thing that you could do. Get a trading partner.
Have someone you’ll talk to every week at a minimum and they go over your statements and make sure — if you’re trading live — make sure that you’re following your system. If you’re not trading live — you’re trading demo — they can still go over your statement and make sure that your following the system.
If they noticed there’s a loss there that’s 5x what your stop should be at, they will call you out on that. You need to get someone who’s definitely going to call you out on that. So, have a trading partner.
The other thing is if it gets really crazy, you can actually have someone who has the pass codes to your trading stations and so, what they can do is — let’s say, your trading the D1 charts and you’re only allowed to make decisions once a day.
Maybe in the past you were closing your trades too early or whatever, not sticking to your system and it was just killing you. What you can have is somebody — like a husband or a wife or whatever, a friend — who has the codes to your trading stations and they’ll open it up for you once a day.
And then, they’ll change the code or whatever so that you can’t go in there and mess with things. That’s another way to do it. That’s kind of like locking the door and not letting the kids out or whatever.
It’s crazy but you can start with that and build up with to some discipline. That’s what I would do. I would tackle it from a couple of different angles almost like a conscious or a left brain sort of thing where you have a trading partner or somebody who has control over your platform.
The other one would be tackle your subconscious through hypnosis or subliminals and working from those two angles that should be able to get you started on the road to a discipline.
Also, having a journal and looking back at your ideas, why you decided to do the things that you do. You can look back at that and go, “Wow! I can’t believe how impulsive I was and crazy I was back then.”
That’s another thing, to have a record and see over times if you do actually change. That’s what I would recommend.
Hugh: Awesome! Those are great tips. Thanks, Walter.
Walter: Thanks, Hugh.