In this episode of Truth About FX, Walter gives two key points on how you can improve your trading habits and thus get better results from a psychology point of view. According to him ,it is always useful to get into the habit of writing your own journal. He also talks about how a hypnotherapist can help your subconscious into forming the correct habits.
Hugh talks about how his hypnotherapy session with Jorge has helped him improve his own habits.
Download (Duration: 07:34/ 9.1 MB)
In This Episode:
00:36 – rewarded for the habit
02:06 – kicking myself
03:13 – have a reminder
04:14 – spot of grass
05:08 – find a hypnotherapist
07:03 – get the recording
Tweetables:
Reward yourself [Click To Tweet].
Create a routine [Click To Tweet].
You need a cue [Click To Tweet].
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. How do I change a bad trading habit?
Walter: Change a bad trading habit, okay. I’ll give you two techniques. I am just going to look at this from a Psychology point of view. The first thing is you are somehow being rewarded for doing this habit.
This is the behaviorism approach for anyone who has been through Psychology course. What you want to do here is you want to set up — and a really good book which I’ll put a link in the show notes is the Charles Duhigg book. I don’t know if anyone has read that one. The Duhig book about building habits.
I would definitely have a look at the “Power of Habit” by Charles Duhigg but the idea here is this: that you want to reward yourself for basically doing whatever you want to do, not the bad habit.
Let’s say for example that I have a bad habit of closing my trades before they reach the ultimate target, or before the trailing exit kicks them out, or whatever it is. I am just closing my trades too early.
What you can do is you can create a routine that, essentially, you get rewarded just like you know, you’ve heard. We’ve all heard of Pavlov’s dog. You get rewarded for doing the right thing.
Let’s say that I know that I usually take profit really too early. I don’t let my trailing exit get me out of my trade. Instead, I go “Oh, I think it’s going to turn around here and make it out.” And then, of course, sometimes I’m right and the market kind of turns around about that area but sometimes the market is just retracing and even my trailing exit would have been triggered and I would have been, you know, the market would have given me another 50% more profit. I’m kicking myself, right? “Why did I do that?”
What you do is you need a cue. When I take my trade, then I have to write it down in my journal and say, “Okay, why did I buy the Aussie-Yen right here? I bought it because of this…” You write it down in your journal and you say, on the exit, you give yourself a rating.
Let’s say like out of 0-10 rating on how well did I do my exit, your cue is the writing in the journal. That is your cue. When I actually close my trade out, let’s say I’m just letting my trailing exit do, and it’s like a script or an EA or whatever that takes my trade out for me.
If I let the EA do it and the script do it without human intervention and me jumping in and go, “Oh, no. It’s Friday and it’s almost the end of the week. I should just get out of this trade. Anyway, if I could always get back in next week if I want to re-enter it” or whatever. Instead of doing that, just let it go and at the end of your trade, you give yourself a rating based on how well you did on that exit. And then, you can pay yourself a reward.
What you are trying to do, you want to basically have the reminder which is the cue, which is writing it out in my journal and then the reward is, if I did it right, if I actually followed my rules, I get rewarded for that. You are just rewarding yourself for doing the right thing. That is one approach.
Same thing like the way that you teach a dog to do the doody-doo in a right spot. A lot of people — and this happened in my family. You take the dog and if the dog does a doody in the wrong spot, you rub the dog’s nose in the doody or whatever. That’s just crazy.
What you’ll do is you wait for the dog to go and do the doo-doo in the right spot and then you keep praise up on the dog. And so, you just wait for it to randomly kind of happen and then you set it up so hopefully it happens.
What you’re doing is you are rewarding that behavior. If the dog thinks, “Every time I do the doody over here in this spot of grass or over there at the corner of the yard, they give me a milkbone. Awesome. I’ll do it everyday, all day long.” That’s a routine.
That is kind of what you’re trying to do here. The Charles Duhigg book is great if you are into this approach. The other approach is what happens if you’ve got some subconscious thing that is affecting you.
The best thing that I can offer, best advice I can offer there, in other words is you know you shouldn’t move your stop but you keep moving your stop. You’ve tried everything and you keep doing it. You know it is destroying your results. You know that when you backtest in Forex Tester, it works because you are using your trailing exit but when you go live, for whatever reason, you keep making this mistake.
What you can do is go find and look up for hypnotherapist in your town. Find a hypnotherapist, call them up. Explain to them what is going on. It’s just a bad habit. Usually, what will happen is you can go to a hypnotherapist. They’ll hypnotize you, they’ll record the session and then they’ll give you the recording.
Sometimes, it may cost you a little extra for that and then you can listen to that after. So you’re really only have to pay for the one session and the recording and then you can do that. That is what I’ll recommend, if you feel like it’s something that’s going on at subconscious, that no matter what you try you keep making the same mistake.
Go find a good hypnotherapist. They’re probably not going to have a lot of experience working with traders, that’s okay. Some of them will but most of them usually it’s smoking and losing weight. Those are the two big things that they do but it’s okay.
You explain to them what it is that you’re doing and they can create a script for you. They will use that script when you go and it doesn’t matter even if you don’t go under a deep hypnosis the first session, once you get that MP3 or DVD or whatever they give you, that is what you want and then use that every single day.
That is really the way to go there. I would highly encourage people to look at that as well. Either way, whichever one of those two things you think makes the most sense. Maybe you try the first one and it doesn’t work then you go find a hypnotherapist.
Either way, those are the two ways that I would say would the best way to kind of overcome a challenge like that.
Hugh: Okay, cool. I just started listening to Jorge’s hypnotherapy session in the forum. I find it really interesting. It’s really very useful. He gets you really deep down there and then he put those things in your head, right? Which is really cool.
Walter: He is great. Do you know that he used to work with or maybe he still does work with pro athletes in stuff like tennis players and stuff like that.
Hugh: Oh, wow!
Walter: He’s like a well-known dude down in the South America. He’s awesome. Jorge is great. The great thing about hypnotherapy is it’s everywhere. It’s in every country. You’ll find somebody who is doing it so it’s not that hard. Just make sure you get the recording and then you’re good to go.
Hugh: Cool, it’s a great tip. Thanks, Walter.
Walter: Thank you.
SHOW NOTES
“The Power of Habit” by Charles Duhigg
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