How To Kill An Emotional Pattern Affecting Your Trading?

We all have times when we perform at lower levels in our trading.

These are the times where we make the most mistakes and it's up to us to find out what's the cause behind them.

Every behavioral pattern has an emotion behind it. It is this emotion that is causing you to act the way you do.

If you find yourself stuck in the same mistake over and over again, it's your emotional pattern that is causing this.

So the focus goes from "How can I stop my mistakes" to "How can I break the emotional pattern behind my mistakes?"

In this article, I present a step-by-step guide to breaking an emotional cycle that is neglecting your trading performance.

Without further ado, let's dive into it:

Step #1 - Identify the main mistakes

The first step of the whole process is awareness.

The only way to raise awareness is by keeping a record of your trades in a trading journal.

You'll not recall events just by memory so tracking your trading is the unique way you can clearly study neglecting behaviors.

It's very important that you try to put your emotions and thoughts into words in your journal. You need as much information as possible so you can have a solid analysis.

Don't hold yourself in writing what you feel.

For now, I invite you to go to your trading journal and identify the main mistakes you've been repeating for the last month.

Step #2 - Find patterns

The objective is to find correlations between your mistakes and the emotions you've experienced before you made them.

Let's say that you notice you're repeating the same mistake many times in a couple of trades...

• What were your feelings before you entered the trades where you made the mistake?

• What was your emotional state at the time?

• Did you let being influenced for the last trade you took?

• Was this a win or a loss?

• How was your performance in that trade?

All of these questions are useful to understand if the same mistake is being caused by the same emotions. If so, you found a pattern!

For example, let's say you can't stop overtrading.

You notice that before the trades you shouldn't have taken, you felt frustrated and impatient. Now, you can say with some degree of confidence that every time you feel frustrated and impatient, you'll try to enter trades outside of your strategy (overtrade). You found the toxic pattern here.

How can you stop this cycle?

Step #3 - List down the factors that trigger those emotions in you

Now that you've identified the emotional pattern for your behavior, you need to understand what's behind those emotions.

These, are called event triggers and they are the most difficult to identify.

Why?

1st, because there can exist many triggers for one same emotion.

2nd, you're trying to identify the beliefs associated with these emotions which can be very difficult.

For example: After a loss, you can feel more vulnerable and even frustrated. This imbalance in emotions can give room for your next mistake:

It isn't the event trigger that causes your mistake, but the emotions it activates. So this means the event isn't the problem, but the way you perceive that event is.

Makes sense?

When trying to identify the event trigger for your emotions, recall past events and remember what you did before you opened the charts that day.

Try to really go deep here because it's the awareness of these events that will allow you to solve your mistakes.

Here, are some examples:

(event-trigger --> emotions-trigger --> response/mistake)

• 1st loss --> Greed, frustration --> revenge trading;

• Bad sleep --> Negativity --> Disrespecting strategy;

• Money pressure --> Anxiety, greed --> Overtrading;

• Discouraging comment from a family member --> Confidence decrease --> Missing opportunities

• Market uncertainty --> Fear of the unknown --> Over analyzing --> Overtrading

• Winning streak --> Over confidence --> Widening risk

• Being in a hurry --> Lack of focus, anxiety --> Not journaling

Step #4 - Make action steps to deal with the emotion-trigger

Some of these events trigger are easy to fix as "bad sleep" or "being in a hurry". But there are others that need a little bit more attention.

For these last group of events trigger, you want to look at the way you see them - your perception.

• How do you see a loss in trading? What are your beliefs associated with it?

• How much do other people's opinions affect you?

• Do you see the market as an uncertain place or a predictable one?

• Why are you trading? What's your main objective?

• Do you expect to make money in your first year of trading?

• Are you setting your goals too high? Is that pressuring you to make money somehow?

Answer these questions on paper. You'll reach your deeper beliefs.

But how can you fix them?

You can formulate new ways of acting when you encounter these emotions next time. Make small action steps that stop you from acting on autopilot (subconscious beliefs) and actually act consciously and intentionally.

An example would be:

Every time you feel a lack of confidence, you know it will lead to X mistake. So go to your saved winning setups and study them for a while. This will boost your confidence.

Or, every time you feel frustrated, take 10 deep breaths and go for a 5min walk. This will rebalance your emotional state.

Step #5 - Execute these actions every time you feel the emotion coming

Every time you feel the emotion(s) trigger coming to the surface, you can break the cycle by practicing the conscious action you've set.

You will be able to produce other kinds of responses.

Your mistake is fixed if you practice your plan of action enough times to turn it into a habit; Until you finally, associate good emotions and beliefs with the event trigger that used to cause you bad emotions before.

Conclusion

With a solid trading journal, you can find curious patterns in your behavior and emotions.

Only then, you can work on your mistakes from a deeper understanding.

That's it!

This is the guide to help you kill an emotional pattern that is destroying your trading.

Try to find your mistakes, emotions, events trigger, and your perception of them!

I hope this was a useful read for you!

Again, nothing is done until you put the work in! So what are you waiting for?

I have helped a lot of traders find their weaknesses and face their trading problems with the Trading Psychology Program.

It’s a 1-1 program with a 30-day duration to help you solve the root of your trading inconsistency.

Click the link to access the full structure of the program.

If you have any questions you can always reach out!

See you soon,

Happy New Year!