In Trading Routine and Psychology

Remember that demo account you had, where you doubled the balance in a matter of weeks? After all, it’s the reason you took your paycheck money and put it in FX to begin with. What seems to be the problem now that you have your own money in there?

I post articles filled with theory and potential solutions but I feel like this is a highly overlooked element that gets ignored far too much in this business. If there’s a ‘theory’ based article I don’t want you to skip, this is the one.

Here are three huge clichés about trading FX that we’ve all heard before, and separate the winners from the losers:

1. The trend is your friend
2. Let your profits run
3. Cut your losses short

They’re clichés for a reason. They work, and they’re true. But doing them is another story.

Today I want to add something to this list:

4. Take Action

Here’s a quote that needs emphasis:

“I watch trade after trade go by that would have been a winner, but the one I ended up taking was a complete loser.”

Some quick shots at this issue off of the top of my head:

1. Never hesitate.
2. Be on your toes. Focus in sharply on your chart and pull the trigger.
3. Control your risk. Most of the time you don’t take the trade because you are subconsciously aware of how much you could lose.
4. Curb the doubt. You know what you’re doing. You didn’t doubt your actions on the demo account.
5. Take the easy ones.


You rightfully want and should plan out all of your trades, but don’t think that just because you didn’t spend 2 hours planning it out means it won’t be a winner. In fact, I find that the more I think about things the more things get screwed up, to say it plainly. Traders that have tendencies to overanalyze markets get caught up in a freakish pattern of actually undertrading, which is just about as bad as overtrading. In both scenarios the result is, many times, negative, depending on how you do things.

My daily plan is put together in a matter of minutes. I see what I need to see, and realize that there is only so much news out there that is truly going to shape the charts in front of me.
Ultimately, when someone comes into the market with a fist full of cash and moves it sharply, no fundamental data is going to tell you exactly when and where this is going to happen. But the technical levels and methods we use here will. Many of these levels are formed on an intraday basis, however, so constant monitoring plays a major role in your success.

Get comfortable, but not too comfortable

You’re not going to trade successfully if you’re under too much stress. By nature, I ‘m high-strung. I have always been this way and doubt it’s going to change any time soon. I take trades I’m comfortable with only, and doing this allows me to ‘keep peace’ with myself and let the rest follow.

Best way to do this? Profit. Build up a bank of initial profits, and your mind goes at ease on subsequent trades faster than you can imagine. Do what you need to do to post some initial balance higher than what you started with and the rest becomes much, much easier. A way to do this? Next point:

Take the Easy Ones

I use this as the slogan for this website for a reason. There’s no sense in taking trades that are ambiguous or pose a very low probability. Key word of this slogan is “TAKE”.

You actually DO know what's going on. The good versus bad subconscious

When we talk about our subconscious minds in terms of trading we generally refer to it in a negative sense, because usually it comes up when we’re talking about fear of losing. But there’s a good side to our subconscious, one which we don’t realize is there most of the time because we’re too busy remembering all of the bad things that have happened.

Anyone that has a basic knowledge of psychology might be familiar with the “Little Albert” experiement, where “Little Albert”, just a child, was conditioned to be afraid of small, furry animals. We don't touch the stove because it's hot. We don't put our arms in spinning lawnmower blades for other obvious reasons. In trading, this subliminal conditioning which might have led us to a fear of losing is one which never gets us ahead, as we all know.

But here's the good news: when we learn how to trade, we are subconsciously storing a library of information in the back of our heads. Whether we realize it or not, its there. So when we see something on an intraday basis that is so obvious and so plain, are we taking it? Yes or no?

Most of you are pros already….I can see it in the charts that get posted and the comments that follow. But my experience knows full well that you’re not taking all of the trades you post. Don’t think your knowledge or education is any less than anyone else that takes up trading for a living. Do what is obvious, and use your initial judgment. It’s usually right.

Many times, you know EXACTLY what you’re doing, and how the market is behaving / reacting, but your doubts cloud your actions. Until finally, you get so fed up and bored at staring at charts, you pull the trigger on a losing trade.

“AAA” stands for “Action, Action, Action”.

Keep saying it. Easier said than done, I know. But get it done.

Naturally, I can't stress the importance of all of the other tenets I teach here (eg risk management, daily planning, etc), and this piece of the puzzle is in no way intended to undermine or contradict any of it. Put everything together, and most importantly, when you see it, take it.

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Showing 5 comments
  • Bagz

    Insightful as always Steve, thanks for the article. You've described exactly a number of the behaviours I am currently challenged by and working through.

    One recurring theme I've noticed is that 'good'(rule abiding) trades feel much harder to take than the weaker, more impulsive trades… even though the rationale part of my head (and trade journal) knows the impulsive ones are far less likely to be successful. Dunno why this is, because its the opposite of what it should be!

  • Andreas

    I can only say true, true, true, true and true !

    Your totally speaking out of my heart (or mind) with these words. You're perfectly describing my behaviour and as I learned lately I'm not the only one around 😉

    I got some bigger winners last week and as you say it it get's easier everytime so my word to everybody out there struggling with the same problems. Just reduce your lot size, be confident; you can do it !

  • db-trader

    That is so true Steve. This article came at the right time as usual. Today I 'went' for it into trade and took my pips and got out. Had I hesitated which I tend to do more often than not, I'd have seen easy pips pass me by and ended up even more frustrated by not taking the trade. Hesitation is my worst enemy

    Thank you for your blog and thank you for the live chat.

  • Macbow

    Great article. What stood out to me where I am at, is when you said that we can basically pick good trades. I have been plugging away at the fx for 3 years, 99% of the time on a demo acct because I could see no point in putting money up when my demo accts consistently went down. A few weeks ago I went to a deal call Discovery Training. Since then I have not had a losing day! I realize that I have to stop seeing myself as "learning to trade", but rather as a trader.

    Anyone I have met who is any good at anything will always tell you that they are continually learning new things, and also revisiting things they had allowed to slip. Learning is part of growing. There is nothing static in this life. You are either living or dying, developing or going backwards.

    So, I realize after this article that it is time for me to switch how I see myself from student to trader. I plan to be trading live in the next 90 days. In the last 3 weeks I have realized I have a few areas I need to get going on, the most important of which is to develop a plan. I agree with Steve you can over-analyse, but my problem has been to under-analyse, and I realize that over the previous 21 days I could have gotten a lot more pips and risked a lot less with a plan in place.

    Thanks for all your great work Steve. You are making an impact on a lot of people.

  • Anonymous

    Love the article. Got rid of all my indicators when I realized that all my "good" trades stood out on the charts and were obvious. Quality of trades has gone through the roof!!!

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