Why You Sometimes Take Trades You Didn’t Want To Take

So often I hear from my traders that they saw a trade setting up let’s say to the short side. They even alerted their trading buddies about that opportunity or posted on the forum that there is a great short setup. Yet suddenly they find themselves going long on that great short trade and it all goes unnecessarily wrong.

Could it be that some subliminal messages have been interfering with their analysis? In the following Derren Brown video you could find some explanation about how the power of subliminal messages can have a detrimental affect on our trading behavior:

Are our trading decisions impacted by subliminal messages?

I have been a fan of Derren Brown for a number of years now. His skill of ‘playing’ with the human mind and the subconscious are just fascinating to me.

This clip about subliminal advertising and how he is able to manipulate those guy’s thinking patterns makes me wonder in how far traders are at the effect of subliminal messages which subconsciously impact trading decisions?


 

 

Ego vs Mathematics

Many traders focus on having as many winning trades as possible. But it actually doesn’t matter how many winning trades a trader produces, all it comes down to is the bottom-line of are the  accumulated profits per period bigger than the total losses? So even if a trader generates 99% little losses but then 1% large profits that well outperform the losses, than they have still performed better than the trader who proudly announces that they have a 90% profit loss ratio with 10% of losses outweighing the profits.

The examples below is a great illustration how focusing on % winning trades can be detrimental. Trading System 2 is the better system because it generates more profits. Trading System 1 is all about ego and results in losses. System 2 is all about mathematics.

System 1 below looks more impressive than System 2 if we use your focus on accuracy. 85% accurate, you can’t go wrong right? Wrong:

Trading System 1:

Percent Win: 85%Percent Loss: 15%

Avg Profit: $500

Avg Loss: $1,500

Expectation per trade: $200

Trading System 2:

Percent Win: 45%Percent Loss: 55%

Avg Profit: $1,500

Avg Loss: $500

Expectation per trade: $400

Will Smith Shares His Secrets To Success..

Will Smith is always a classic, so here is a great youtube clip to remind us to always follow our dreams and goals..

 

The Journey of Trading Success

Found that one on my facebook… sigh.. it is sooo true… we must be crazy to love trading so much..