Forex Psychology

Changing Your Ways: How to Break Bad Trading Habits

In order to find out your bad trading habits, we need to have a trading journal set up and for it to be full of information. The information is stored in this journal should include things like your entries, exits, any changes to trades, the results of the trades, how long the trade was held for, and much more, basically as much information that you can fill it with. You can then use this information to look for habits, things that you have been doing consistently, and in the case of bad habits things that have consistently been having a negative effect on your trades.

As a side note, if you have not started to record your trades in a journal, then ensure that this is the next thing that you start to do, it is an invaluable source of information and can be used on a regular basis to improve your trading and to make you a better trader.


When looking through your journal, you may find quite a few things that have caused your trades to go bad, it may look like a lot of work, but it may not be quite as bad as you think. A lot of bad habits often stem from the same thing, there could be a single underlying habit which is then causing everything else to take effect. So take a look through to see if there are any characteristics of these trades that are similar to each other. As an example, if we think of a few different issues that can very easily arise, you close a trade early, set your stop loss a little too tight and avoid taking a good trade setup every now and then. Those seem like three completely different issues which by themselves they are, but there is a single underlying factor that links them all, a fear of losing.

We can use this and by dealing with that single underlying issue, it can help us to get over al three of those issues, there may, of course, be something else in there too, but the major factor that links all three together is the fear of losing, so dealing with that will help reduce the likelihood of all three issues recurring. It is all well and good identifying the issue, but we then need to do something about it, and that is where this article comes in. We are going to be looking at some of the things that you can do in order to help get yourself out of these bad trading habits and then become a much more confident and consistent trader.

Use a trading journal:

We touched on this earlier, but you need to be journaling your trades. You just need to. A trading journal gives you so much information, it gives you such a fantastic insight into your trading and your trading habits. You will not be able to deal with your bad habits if you do not know what they are. Just take a few minutes before and after each race to jot things down, it won’t take you a long time to do, in fact, once you have been doing it for a while it will be like second nature to you and can be done pretty quickly. When you are feeling uneasy, write it down, when you come out too early, write it down, just write everything that you do down. It isn’t hard, it does not take too long, so just do it, if you want to be a successful and profitable trader then you need to be doing this.

Talk to yourself:

You have probably been annoyed at some time in your life when you have been trying to do something but the person next to you is reading aloud or talking to themselves. They aren’t necessarily doing this because they are a little crazy, they are most likely doing this as a way of confirming the information or what they are doing with themselves as a way of being sure that they are doing the right thing. There is no harm in this and if you experience a number of bad habits, doing this yourself could help you get over them and nip them in the bud early on.

If you talk to yourself and question what you are doing, it makes you think about it more, this can help you to recognise that one of your bad habits is trying to rear its little head. At this point, you can realise this and then take action to avoid it. This is your first opportunity to tackle a habit, so do not be afraid to talk to yourself or to even question what it is that you are doing, and doing it out loud just makes it a little more real.

Talk to someone else:

Just like when talking to yourself, when you talk to someone else, they may well be able to see and recognise habits that you could not otherwise see, which can then allow you to deal with these habits. Talking to others who have experienced similar things can also help you to work out what you can do to try and avoid those habits from happening again. Getting experience first hand from other people is a fantastic way to get around them as it confirms to you that you are not alone, this habit is normal and if others have gotten over it, so can you.

List the triggers:

It is a good idea to write down the triggers for these bad habits so that you are always aware of what they are. The thing about habits is that they often happen without us knowing that we are doing it, so knowing what he triggers will allow you to work out if you are about to move into one of these habits or if you are already doing one. Just write them down and pin them up as a reminder of what you are looking out for.

Walk away:

Sometimes you need to take the more drastic measure of simply walking away, this may seem counterproductive because you are simply walking away from your bad habits rather than trying to deal with them, but it is not quite that straightforward forward and it depends on what your habit is. There are many traders that are fantastic when they start out, but after a couple of hours in front of the computer, their habits start to come out, cutting corners or getting anxious. This is a good time to take a break, simply walk away from the computer for a short period of time in order to calm yourself and to compose yourself again, this simply removes the opportunity for the habit to occur. It may seem simple, but it is an extremely effective way of avoiding bad habits.

So those are some of the things that you can do to try deal with your bad trading habits, there are of course other things that you can do, and some habits simply work themselves out, what is important is that you are able to recognise your bad habits and are then willing to try and work on them to ultimately remove them from your trading arsenal completely.


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