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Posts Tagged Under: impulsive trading

How Lack of Trading Discipline is Killing Your Performance and the Steps You Can Take to Improve It

 

This article on Trading Discipline is the opinion of Optimus Futures.

Imagine, if you will, two traders. One trader holds a superior trading strategy and ample capital resources to make it work. But he lacks discipline. The other trader has a mediocre system, fewer capital resources, but superior trading discipline. The non-disciplined trader has everything going for him, except for himself; whereas the disciplined trader has a few things working against him, but his ability to remain disciplined serves as his core strength.

Who might end up becoming the more successful trader? The answer is that it all depends on a few other things: the ability to adapt to situations, the smarts to assess what’s working and what’s not, and the “discipline”

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When you should really be scared of FOMO (Fear of Missing Out)

 

FOMO, or the “fear of missing out”, is a well-documented phenomenon in the world of trading. FOMO comes in many forms and shapes and often leads to bad and impulsive trading decisions. The following article will go over how FOMO is responsible for many of the problems that traders  deal with on a daily basis.
In its purest form, a trader who is driven by the “fear of missing out” enters trades too early, without waiting for actual confirmation of any trading rules. These traders see price moving and they think that they can “feel” it is going a certain direction, even though their trading rules don’t support the trade idea. They try to come up with reasons why they don’t want to miss a potential trade because it can finally get them out of their losing streak, despite the lack of any confirmation. Essentially, these traders will reason themselves

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When do losing streaks end? What is the gambler’s fallacy?

 

losing streaks

Losing streaks happen to every futures trader. However, Variance drives trading performance and influences the way traders think and act. Variance means account volatility, and it describes how the outcome of your trades impact your account development.

In trading, results can’t be forecasted, and you will never know when you enter a winning or losing streak, or how long it will last once you are in it. Therefore, understanding variance and how wrong assumptions can lead to significant underperformance is of great importance to traders.

Gambler’s fallacy

The gambler’s fallacy describes a phenomenon when people misjudge the likelihood of events. If something happened more frequently than you’d expect it to happen under normal circumstances, people then mistakenly believe it’s going to happen less often in the near future.

For example, if you play roulette and red come up four times in a row,

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