Hi everyone, it’s been a while since I have posted my blog. Today I am gonna post these 3 aspects which in my view is very important about trading. The 3 aspects are:
- Logical thinking
- Emotional Control
- Physically Healthy
Logical thinking is a thought process where you analyse a problem or situation and come up with a conclusion. Logical thinking uses reasoning to process the thoughts and to backup the reasoning, we start to find facts about the information. Upon collecting the facts, we started to link it in a chain-like progression of the cause and effect and come up the conclusion which “ make sense”.
In trading, what’s the reason you want to open a position on this particular stock/pair? We gather facts about it, linking all the cause and effect and come up with the conclusion. In short, think all of these in steps.
As much as these saying, the conclusion you came up with doesn’t mean you are correct. You could be wrong also. There is no 100% correct in anything, however, logical thinking and being open mind can make as close as 100% correct.
Quote from Ray Dalio from his books Principles: “ Recognize that decision making is a two-step process: First take in all the relevant information, then decide.”
We humans have emotions, that’s an undeniable fact. Just now we talked about logical thinking and in reality, emotional control > logical thinking. Act on impulses, big egos totally destroyed logical thinking. I still can list out a lot more of fear etc…
Trading with a lost control brain is a big no-no, you will be in deep shit with panda eyes
If we did not get our emotion in control, things I have described above will happen and can stay in you for a long time if not forever. Out on control emotions is VERY DANGEROUS.
So how do we control it? The first step as always is practice self-awareness. To aware what you are doing is know yourself more also.
Check out the link below for the controlling emotions:
In my view of these 3 aspects, keeping yourself physically healthy is the most important for it. Poor health will lead to poor emotional control and bad decision making, it is a chain of effect.
Let’s use driving as an example. When a person does not have enough sleep the night before, he or she will feel tired when driving a car and this decreases the alertness. As usual, they are driving the same route to work however with the alertness decreases, driving is “off” and dangerous. Other drivers horns and they felt frustrated, emotions getting out of control and they made a bad decision to speed ahead. The next thing we know is they are in the newspaper headlines.
All these chain effect events can be prevented if we take care of our physical health first and may have a surprise reward.
Most of the traders think that emotional and logical thinking are the most important and they ignored the physical health part which is why their health is always terrible
As we can see, all these aspects can cause a chain of effect, either a great or a disaster way of ending. In trading, markets are also a series of a chain of effect
These 3 aspects are not only implied on trading, but on life too. Once you have mastered the 3 aspects, I can assure you that your trading career will take a massive step on the success path.
“The process by which one accumulates money is so simple, yet so hard to implement for most.”
― Yvan Byeajee, The essence of trading psychology in one skill