Why Traders Intentionally Make Bad Decisions in Forex Trading

Why Traders Intentionally Make Bad Decisions in Forex Trading
Brian McAboy


We all make mistakes, but in Forex trading it is a common
occurrence that people will knowingly do things that cause
trades to go bad. Now we're not talking about losing trades that
are the result of testing out a Forex trading system or a
specific indicator. Nor are we talking about simple errors made
purely by accident. If our goal is to profit, then why would we
do these things that are totally out of alignment with what we
know to be right? This phenomenon has many very unpleasant
results that are encountered quite regularly in the Forex
trading world.

The Trader's confidence can take a severe blow when these events
take place on top of losing money. Additionally, the trader will
then engage in quite a bit of putting oneself down for having
made the mistakes. Depending on the magnitude of the error, this
can be the start of a rather vicious cycle that compounds the
problem and sets the stage for recurrence. Until the source of
the issue is discovered and the person does something to address
it, the self-sabotaging behavior is likely to continue.
Experienced traders can encounter this as well.

Let's look at a real life example. One such trader (a real
person that we'll call Mark) of over 50 years had been going
through this repeatedly for over a decade since he started
trading from home. Mark has done just about everything there is
to do in the futures industry. He worked on soybean farms and at
the shipping docks loading ships and coordinating orders and
shipments. For about another decade, Mark was on the floor of
the exchange running orders. After that, he worked both for and
as an introducing broker in the commodities industry until he
decided to retire at the age of 59. Needless to say, Mark had
plenty of experience in trading, but for nearly 15 years, Mark
has been losing money because he enters trades without an exit
plan. So why does he keep doing it?

Trading is definitely nothing new to Mark. As a broker, he was
very successful. He's tried just about every strategy and system
there is. He's pretty intelligent and knows his way around the
computer and what he's looking at on the charts. Mark loves
trading and is excited about getting out of bed every day to get
busy with his trading. On a typical day, he might make $600 or
lose $800. Most often times he loses. When his wife gets home
from work (yes, she still works at the age of 70), he's usually
brooding in his recliner after kicking himself and calling
himself "stupid" or "idiot". In all these years, he still has
yet to end a year in the black. He's also not sure how much
longer his wife is going to let him keep on this way.

When asked why he continues to trade this way, and why he
doesn't pursue a strategy that he knows can make him money, he
simply says that he doesn't because they are boring. This is a
simple fact: a well-planned trade, where you have already
determined what you'll do before you get in regardless of which
way the market moves can be very boring. The suspense can be
very intense when you enter trades without a plan, or if you've
deviated from your system.

As humans, there is a part in all of us that craves excitement.
Why do people take the time to sit through movies instead of
going straight to the end to see if the hero triumphs or fails?
Why do millions of people watch football games, rather than
simply check the scores in the morning? It is the suspense, the
excitement of not-knowing the outcome, that brings the
excitement. The moments that are most enjoyed and fully hold our
attention are when the ball is in the air and hasn't been caught
yet, when the hero's fate hangs in the balance. The desire for
the emotional rush is what is satisfied.

Consciously, making money is what everyone desires (afterall,
who doesn't?). Many people decide to become traders because
Forex Trading offers the opportunity to realize very significant
monetary gain. The danger is that it also offers the thrill that
another part of us craves at the subconscious level. If that
part of you isn't being satisfied through other channels of your
life, it is highly probable to seek fulfillment in your Forex
Trading.

The results can be disastrous if you are experiencing excitement
from not-knowing the outcome in your Forex Trading. What you
need to do is to include activities in your life that provide
sufficient excitement, and be okay with it if your trading is
not so exciting - but making money.