Trading

psychology: the
trader
development path
and its traps.

presentation by
Sebastian Seliga
for ShowFx Expo Bratislava 2017
„Becoming a great trader is
a marathon, not a sprint”
- Abe Cohen, trader and mentor
 Psychology in trading

Market Trading
psychology psychology
 Tell the difference

TRADING
GAMBLING or INVESTING
SPECULATION
Trader Development Path

STAGE 1: THE BEGINNING

Beginner’s luck:
- Pride
Decision to start - Satisfaction
trading - Self-esteem up
Start of trading: - Positive emotions
- Emotions: fear, - Risk Up
First contact: joy, excitement
- Main motivation - Stress
- Life stage - Slow recognise of
trading preferences
- Personal
differences
 3 Stages of Becoming a Pro Trader

1. The beginning – learning to trade

- Gaining basic knowledge about the market and developing the skills
necessary to enter into a transaction
- Overconfidence after first successes
- Trading on various types of simulators and demo accounts
- Trade in small volumes on the real market
- Developing courage, discipline, consistency, patience, perseverance and
other qualities of a trader
- Consistent actions based on acquired knowledge
- Transition from the area of incompetence to conscious use of the skills
possessed
- Underestimating the probability of difficulty in succeeding in trading
Trader Development Path

LESSON FROM STAGE 1:

One of the biggest obstacles you have to overcome

as a trader is to stay in the trading game long
enough for market mechanisms to be
understandable to you, and your psyche is no longer
your enemy.
Trader Development Path
STAGE 2: BECOMING A TRADER

Complete
Failure?
Search for the right
system:
Should I Give -Knowledge reconstruction
Up? -Autoanalysis
Strategy change and -Self-esteem,self-evaluation
chaos -No authority!
- Emotions: fear! -Acceptance and
First losses: - Sometimes panic! Experience Integration
- Feeling of a failure - SELF defence
- SELF defence mechanisms
mechanisms
- Cognitive dissonance
 3 Stages of Becoming a Pro Trader

2. Becoming a Trader
- Trying to match trading strategy and trading style to Trader’s personality
- Continuing to acquire practical skills, developing knowledge about market
mechanisms and proper trading approach
- Realization of some skills and activities subconsciously (intuition)
- Experiencing and dealing with the first painful loss series that test the level of
commitment, self-confidence and mental resistance of a trader
Trader Development Path

LESSON FROM STAGE 2:

The next obstacle you have to overcome as a trader

is to develop your own, personal SYSTEM
(approach) to trading based on analysis (technical,
fundamental), money management and trading
psychology
 Trader Development Path

Knowing how to make

Analysis money

• Technical Analysis
• Fundamental Analysis
• Statistical Analysis

Knowing how not to TRADING

lose money EDGE Knowing Yourself
• Decision Process
• Discipline
• SL,TP Money Trading • Improvement
• Risk/Reward Ratio Management psychology • Control
• Stress Management
Trader Development Path
STAGE 3: TRADING IN THE ZONE
Pro-Trader

Effective Trader:
- Winning trades bigger than
Self-Consciousness losing trades
Expansion
Trading in the zone:
-Flow
-Perseverance
-Experience
-Self-Confidence
Deliberative trades:
-Stress management
-Knowledge of personal
-Targets invariance
preferences
-Ongoing Self-Analysis
-Self-Control
-Humility and mistake
-Consequence
acknowledgment
-Discipline
-Mistake analysis
-Strategy fitting
 3 Stages of Becoming a Pro Trader

3. Effective Trader
- Having the skills necessary to create and execute your own trading strategies
that correspond to the personality of the trader, his strengths and
weaknesses, and his preferred risk level
- Realization of many subconscious skills (unconscious competence)
- Desire for continuous development in order to achieve an ever higher level of
trading
- Flexible approach and easy adaptation to changing market conditions
- Ability to transfer knowledge to other traders
- Having a lot of market experience (10 000 hours rule)
- Understanding the importance of investing psychology
- Focus on correct execution of the transaction strategy and not on the result
Trader Development Path

LESSON FROM STAGE 3:

The last obstacle you have to overcome as a trader

is to find a way to constantly improve your own
system while working on discipline, consistency and
own psychological development
Easy said than done, coach!

THE BICYCLE METAPHOR

THANK YOU!