Keeping a detailed forex trading journal still not enough for you?
If you’re looking to take your journaling a notch higher, you might want to consider getting a tape recorder to keep track of how you talk to yourself while trading.
Sounds pretty crazy, huh?
You might not be aware of it all the time but forex traders like you and I have this tendency to talk to ourselves during the actual trading process.
We often have dialogues with ourselves when hunting for trade setups, deciding whether to take a trade or not, cursing the markets when price doesn’t go our way, or congratulating ourselves when profit targets are hit.
These dialogues are actually part of what psychologists call priming, which is defined as an implicit memory effect in which exposure to a certain stimulus impacts response to that same stimulus later on.
Simply put, our reactions to events are typically shaped by how we reacted to those events in the past.
This is why commercials usually try to associate products with good feelings.
In a way, self-dialogue while forex trading acts like an advertisement to ourselves as it associates thoughts and emotions to specific events, making us prone to have the same kind of reaction once the event repeats itself later on.
For forex traders, there are three general types of self-talk that we usually engage in, each of which has both positive and negative implications to it.
1. Environment-based vs. emotion-based talk
Those who describe the market environment out loud (e.g. price action, shifts in market sentiment, etc.) are more likely to have more success in forex trading that those who talk about their emotions, regardless of whether they’re positive or negative.
There’s a scientific explanation for this. You see, the frontal region of our brain is where the process of decision-making occurs. However, when we are emotionally-stressed, our heart rates increase and the frontal region becomes more difficult to access.
Talking out loud about how you feel could mean that your emotions are heightened and your brain finds it harder to make rational calls necessary for forex trading.
2. Active vs. passive talk
It may seem silly, but the trader who refers to himself using “I” has a bigger probability of succeeding than the one who uses “me” in his self-talk.
The rationale is that “me” signifies that a person is only a recipient of action, vulnerable to the effect of events.
On the other hand, “I” implies the active participation of the person. You say, “I eat,” “I do,” “I will take profit,” and “I trade” if you intend to exercise control in carrying out these tasks.
Sure, no one can ever control the markets. However, success comes to those who take control of what they can and strive to be useful in whatever situation they’re in.
3. Trading-related vs. dillydally talk
It shouldn’t come off as a surprise that those traders who can sustain their focus on the markets are more successful than those who cannot.
Even when they’re not trading, successful forex traders continue to exude their tenacity by reading up on the markets or discussing trading strategies with other traders. It’s as though they are setting themselves up for competition, using their spare time to find an edge over the market.
Meanwhile, those who don’t have the concentration are typically seen just surfing the web or chatting with their pals. These traders only prime themselves for avoidance from the market.
If you’ve been engaging in negative self-talk than more productive ones, don’t worry. Priming happens in our subconscious. So, in order to fix it, we just have to make a conscious effort to steer clear of it.
Here’s where a recorder will come handy. Listen to the things you say when you trade. If you don’t have one, you can start noting down what you say in your forex trading journal.
Once you notice that you tend to shout out your glee over a winning trade, or maybe talk too often about HBO hit Succession during trading hours, it will be easier to correct yourself.