I worked as a web developer for 10+ years before coming into full time forex trading. Transition was painful as I had to overcome harmful habits that I brought from my tech career. If you try trading, you’re likely to face the same challenges, so let’s dive deeper.
1. Overconfidence (I’m a PRO!)
I was a respected, well-paid professional. I was convinced I’ll easily transfer my skills into forex trading. I was wrong. Trading skills have nothing in common with programming skills. Trading a serious job that must be learned properly.
I was so overconfident I even traded all of my mentor’s strategies without stop loss. It felt great because that way I made almost every trade a winner (with no respect for risk). When I became too smart to be wrong I blew my relatively large account.
Before playing with fire, I should’ve learned to handle water first. However, this experience helped me cure my overconfidence.
Approach trading like a new job. Look at it as a child. Don’t try to transfer your tech experience to trading. Otherwise, the market will give you a slap.
2. Emotional Decisions
Sounds contrary – we as IT guys are logical people, so how can we have problems with emotional decisions? As a developer, you spend most of your time in the logical realm. You don’t develop your emotional muscle.
In trading, it’s your cash at risk, so you face strong emotions like greed, fear, euphoria, panic. These emotions short-circuit your brain’s reticular formation. This disables you from making logical decisions. Then, your emotions rule. And they’re the worst ruler possible, forcing you to act against your best interest.
What helped me overcome this pattern is to be aware of my emotions and watch them diligently. If I felt that my emotions spiral out of control, I’d close my terminal, lie down on a sofa, breath deeply or go for a walk. I’d also do a 5 minute meditation before coming back to trading.
3. Automation Craziness
While trading, I also built a trading journal app, some tools and lots of EAs (trading robots) to automate my strategies. I spent 100s of hours coding and backtesting. I failed in all of my automation efforts.
I understood it’s impossible to automate professional trading. Human judgement is essential. My mentor already told me that before, but as a “pro handyman” I couldn’t believe it and I had to hit the wall 100x to finally accept it.
The idea of building a trading robot to print money while you sleep is attractive. Although trading is simple when you know what you’re doing, it’s not as easy as waiting for indicator signal and hitting buy/sell. If it was that easy then everyone would be making millions from trading robots, but reality is far from it.
Avoid the trap of automation. Don’t even start with it because it’s a dead end. Learn what’s required first, don’t search for greener grass and don’t look for shortcuts. Coding is not needed in trading. If you love coding, do it on the side, but don’t build trading robots.
4. Over-engineering / Over-thinking
It’s the cycle I’ve experienced many times: I write down a simple trading plan based on my mentor’s strategy. After a few trades, I want to “improve” my plan because my trades sometimes lose (perfectionism). I add extra rules. I do backtesting and add even more rules.
In the end, my trading plan becomes too complex to follow. Or if I manage to follow the plan, I can’t take any trades because there’s always that one rule that’s not satisfied.
Then I come back to square zero, remove the unnecessary burden and start fresh with a simple trading plan. And the cycle repeats again…
Engineers have convoluted minds. They can’t get it how simple trading is. Since they’re smart, they want to “solve the puzzle of the market” to become heroes. And they keep solving that puzzle (which doesn’t exist), while making things more complex than they are.
To fix overthinking issue, I focused on making myself “more stupid”. Because being smart was a major roadblock in my trading process. KISS – keep it simple, stupid – and your overthinking problem will go away.
5. Impatience
Developers are craftsmen. They code, hit refresh/compile and see the result instantly.
Trading is the opposite world. You wait for a setup, open the trade, set TP (take profit) which is nearby and you expect it’ll take 30 minutes for TP to be hit. Your excitement turns into frustration when you see how after 6 hours your TP wasn’t hit yet. You exit the trade and 30 minutes later your TP gets hit. Extremely painful.
In another scenario you’re waiting for a setup for 5 hours. You had 2 unsuccessful entries but the setup still looks good. You start feeling hungry and self-doubt clouds your mind. You go for lunch, miss the last entry and watch how the train left & accelerated without you. Frustrating.
Trading requires strong patience. I struggled with it. My mind used to go crazy after just 1 hour of waiting for a setup. Nowadays I can wait for 7 hours and it’s no problem. Waiting is boring, and I was impatient because I failed to see the bright side of boredom.
Society sees waiting as doing nothing so we naturally feel bad about it. But waiting is an essential part of any business owner’s workday, including trader’s. Boredom is painful, but ask yourself what’s good about it and what it wants you to teach. You’ll find the hidden blessing behind boredom and it’ll fix your impatience.
6. Misunderstanding Uncertainty
I didn’t come from a business family – craftsmen rarely do – and it’s likely you didn’t as well. Software engineers are used to deterministic systems and predictable outcomes. To put simply: it either works or it doesn’t and it’s obvious. If it doesn’t work then you need to fix the bug and it will work.
Markets and business in general, however, are non-deterministic. I do my homework and I enter into a trade only when I’m confident about its outcome. But that outcome is not guaranteed. So initially I have to act as if I know where the price is going to go, but under the hood it’s actually a 70-99% probability. At some point during the trade I may need to admit it’s not a 100% chance and make changes.
Having a rigid mind that sees apple only as an apple is bad for trading. It leads to debilitating emotions and stress when the future shows that apple was actually an orange. Stress is harmful and it lead me to health problems. To stop self-destruction I had to develop a flexible mind that is not fixated on a single outcome and is quick to change predictions.
To achieve that, I studied the biographies of famous entrepreneurs. Their success stories are usually 95% failure stories. Before they had 5 successful projects, they faced a frustrating failure with the other 95. And when they start their 101st project, there’s still no guarantee it’ll work. Surprisingly, it’s a feature, not a bug!
To make uncertainty your friend, tell yourself that every trade is a new startup. There’s a level of risk, reward and probability in each trade. All of the variables may change during the trade. Your job is to maintain reward, risk and probability in harmony, according to your best interest. When you realise that a degree of uncertainty is a core feature, not a flaw, of trading – your mind will stop exploding and you’ll trade with peace.
7. Perfectionism
I was a perfectionist web developer. Because I had perfectionist clients at the beginning of my career, who did well in their businesses. I’d measure every single pixel to see if it all aligns perfectly. I’d think about multiple worst-case scenarios and make sure none of them can happen. My goal was to always satisfy my clients 110%.
Trading is different. You act according to your rules with discipline, but if you do it perfectly you’ll miss most of your trades. Because perception of the chart is your responsibility. How you describe what you see and how it measures against your rules relies on your brain.
When I traded as a perfectionist, I’d reject an entry because “this price level is too flat” or “this looks too retail” or “this indicator signal should have appeared on previous candle 1 minute before, if it’s now then it’s not good”. These are situations when I see 9 out of 10 stars aligned and 1 (distant and small) star didn’t. And I’d focus on that 1 bad star, failing to see the full picture because… I was a perfectionist!
To cure perfectionism, act even if 1 out of 10 stars doesn’t seem to be aligned. But don’t break your rules. You do need a logical, well defined strategy. Just don’t make it too rigid, leave some loose ends that allow for flexibility. I recommend making entries your loosest part. Have 4-5 different entry methods, because entries are the least important part of professional strategy.
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Thanks for reading this article and have a beautiful day.
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