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Why and how to be prepared?

What is the first thing we do when we come to work? What do we look at when we are bored? Emails! This is unhealthy!

Situation goes even worse in case we trade. Even algorithmically even with Demo accounts… indeed people can really get sick or develop betting dependence syndrome…

Probably lot’s of books are already written about these phenomena however let me propose few tips here on how I would deal with those situations myself!

Why Psychology is important?

There are probably several reasons:

• We don’t want to be sick from trading
• We want to be productive and not thinking all the time about potential wins or losses

Tips on how to be prepared

Tip 1 Train your curiosity

First tip I would do myself is NOT to look at the results. For example whenever my algorithmic system is set up I would leave it running and will only look at it every Saturday. And not even look at the trading journals or email notifications…

Tip 2 Do something else

It is very important to keep busy, perhaps doing some physical activity, traveling somewhere. So concentrate on something different!

Tip 3 Write down your emotions…

… and actions.

I would take a piece of paper, make two columns and write there my emotions and actions. On the top of this paper I would write:

… imagine loosing 1000 USD of trading capital!

“I just lost my trading capital 1000USD” …

• Left column - what would be my emotions. E.g. ‘I knew the consequences, this is not a big deal, will make it better next time…’
• Right column - what would be the response. E.g. ‘Trying to find reasons of failure, investigating other options…’

… also imagine winning from 1000 USD of trading capital!

• Left column - what would be my emotions. E.g. ‘Great work, is it sustainable? Can this be just a coincidence…’
• Right column - what would be the response. E.g. ‘Make sure to document all steps taken to get such success…’

Tip 4 Design your system with automated controls in mind

I would never be trading if robots are not controlled in one way of another. Examples of controls are:

• Trading environment will restart automatically
• Stop loss levels are set
• Performance of the robots is monitored, in case of need they will be switched off automatically
• Robots will be automatically off whenever macroeconomic events are expected

Tip 5 Setup some goals

Before I would say that my psychological test is complete I would use this checklist:

• Keep the routine during 10 weeks
• Only look for results on Weekends
• Automated robots supervision is working well
• Do not have negative emotions that reduce productivity for other tasks

Conclusion

These are just few tips to deal with psychology when doing algorithmic trading! By the way, it’s sounds like a plan so let me do that myself!!!