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stop-thinkingDoes this sound familiar: You see what you believe at first is a perfectly good trade setup, however, as you continue to analyse and study it you begin to feel less and less sure about the trade, yet you aren’t totally sure why?

This is a common problem for traders; the ‘deer in the headlights’ scenario that occurs when you have too much ‘congestion’ in your thinking. Traders often over-analyse themselves right out of a good trade setup, and it can be a very big problem that can have severe negative consequences on your trading performance. Over-thinking can also cause traders to screw up perfectly good trades that they’ve already entered, this is another big problem you need to deal with.

The goal of this article is to identify the main reasons that over-thinking negatively impacts your trading and how to solve them…

Problem – Too many external influences causing confusion and over-analysis

News, trading websites, CNBC, other people, etc.; all of these things have one thing in common, which is that they cause you to over-analyse the market and become confused. External influences are probably the biggest reason traders think themselves right out of good trades, mess around with their trades when they’re live and over-trade. When you have too many external influences, it clouds your mind and thought process and causes you to second-guess your trading strategy.

Cure – Make a decision to ignore external influences

The key to ignoring external influences such as the ones discussed above, is to simply gain understanding and knowledge that these influences are actually HURTING you. Once you fully believe and accept that, you will no longer care about them and the result should be that you will focus more on your trading strategy and on mastering it, and less and less on external influences.

Trading success is the result of being a master of your trading strategy and having extreme clarity on what you are looking for in the market and sticking to that without any outside influences screwing that up.

Problem – Psyching yourself out of a good trade

There is nothing worse than seeing a perfectly good trade setup that meets your trading plan criteria but you don’t enter it, then it takes off in your favour. A big cause of this is over-analysing your trading strategy and thinking too deeply about it.

I’m sure you’ve fallen victim to over-thinking your trading strategy. You see a good price action signal for example, but then you begin looking at the surrounding price bars and start finding reasons why it ‘might not work’. Or, you start reading economic news and opinion pieces about the market you’re trading and you end up getting turned off to the trade because of someone’s opposing opinion or view.

Cure – Don’t think so hard about it

This a bit more of a complex aspect of over-thinking, because there are a number of reasons that traders think themselves out of perfectly good trade setups. But, the main two are fear and ignorance.

You have to stop being afraid of losing money, and the best way to eliminate that fear is to accept it. Trading involves having losing and winning trades, not just winning trades. The sooner you accept that, the sooner you will understand the need to manage your risk properly on every trade. Also, accepting that you will have losing trades will help you eliminate the fear of a loser, which can be a big reason traders find reasons not to trade.

Remember, each trade is just another execution of your trading edge…don’t think too hard, if you see the signal and it meets your criteria, take the trade and walk away. Sure, you can always find reasons to not take a trade, but if you always do that you will not be following your trading strategy and you’ll be giving into fear. You have to take every obvious / clear instance of your trading edge in order for it to work in your favour and make you money over a series of trades. Trading involves risk, accept the risk early on and manage it, or don’t be a trader or else you will be stuck in a cycle of fear and over-analysis of the market.

Problem – Over-thinking / over-analysis causing thought ‘congestion’

Having ‘congested’ thoughts about trading means you are confused and that comes from analysing the charts too much and taking in too many external variables as discussed previously. It can also come from not knowing what you’re looking for in the market (not having a strategy) or not having your trading strategy mastered yet.

Cure – Stop being so involved and ‘clean up’ your trading process and mindset

The first thing you can do if you haven’t already, is de-clutter your charts. If you are trading with tons of indicators and messy charts, you are going to be confused and have a congested trading mindset. To be a successful trader, you need clear and simple thoughts: Here is what my trading strategy is….Is it present now on the charts? If not, do nothing, go away for a while (a day maybe), if it is present then set up the trade parameters and do nothing again. I discussed why ‘nothing’ is the key to trading success in a recent article, check that out to learn more.

Another thing you can do to ease thought congestion, is to simply stop looking at the charts so much. This can be hard if you have a job where you’re on the computer most of the day, but it’s important. I recommend deleting your trading app on your smart phone if you have one; you don’t need that, and the charts look distorted on cell phones anyways, I don’t recommend mobile trading as a general rule. Only look at them on your computer and schedule regular times each day to it; maybe twice a day (morning and evening). But, if you are looking at the charts all day every 10 to 20 minutes (because you’re addicted to trading) you are going to over-trade due to over-analysis, I guarantee you that.

Looking at the charts too much is also a big reason why traders over-analyse and subsequently mess up their trades after they’re live. Leaving your trades alone while they’re live is about the best way to get the most out of your trading strategy.

Problem – Too little confidence in your ability causing you to second-guess yourself

Obviously, if you aren’t confident in your ability to trade, you aren’t going to make money. You need to be decisive to make money as a trader, not confused and inconsistent.

Cure – Get training and screen time

The two biggest cures to low self-confidence in your trading ability are education / training and screen time. You need to learn how to trade from a qualified trading course / mentor. Trading seems like something you can ‘learn on your own’, but take it from some of my students; you are much better off obtaining training from someone who can help you avoid many of the common pitfalls that cause traders to lose money early-on. Your hard-earned money is going to be on the line and you want to take as few risks with that as possible, and losing money simply because you didn’t get education is just foolish.

After obtaining education and mastering your trading strategy, simply getting in screen-time with your trading strategy is a great way to build your confidence up. Demo trade for a while but don’t do it too long, start live trading with small amounts of money at first to gradually build your confidence with real-money trading.

Conclusion

I walked the same journey as you, and I went through the same psychologies issues discussed in this article, and it’s my goal to help my students recognise these issues and then help them solve them and avoid the years of mental and financial heartache that are often the result of these issues.

You can break free of this cycle of over-thinking, over analysis and traders’ ‘insanity’. As your coach, I am not only here to make you aware of these mental traps, but to help you identify them, solve them and create a routine that will help you avoid them into the future.

I’m always there on the email line and providing coaching via my price action trading course and trader’s discussion forum to provide guidance if you identify with any of the issue / symptoms discussed in this article. Contact me here.

REMINDER: Until September 30th - Get 35% Off Life-Time Access To Nial Fuller's Professional Trading Courses & Daily Trade Setups Newsletter, Ends Sep 30th -  Click Here For More Info.
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About Nial Fuller

is a Professional Trader & Author who is considered ‘The Authority’ on Price Action Trading. He has a monthly readership of 250,000+ traders and has taught 15,000+ students since 2008.
Checkout Nial’s Professional Forex Course here.

Now I want to hear from you! - Click Here to Leave a Comment

15 Comments

  1. Edubliss says:

    your trading strategies has set me on the path of profitability. tanks a million Nial.

  2. Len Livermore says:

    Nial, thank you for your consistent educational well written articles on helping traders with real world trading issues. I truly look forward to reading your current articles and I reread the previous ones as well. May you always be blessed for helping others.

  3. Barry Johnson says:

    thanks Nial, it really boost the low confidence in traders. this kind of mental status and ruin ones career and life.

  4. Denis says:

    Thank you, Nial! This is a great article. It is really helpful to solve such psychological problems.

  5. Darrell says:

    This was my problem several years ago when I was trading. This time, with your help, it
    will be a different story.
    Thanks,

  6. Roger says:

    Great article mate .
    You have a real knack of exposing the flaws and weaknesses of rookie traders .

    Thanks

  7. Brian says:

    Good article Nial.

  8. anil says:

    yea Nial, this habit lost my lot of good trade setup and later went in my favor, thanks for giving a trading mindset.

  9. John says:

    Agree with Frank above, use rules.
    Look at the steps you take when analysing a trade, S/R, candle pattern etc, see what the minimum is needed for each type of trade and if it reaches that number, take the trade. If there is more than one potential trade, rate each one and allocate a smaller position to the “weaker” ones.
    This is a matter of DOING THE HOMEWORK, which trains your brain to see the set-up, then TAKE ACTION.
    As Nial says, trading is a numbers game so be prepared for the occasional stop out as you will never know all of the information. You will never know if a huge institutional order was placed at the last minute delaying the move, requiring sideways action and running some stops to fill the order.
    Merry Xmas all

  10. siegt says:

    well…. this article really help me out from being frustation ,while i had a great loss…. it motivated me to not giving up yet at trading
    thx lot nial

  11. Frank says:

    Solution is easy! Have fixed rules for entering a trade. I f the rules are met take the trade. Been scared to take a trade is only what amateurs do.

  12. emilio says:

    You say the truth and you are the truth nial

  13. John says:

    Nial
    You are not wasting your time with these articles I must tell you.someone somewhere is benefiting seriously and that is me.

  14. Adriana Ghidau says:

    Hi Nial

    I’m amazed and so happy to read every of your articles Nial ! They are truthful and helpful.
    Thank you for sharing your experience .I follow step by step each of your advices and tips so I feel I’m doing right in the market .:)
    Have a good day Nial

  15. Mat Le says:

    This soooo dejavu… That’s sooo me.. Thanks for the great article Nial.. You are absolutely right!!

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