How to fix cognitive dissonance in trading?

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Crosta

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Sep 29, 2021
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There are no simple techniques that can suddenly and completely eliminate cognitive dissonance, but there are some very specific actions and shifts in thinking that allow traders to reduce the negative impact of cognitive dissonance on trading decisions.

Don't talk about (and don't try to justify) a trade to anyone. It's easy to get caught up in our egos when we talk about a trade, and we don't want to show that we're trading at a loss. Amateur traders who share trades publicly are more likely to convince themselves to stay in a losing trade longer because they will find reasons why holding the trade is the right thing to do.

When developing a trading plan, be sure to consider both long and short positions. Avoid one-sided analysis and keep your mind and eyes open to both sides of the market.

Keep a trading journal to improve your understanding of trading behavior. Traders who track their behavior can see how much they can lose by repeating the same mistakes and are then more likely to change their behavior.

Be humble and admit that you don't know everything and that you will often suffer losses. A trader who cannot take losses has no chance of becoming a professional full time trader.

When trading, always explain to yourself out loud and in words, as if you had to explain to someone else why this trade makes sense and fits into your trading plan. You will soon find out if you are talking nonsense.

我们的头脑可以是一个熟练的骗子。控制它需要我们首先意识到它以及它如何操纵我们的行为,尤其是在交易方面。理解认知失调的概念是真正客观地评估一个人的自我表现和能力的关键一步。

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