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‘I do nothing upon myself, and yet I am my own executioner’ This quote by John Donne quite aptly captures the concept of self-sabotage.
Self-sabotage may be defined as a destructive action which has the effects of undermining, or obstructing one’s own potential, or productivity. In most cases, the individual is completely unaware of his self-sabotaging behaviour. This is what gives it the potential to cause great harm. Self sabotage can be especially harmful and demoralizing for us as Forex traders.
After having had a great day trading, you’ve reached the profit target that you have set for yourself, but you feel so pleased with your profits, that you are pumped-up, and on the look-out for another trade-just one final one before calling it quits. You are not able to find a trade setup that met your criteria, but you start to rationalize ‘Well, if the trade goes against me, I will close it with a small loss.
So you go long on a currency pair. Almost immediately, it plunged twenty pips as you watch in disbelief. You sit there immobilized, as your hard-earned profits begin to dissipate. In the heat of the moment you completely forget what you had said about exiting the trade if it turned against you. You buy some more at the lows, hoping that you will be able to at least break even. Instead, more bears surfaced.
At this point, not only have you lost your profits of the day, but your account balance is decreasing by the second. In agony, you bite the bullet and close your positions. Exactly five minutes later, the pair shoots up, straight through your original target. You are an emotional wreck. You couldn’t put a logical thought together if your life depended on it. You are ashamed by the fact that you allowed the chain of events to spiral out of control.
This scenario, though exaggerated, describes a situation that we as traders can quite easily find ourselves in. We sabotage ourselves, and it hurts. It hurts much more than any harm someone else could ever inflict on us. It results in emotional torture which can completely ruin our chances of forex trading success.
How do we guard against self-sabotage? The answer is complex, as the reasons behind can stem from a variety of factors, from low self-worth, and psychological issues from childhood, to plain greed or carelessness. There are no magic bullets. However, in many cases, strict control in our trading can go a long way towards minimizing the problem. This involves making an objective trading plan and sticking to it. This plan should lay out the exact conditions under which you will enter, and exit a trade.
It also involves a great deal of self-control at times in order to maintain our discipline.
If you know that you have a problem with self-control, ensure that you set a profit target, and maximum-loss parameters. Once they have been reached, shut down your computer and find some other way to occupy your time.
Forex trading does offer incredible opportunities. The flip-side is the accompanying responsibility it lays on our shoulder to maintain control of our actions.
Thank you for reading the article. I hope you found it helpful. Please also leave comments, as I would love to hear your ideas on how we can beat self-sabotage. Have a great weekend!
