How tilt kills the trader
Everyone knows such important points in Forex trading as fundamental and technical analysis, mathematical part of deals and resulting rules of money management (Money Management). Investor's psychology and its influence on transactions stands a little apart, though not deservedly so.
From his first steps on the financial market, a trader learns to recognize analysis patterns, trend direction and has little knowledge how to apply and use psychological skills which sometimes play a "mean" trick on investor's capital.
It is very easy to analyze opening and closing levels of a deal, its profit or loss, but sometimes it is difficult to evaluate the psychological component of the deal. Psychology is a complicated thing. It cannot be touched, held in the hand or seen on a chart. But it invisibly influences investor's behavior and sometimes turns over a planned profit. A beginner in the world of trading makes mistakes due to lack of knowledge and experience. A professional investor is more likely to make mistakes due to psychological problems.
One of them, the most insidious and least noticeable, is the player going into a state of TILT caused by various circumstances. Professional poker players have coined the expression "TILT" to briefly describe a player's condition, usually inappropriate to his style of play, and which tends to cause losses. This is also the case in Forex.
An example of a common situation that causes tilt in traders: Most often, tilt is caused by losses. It looks something like this - a trader who opened a trade on a tested signal takes a loss. After a certain period of time, the situation repeats. Then it happens again. At some moment the player understands that he needs to exit the market and revise his trading plan, but inner desire to get even creates an illusion that the very trend is about to begin, that very infinite number of pips and the trader freezes in front of the monitor. When the head fog clears, the investor is likely to find that lack of self-control has brought the trading account to the critical line due to a large number of losing trades.
Tilt occurs much less frequently as a consequence of the euphoria of the big prize. At such moments, the trader's consciousness is filled with unearthly joy, he is filled with a feeling of his own uniqueness and genius of his trading strategies. And you have already understood the end of the story when the player regains consciousness.
Whatever the reason of the tilt condition is, first of all, the trader blocks and looses self-control, and this leads to a succession of losing trades. Being in such a state, the investor does not realize that he breaks his own rules and causes damage to his capital by his actions. An epiphany occurs, but sometimes it is too late to change the situation.
Types of tilt -Apparent Tilt. If you find yourself thinking that you have deviated from the trading plan, and your actions do not fit into the developed and admissible framework, it can mean that your self-control sends a "stop! You should stop and carefully analyze the situation, regardless of your current state of affairs, as any further action could lead to an even more confusing situation.
- Hidden Tilt. If you find yourself in a situation where on the one hand all is well and your trading plan is flawless, but on the other hand a series of incomprehensible losses makes you cringe and feel uncomfortable, it is possible that you are under the influence of a latent tilt. Ask a colleague to analyze your trading in order to understand the situation.
The latent tilt is not so strong and therefore doubly dangerous. First of all, it affects the trader's psychological ability to accept the acceptable risk level of the deal clamping him/her in the jaws of uncertainty. Without realising it, the trader trades in an unusual manner.
Exposure to tilt The profession of a trader is a difficult path, often involving a fundamental breakdown in psychology. A professional investor, like a competent tightrope walker, always chooses the path between risk and profit, finding his way to a safe and positive transaction outcome. Therefore, the stress of losing capital or making a profit in this profession is normal.
Resilience to shocks, and consequently tilt-tolerance, is a completely individual norm that cannot be analyzed or mathematically predicted. It is not worth guessing how prepared you are for such an ordeal. It is much more important to know what methods can help prevent it from happening and how to deal with it if you do fall prey to it.
Ways to fight tilt 1. Strong emotions are your enemy. Don't trade when your emotions are running high. Keep a cool head in your account.
2. Don't trade when you're not feeling well, haven't slept well or have people close to you to pay attention to. All these factors prevent you from concentrating, and making a trade that fits the forex strategy you've developed.
3. Adhere to the rule "War is war, but dinner is on schedule". Follow a planned trading plan, which needs to take into account the development of various situations, including those unexpected to you.
4. rest. Regardless of the day's results, allow yourself to relax. Tomorrow will replace today, you will not make all the money during one day, but in a tired state you can do a lot of good.
5. Use the techniques available to relax your body and release tension. This can be yoga, meditation, qigong, swimming in the pool. Anything that will allow you to overload your condition.
6. Thought precedes action. Visualise your trading actions, imagining how your trading goes, according to clear and specific rules. Create a visual sequence of different trading scenarios, including losing trades. Daily practice will develop the necessary reflexes and allow you to stop in time if you suddenly start to drift.
7. Create for yourself a model of emotional state. Refer to it regularly throughout the day to make sure you're in the right shape. If you feel any discrepancies and deviations from the standards, take a break in trading.
I write these lines with knowledge of the subject, because I have fully felt the effects of tilt on myself. In my practice there were three cases when I experienced this condition. The last event of this kind happened to me in the summer of 2011. It took me three weeks to recover. After such a "cliff" I established a postulate that from time to time I should take a two or three day rest in my career, just to observe the market.
The topic of tilt is vast. I have resorted to its general description, without going into much detail. Our brain is a unique computer which is programmable, allowing you to reach heights you never even dreamed of. All you have to do is to learn how to control it, tuning in to a certain frequency and moving in a chosen direction.