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Your Lesson 06
Task: Listen to the Audio Lesson or Read The acritical
Goal: To know why addiction to unpredictable rewards is especially problematic as it leads to impulsive trading.
Exactly Why Traders Takes Unplanne, Impulsive Trade
Greetings! Glad that you have decided to continue with the lesson.
Today we will discuss one problem every trader encounters yet never reflects on.
It is the addiction to unexpected rewards.
An addiction to unexpected rewards tempts traders to trade impulsively.
It is a significant emotional barrier as a trader need to overcome.
For traders, an addiction to unpredictable rewards is especially problematic since it adds yet another barrier to developing the mental framework that results in stability in the trading result.
It probably has to do with the euphoria-inducing hormones released in human brains when we have an unexpectedly pleasant surprise.
We never know if and when we might receive a reward if it is random, like in trading where the outcome of profit and loss in your next trade is about to take.
So it is tempting to open a new trade once again to feel that delightful sense of surprise.
It can be addictive for a lot of traders.
On the other hand, we become dissatisfied and feel horrible when we anticipate a particular conclusion that doesn't materialize.
Any addiction has the drawback of reducing our ability to make decisions.
Our attention and efforts will be directed toward achieving the goal of the addiction to whatever extent it controls our mental state.
Traders feel powerless to act in any other way than to satisfy the addiction to trading.
An addiction to random rewards is particularly troublesome for traders because it is another source of resistance to creating the mental structure that produces consistency.
As you are now aware of it, your next goal is to reflect on the past few trades and ask yourself, is all this trade pre-planned?
If your answer is no to even a single instance, then it is time to think about this and take the help of a trading plan that takes care of it.