3 Trading Psychology Lessons I learned From Dr. Andrew Menaker

3 Trading, Psychology Lessons, I learned, From, Dr. Andrew Menaker, Trading Psychology, fx trader, forex

I’ve been extremely fortunate to come across the right people in trading.

As a matter of fact, I simply do not believe I’d have been where I’m at today if I had not received lessons of key personalities in the trading industry, even though it took some effort on my end.

A few months ago, I got on a call with one of the leading market psychologist: Dr. Andrew Menaker.

Dr. Menaker’s teachings on trading psychology have been very impactful in my trading.

As I keep reflecting on the key elements of trading psychology, I wanted to share some of the top lessons I got from Dr. Menaker, who actually started as a consultant for the U.S. Navy Defence Department.

Without those insights, I would expect my emotions to be much more volatile. My occasional drawdowns would also be way bigger and frequent than they currently are, so there’s definitely something to learn here.

Lesson 1: Our success in trading depends on how we respond to discomfort.

Early in my conversation with Dr. Menaker, he made it clear that feeling uncomfortable was inevitable for traders.

After all, discomfort comes from the nature of the trader’s job, in which the outcome of a trade is always uncertain. We have absolutely no control on the outcome of a trade.

Since we cannot control what happens around us, such as drops in the market, volatility, losing a job, etc., then the only thing we can do is to control our response to what happens. That is something essential to understand for any trader.

While all traders will, at one point of another, feel discomfort (i.e. for being in a losing trade, not meeting expectations, going through a series of losses), the best traders in the industry will respond to discomfort by first identifying it. They will take the time to notice the feeling of discomfort.

The best traders’ worried minds may tell them to do something, but that is rarely the proper action to take.

According to Dr. Menaker, the key after identifying discomfort lies in asking: “Why do I feel this way?”.

My Experience With Discomfort

In my own experience, the main reason I felt discomfort in trading came from not knowing exactly what to look for in a trade (i.e. having no process) or watching price movements way too much once an entry order got triggered.

When I became able to identify those reasons, I understood that my discomfort meant something deeper. The good thing is, I could do something to handle it.

In the first case, I had no process and needed to work on creating a checklist. In the second case, the right action was to get off watching the charts after entering a trade as price movements didn’t have anything to do with the reasons I had for entering my trade.

In short, if we can learn to respond to discomfort by taking the right action (whether that is walking away from the screen or doing more preparation), we are directly increasing the likelihood of accumulating returns from the market. Not identifying that we feel uncomfortable while trading and acting based on emotions is a sure way to destroy the progress we’ve made.