Those who trade the emini swear by the enjoyment and excitement the very act of a successful trade brings.  I relate emini trading to a war, which is won by many small battles.  Of course, that may be a little melodramatic, okay, maybe I love trading enough to overdramatize the act, but it just resonates with me in a way few things can rival.

It’s why I write everyday, or nearly everyday, about emini topics.

But I have been thinking an awful lot about trading psychology lately.   Let’s face it, the failure rate of traders is astounding.  Some figures estimate the rate of busts at 90% within the first three months.  Is it true?  I guess so, I don’t have any evidence to the contrary.  And yet, I think most traders, when they start out, have a pretty good idea what they want to accomplish.  Sure, they may take the odd flyer, or get into a few too many trades, but by and large they have paper traded enough to have a good idea what an ideal setup should look like.

Yet, traders fail in droves.

And one thing is for certain, most traders DO NOT WANT TO TALK TRADING PSYCHOLOGY.

The subject is a near taboo topic for most.  Most traders are content to rationalize their poor trading on some faulty indicator, a little bad luck, or the market took an unexpected move.   These things happen.  But more often, the trader took a bad trade based upon emotion or some unknown intuition.  A guess, really.  I see it all the time.

I suppose the average trader’s psyche is a fragile thing, and the books that have been written about trading psychology are not often a part of a trading discussion group.

Trading for a Living: Psychology, Trading Tactics, Money Management by Dr. Alexander Elder had a profound effect on my thinking.  There are other books on this topic but you seldom see them discussed.  No, we like Fibonacci retracements, pivots, support…you know the topics, but not enough is discussed about what is going on in a trader’s mind while he trades.

Why is that?

My personal feeling is that it is a sensitive subject because the average trader would have to discuss his failings and/or shortcomings.  And yet, I have seen some of the very best traders make absolutely terrible trades.  The common denominator in all these shortcomings is emotional/ego involvement in trading.   And that emotional/ego involvement seems to stifle too much talk about trading psychology.  Who wants to talk about failure?  Of course, we are more than happy to talk about success, but it is the analysis of failure that makes us better traders.

I keep a trading log, and am my own harshest critic.  It’s easy to write derogatory analysis about yourself when you know you are the only one who is going to be reading your diary.  But lately, I have been thinking I ought share some of my boneheadedness with the regular followers of this blog.   I try hard to reinforce, in my mind, an aversion to the mistakes I have made in the past.  And it’s not always a pleasant process, analyzing your failure.  But I believe that understanding your mistakes makes you a better trader.

On the other hand, I’m not sure analyzing mistakes is a very popular topic.  What say you?