CHAPTER 11

The Trading Psychology Process: Constructive Self-Assessment

Jenna traded the popular commodities, including Crude Oil and Gold futures. She had developed good technical skills and was a net profitable trader. Although enjoying success and profits, Jenna could be a better trader than her results reflected. What held her back was that she did not know that she frequently committed similar errors. For example, Jenna liked to test her reflexes at the beginning of the trading day by putting on an aggressive trade to see how she and the market responded. Being aggressive, these trades often went against her. At times, the market went swiftly through her mental stop. When this occurred, she froze and took a much greater loss than anticipated. This would adversely affect her trading the rest of the morning, making her much more cautious.

Like many traders, at the end of the day Jenna recorded her trades. She never made more than a cursory review of her trades or her performance for that day, however. Therefore, she was blind to the fact that she was making the same errors over and over again. Not only was she committing trading errors described above, she was also committing an error with respect to process.

What was missing in Jenna's process was Constructive Self-Assessment. Without this critical procedure, which includes a review of her trading performance, she kept herself in the dark—she didn't realize she was making the same errors. Without knowing why, Jenna was ...

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