Stop Practicing Bad Trading Habits!

Last Updated September 24th 2020
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How to Break Bad Habits and Develop a Healthy Trading Routine

If you want to stop practicing bad trading habits and develop a healthy trading routine, this article is just for you!

We at Trading Education can help you get out of your comfort zone and develop a healthy trading plan. Simply sign up for one of our trading courses to understand the world of finance and create successful trading habits!

Why Are Trading Habits Important?

Why Are Bad Trading Habits Bad?

But Why Is It So Hard to Stop Practicing Bad Trading Habits?

How to Stop Practicing Bad Trading Habits?

  1. Start with the Basics of Forex Trading
  2. Use Virtual Funds in a Real-world Trading Environment
  3. Follow Your Own Forex Trading Rules
  4. Stay Positive
  5. Understand Your Emotions
  6. Seek Feedback
  7. Be Patient
  8. Stay Healthy

Rounding Off

Why Are Trading Habits Important?

We all have heard that “Practice makes perfect”... But can we really become successful traders by practicing bad trading habits?

The truth is that practice is vital as it helps us develop trading habits. Take any great athlete, for example! They also repeat the same routine over and over again until it becomes an automatic reaction of their bodies.

Even if you don’t want to think of yourself as a creature of habit, experts reveal that more than 45% of our daily activities are habit-forming and automatic. As such, habits play a crucial role in life and help us function, allowing us to concentrate on novel and complex tasks.

Imagine thinking over and over again whether or not to turn on your computer every time you are about to start trading forex! Simply a waste of time and resources that can be used to execute a trade instead, right?!

Why Are Bad Trading Habits Bad?

While practice is vital to help traders establish trading habits, what will happen if you keep repeating the wrong things over and over again?

Having poor knowledge and repeating the same mistakes won't lead you to progress no matter how many hours you spend practicing. The key here is repeatability. Experts claim that it’s the continuous repetition of bad money habits that causes such bad habits to become deeply rooted.

In fact, developing bad habits early on can cause big problems in your trading career. Imagine if greed becomes ingrained in your trading plan! A real recipe for financial disaster! So instead of burying yourself in wrong trading practices, start breaking your bad trading habits.

But Why Is It So Hard to Stop Practicing Bad Trading Habits?

Just like any bad habit, including nail-biting and procrastinating, bad trading habits can be detrimental. But how can we stop practicing bad trading habits?

It’s easier said than done, we know! Breaking bad habits and developing a healthy trading routine can be really hard. The main reason is rooted in the brain. When we find a rewarding activity, we start practicing it over and over to feel good. 

Take smoking, for example! Any pleasurable activity can create a new neural pathway in the brain. In order to feel good, we keep craving for activities that follow that pathway; slowly such behavioural patterns become ingrained and hard to change

To stop practicing bad habits, traders - including forex newbies - have to identify their bad habits and the so-called habit loop. In other words, one has to identify triggers, behaviours, and reinforcing rewards. How?, you may ask. 

How to Stop Practicing Bad Trading Habits?

Wondering how to stop practicing bad trading habits? How to stop checking your social media feed instead of catching up on the latest forex trading news, for example?!

The easiest way is to create a new habit; a new habit that can replace your old one but still meet your needs. When you find a substitute for your bad trading habit, visualise yourself succeeding and avoid negative self-talk.

It’s not about becoming someone else but creating a positive mindset. When it comes to forex trading, for instance, one has to see success as their ability to be consistent and to follow a trading plan; not as their ability (or sometimes pure luck) to make a profit.

Here are some tips that can help you stop practicing bad trading habits:

1. Start with the Basics of Forex Trading

start with the basics, trading habits

To stop practicing bad trading habits, you have to start with the basics. Like most things in life, you can't master a topic without thoroughly exploring the fundamental principles behind it.

In the world of forex trading, for example, before you start making large trades and placing large sums of your cash flow on a single trade, you need to understand the very fundamentals that constitute trading.

This includes things like common trends and chart patterns, currency correlations and general economic trends, and so on and on. From books and online courses to webinars and social network groups, traders should invest enough time and resources in proper trading education.

Once you’ve comprehended how forex trading works, only then can you begin forming strategies on how to properly trade currencies and potentially make stable long-term gains. Let’s mention again that consistency is the key to success: numerous small gains over a certain period are more valued than large one-off wins. 

After all, forex trading is not gambling or a get-rich-quick scheme, so you shouldn’t rely on luck and leprechauns. 

2. Use Virtual Funds in a Real-world Trading Environment

The second solid trading habit you should be following to replace a bad trading habit is to regularly test your skills in a risk-free but realistic environment. To put it simple, instead of making trades with your actual cash flow, you can use demo accounts with virtual funds. These test areas are anything but straightforward. Moreover, demo accounts usually allow you to trade live, so there is no way to know what will happen. 

To make this a truly great habit, you will need to regularly revisit these demo accounts to improve your long-term abilities. Virtual trading can help you develop skills that you can’t simply forget about. 

At the same time, as virtual trading doesn’t come with real money and emotions, demo accounts can play a bad joke on you. Thus, when you acquire enough skills, do not hesitate to dive into the world of real forex trading.

3. Follow Your Own Forex Trading Rules

To stop practicing bad trading habits, you have to establish strict rules and self-control. From placing stop-loss orders to taking breaks between trades, you should be consistent in setting your own rules.

When it comes to consistency, always stick to your trading plan and risk management strategy. Here we should note that experts claim that one should never place more than 1% of their account on a single trade.

Even if you get tempted, remind yourself there’s no place for impulsiveness in trading. No, trading forex and impulsiveness are not a good pair. Take a break between trades if needed to stop yourself from executing unplanned moves.

4. Stay Positive

No matter what happens, positivity is the key to changing habit-forming behaviours and breaking bad trading habits. Believe it or not, trading psychology is a big deal!

Embrace that trading comes with risks and losses, and stop seeking immediate rewards. Ditch your impulsiveness and stay positive about the fact that you can change your trading habits and mindset.

It will take time, but don’t worry! You can even reward yourself for being persistent. Grant yourself a small reward for following your trading plan, for instance! How about buying a forex trading psychology book or some chocolate?

5. Understand Your Emotions

Behaviours, emotions, and cognitions are all mixed in one, so it’s vital to recognise your emotions on your journey to trading success. Breaking bad habits will come with a lot of frustration, anger, impatience, and even overconfidence, so make sure you understand how forex trading makes you feel.

Even if you are not an expert in trading psychology, you should become an expert in your own trading routine. As stated earlier, healthy habits are vital to help us function and potentially make a profit.

Do not allow greed, fear, or overconfidence to guide your moves. To help you feel more at ease, experts advise to trade only money you can afford to lose.

6. Seek feedback

seek feedback, trading habits

When you decide to change your bad trading habits, do not be afraid to seek feedback

Okay, okay, we know that the fear of failure often stops us from seeking feedback. For instance, people rarely tell other people that they’ve started exercising. Why? Simply because they think they’ll fail and will be mocked about their inability to be persistent. 

However, seeking feedback is a key part of your learning process. Though the nature of forex trading makes it more of an isolated experience, seek help and learn from the best. This could be from a friend, relative, or even a paid coach. In fact, seeking feedback is one of the best habits that can make you a truly successful forex trader.

If it’s unlikely to have someone else with you in the room when you are executing trades, you should go through your own trades and offer personal feedback. Keeping a trading journal, for instance, can be highly beneficial.

7. Be Patient

Even if you are committed to creating a healthy trading routine, do not forget that breaking bad habits requires a lot of patience. We can’t change our biology fast, after all. As Warren Buffet said, “Successful investing takes time, discipline and patience.”

Remind yourself of the benefits of your new trading routine and give yourself at least a month to see the fruits of your new trading habits. 

Here we should note, according to science, it might take between 18 and 254 days (66 on average) for a new behaviour to become automatic. It’s worth waiting because trading habits can become success habits!

At the same time, plan for failure. Be prepared not only to lose money but to lose yourself on your journey to success. When you notice that you might be slipping back to old habits, reassess your emotions and moves, and give yourself some more time. It’s not only the trade that’s your friend... but patience!

8. Stay Healthy

Healthy habits go hand in hand with a healthy lifestyle. We are not talking about going on a diet or quitting sugar, caffeine, or nicotine. We all have our little secrets.

Yet, try to stay healthy; exercise, connect with nature, and try to get enough sleep. Treat yourself and use your free time to the fullest.

Also, do not forget that trading should not become an obsession. Try to find a balance between work and personal time and always dedicate enough time to your loved ones.

Rounding Off

At Trading Education, we recommend these good habits as a solid and fundamental way to build up a successful career in forex trading. 

Yes, practice is a vital part of learning, but there is no place for practice without a healthy routine. These guiding principles can help you build a healthy trading structure:

  • Always go back to the basics to ensure you understand the fundamentals of forex trading patterns.
  • Use demo accounts and virtual environments to test your knowledge, especially in fluctuating markets.
  • When you start trading, be consistent and stick to your trading plan and risk management strategy.
  • Find a mentor with more experience than you, a mentor who can offer you constructive criticism and feedback regarding your trading patterns.
  • Changing bad habits requires a lot of patience and may come with many intense emotions. Thus, try to analyse your emotions and stay positive. Give yourself enough time to change and even be prepared for failure.
  • To have a healthy trading routine, one has to stay healthy. Find a balance between trading and personal life; simply because success is not measured only in money!

We at Trading Education can help you create healthy trading habits. Sign up for our online trading courses and become a real pro in the world of trading.

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Do you think you can stop practicing bad trading habits easily? Which tip did you find the most useful? What is a positive trading routine for you? Let us know in the comments below.

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