In the trading world, it's called “pressing”, forcing a trade to make more money. Pressing (trying too hard) can hide itself in many ways…position size too large, not adhering to your trade plan, etc. Pressing is totally the opposite mindset of trading selectively, as per trade guidelines and a trader's own trade plan. When you trade selectively, you let the market come to you, and be patient while you wait for your opportunity. The concept of pressing occurs when a trader is trying to MAKE things happen.
How does Pressing Affect our Trading?
Most traders, even those working on professional trading desks, have fallen victim to pressing at some time during their trading career. The way to eliminate the urge for pressing is to change our trading behavior. The right trading behaviors start as rules/guidelines and evolve into habits over time. Trading rules/guidelines can be anything from position size, target profits, and stop-loss levels, and more. These habits are important, because they don't require much effort, and don't deplete a trader's mental resources. If we have to MAKE ourselves follow rules each time we are confronted with a specific trading scenario, our mental resources are stressed, and this takes away from devoting full attention to the situation at hand.
When we're pressing to make money, the need to enter positions overwhelms our adherence to rules. Pressing most often occurs in situations where we may be frustrated with our performance, poor returns, missed opportunities, etc. This frustration leads us to try to MAKE opportunities rather than responding to those opportunities as they are presented to us by the market. In our interaction with the market, a successful trader looks for the market to be the leader. When we attempt to lead the market – when we try to guess what may happen instead of identifying what is happening – we are opening up ourselves for disappointment. This may lead to poor trading results and greater than planned-for losses.
So how do we make our trading rules automatic?
The answer to the above question is to turn our trading rules into habit. Human minds have the unique ability to automatize rules, in order that all mental resources can be fully devoted to deal with challenges at hand. As children, the “brush your teeth twice a day” might have once been a rule dictated repeatedly by our parents. Over time, with repetition, this became a habit, and most no longer required a reminder of the rule, or any special motivation to follow it. This is the type of automation we strive for in trading; when our rules become so ingrained in us that they require no extra effort or attention. By repeating your rules over and over again, in many ways you will gradually internalize them and turn them into habits. It is not possible to avoid the normal stress the market deals us at times, but by turning your rules into habits you are less apt to fall prey to frustration and pressing.
struggle will cease to exist.” Mark Douglas
How do I put this all in perspective?
It's important not to be overwhelmed by trying too hard to turn your rules into habits. Don't try to internalize too many rules at one time. Start with the most important rules that are part of your trading routine: entry rules (getting good pricing), position sizing rules (limiting risk in relation to your account size), and exit rules (setting precise profit targets and stop-losses). These three rules incorporated into your trade plan can become your guide for trading with full control instead of pressing.
Have you ever fallen to the temptation of pressing? Feel free to comment below.