Traders also deal with demons. Nothing particularly disturbing or life-threatening, let's be clear. Simply thoughts and attitudes that stand as obstacles between the individual and success. Thoughts that, just like the demons in movies (or in the Christian tradition, if you prefer), take possession of the mind and force the person to behave in ways they never would.

It's best to get rid of trading demons, and do it quickly. The good news is that external intervention is not necessary. You don't need a "priest" to free your mind from negative thoughts. You can do it all by yourself. Here are some useful tips, "demon by demon".

The demon of hesitation

You look at the chart and identify perfect patterns. However, instead of planning the trade, you hesitate, start to get nervous, change the chart timeframe to one hour, then fifteen minutes... Until you realize that maybe the market is about to change, that all that perfection you identified was perhaps just an illusion. In the end, after two hours of obsessive thoughts, you decide not to enter. This is what happens when the demon of hesitation takes possession of your mind. It's a demon that is clearly created by insecurity, which often acts regardless of the current reality. In fact, as evident in this case, it contradicts reality. How do you cast out the demon of hesitation? Of course, it's not easy. It can help to convince yourself of a small but important truth: it's useless to seek mathematical certainty, as it does not exist. In trading, we speak at most of normality. Therefore, you must accept risk, trying to contain it as much as possible. Another remedy is to reduce discretion. Doing so, in theory, is quite simple: create or adopt a trading strategy, which also includes a pattern for interpreting signals, and follow it no matter what (emotionally).

The demon of arrogance

This demon is the exact opposite of the one addressed in the previous paragraph. Exactly: it's not only insecurity, which translates into an obsession with controlling the uncontrollable, that throws a wrench in the works, but also excessive confidence. It, in fact, leads to arrogance, which is one of the attitudes to avoid. Thinking you're able to easily untangle the most difficult situations, as well as believing in your abilities beyond realistic data, is truly harmful. Arrogance is not a far-fetched risk. On the contrary... According to some estimates, more than 50% of traders overestimate their skills, which leads them to make real blunders, such as not verifying signals, performing a hasty technical analysis, and following their instincts in a practically arbitrary way. To defeat arrogance, the only work to be done is introspection. In a way, it's easier to overcome insecurity than arrogance, as you're going against your own positive feelings. This mental work must proceed from an analysis of your possibilities that is as realistic as possible, a kind of continuous and in-depth examination of conscience. Although, in retrospect, arrogance often has short legs: a few losing trades are enough for the house of cards to collapse.

The demon of fear

This demon goes hand in hand with that of insecurity. However, fear and insecurity are two different things and, unfortunately, the former is worse than the latter. If insecurity generates hesitation, fear generates paralysis. Those who are afraid don't delay an action, they tend to avoid it altogether. This means missing opportunity after opportunity. Not only that, when maybe, more out of inertia than real will, you enter the market, fear has already eroded your lucidity, so your actions are ineffective and even harmful. So, how can you overcome the fear in trading which, it's worth specifying, is essentially the fear of losing money? The solution, and this is certainly good news, is at hand. It consists of undertaking a "specific therapy". One that is not at all shocking, but aimed at bringing trading back to a state of normality in the gentlest and most gradual way possible. This therapy consists of drastically lowering the investment amount, almost going back to a demo stage, and then, once the fear has subsided, gradually increasing the stakes. It's the only possible therapy, also because the usual advice, i.e. following your trading system and reducing your discretionary power, is useless when you're engulfed by irrational fear.

The demon of regret

At first glance, it may be the least dangerous demon of all. After all, a feeling of regret after losing a trade is completely normal. Who doesn't feel sorry for losing money? This statement is essentially true. The problem arises when this "normal" feeling takes on a "pathological" dimension, that is, when it's so powerful that it conditions future trades. This happens when regret causes a lack of confidence. A bit like what happens to individuals who are depressed due to trauma or a particularly negative event, who end up in apathy, traders can lose confidence not so much in themselves, but in trading in general. That's when any initiative loses its effectiveness, precisely because the trader himself is not convinced. Paradoxically, this demon, which is ultimately "less murderous" than the others, is one of the most difficult to cast out. The reason is simple: regret sinks into the depths of one's soul. It's really difficult to control a feeling of sadness. The advice, therefore, is to play on willpower. That is, to hold on, to continue with your trading system until positive events occur, which generally means winning trades. The surest way to overcome regret is to find happiness, or at least a glimmer of serenity. It's all very difficult, as it's anchored to results.

The demon of revenge

Revenge which, incidentally, could easily turn into vengeance. What does it mean to take revenge in trading? Clearly, there is "no one" to take revenge against, but "something". This something is defeat itself. When losing, the trader is often driven (especially immediately) by a feeling of revenge, which can become vengeful. That's when you seek victory at all costs. That's when you force your hand. This means, in a nutshell, taking more risks than you should, ignoring negative signals, overestimating positive signals. It means, above all, increasing exposure. After all, the goal is to recover as quickly as possible. Well, this is an incredibly harmful attitude. And the reason is simple: it directly recalls gambling, and trading has nothing, or at least should have nothing, to do with gambling. How do you suppress the thirst for revenge, how do you defeat and cast out the demon of revenge? Again, the solution is very simple to say and very difficult to do. In short, it's necessary to solve the problem at its root, that is, to extinguish the feelings from which the thirst for revenge originates. In the vast majority of cases, in trading as in life, the origin can be traced back to unresolved regret, to a trauma that has been poorly or ineffectively processed. And here, of course, we refer back to the previous paragraph.

The demon of hope

It may seem a contradiction to assign hope a negative role, to even turn it into a demon. However, that's exactly how it is: under certain conditions, hope is a demon. The reason is twofold. On the one hand, hope is a feeling that (sorry to say it, but it's true) has little to do with rationality. It's a matter, after all, of ignoring technical data and considering an event beyond the real probability of it happening. Secondly, hope, precisely because it tends to be detached from the rational element, tends to degenerate into greed. And on Wall Street there is a saying: bulls make money, bears make money, pigs get slaughtered. So, how do you cast out the demon of hope, or at least limit it and prevent its degeneration? In this case, the solution is quite simple: reduce your discretion, thus preventing hope from influencing your actions. To do this, it's enough to follow your trading system, not deviating even by a comma. It must be your guiding star, the element that anchors the trader to rationality, to scientificity (as much as possible in trading). The only resource that, in this context, must never be lacking is willpower.

The demon of ignorance

If hope appears innocuous (but it's not), it's not at all difficult to understand why ignorance should be banned. It's almost pleonastic to explain it. However, it's worth explaining how much ignorance hurts in trading. First, it causes loss after loss because it forces the trader to intervene completely or almost devoid of tools in a context that is truly complex. Secondly, it forces them to adopt, in the absence of better, attitudes that recall gambling more than the world of investment. And, as we said before, trading should have nothing to do with gambling. The good news is that defeating the demon of ignorance is relatively easy. If you lack intelligence, and have not very weak foundations, it's only a matter of time. The only remedy, it's almost needless to say, is study. The only real big difficulty, if anything, is establishing a course of study, since there are no "trading universities". In this case, we recommend reading this article, which talks about the books that a good trader should know, and referring to brokers, who mostly organize a real training center, with ad hoc courses for beginners and experts.

The demon of superficiality

More than a demon, it's a character trait. As a result, it's very difficult to come to terms with it, to limit its effects. In trading, a superficial attitude translates into the classic easy-going approach, and therefore into a non-pedantic verification of signals, the tendency to dwell too little on technical analysis, but rather to rely with little knowledge and little sense of control on automatic trading. This is clearly an attitude that easily leads to disaster. Given that it will be the defeats that transform a superficial individual into an attentive one, how can you limit superficiality before it, at least with regard to trading, causes irreparable damage? First, you need to become aware of being superficial. Secondly, it's necessary to stop often and "rethink yourself", that is, do the classic examination of conscience, analyze your actions and thoughts as if you were outside. It's not easy, even in this case it takes a lot of willpower. And, paradoxically, it's precisely the willpower that is lacking in a superficial individual. That's why the demon of superficiality is one of the most difficult to manage.