11. Psychology of Decision Making
Are decisions made with the conscious or the subconscious mind? That’s the big question we’re answering on this episode of Mind Over Markets. We have strategies to help you break out of your subconscious decision making patterns, and the personal challenge in this episode is designed to challenge your unconscious decisions. You make roughly 35,000 decisions per day. That breaks down to making a decision about every two seconds. And when you’re making that many decisions, how can you be conscious of every single one of them? The truth is – you can’t. And this truth is even more important when it comes to decision making as a trader. Unconscious decision making comes from our subconscious desire to find the “right” answer. In trading, the right answer isn’t always so obvious. That’s why decision making is so hard for new traders. The decisions we have to make as traders aren’t always easy, but taking the pressure off of yourself to make a profit right away can make it a little less difficult. This way, you can focus on learning and trying different strategies until you develop a decision making process that works for you. “The most important job that you have is learning.”Click To Tweet You can’t rush into decision making when you’re a trader because you’ll fall into a pattern of habit-based decisions. Those are the impulsive decisions you make when your unconscious mind takes over. If you’ve ever had a day when you look back at your trades and think to yourself – “Who made these? This doesn’t look like me at all.” – then you know you’re starting to make a habit of unconscious decision making. We’ve all been there. In fact, nearly 25% of our trades are habit-based. But it’s time to break that habit. In this episode we’re discussing the differences between value-based and habit-based decisions, and sharing trade pro tips on how you can start training yourself to make more conscious decisions when trading. Learning how to make value-based decisions takes practice, but as you familiarize yourself with the good habits of successful traders and take your time to understand the ins and outs of the market, you’ll find yourself making the right decisions sooner rather than later. In This Episode You Will Learn: The two types of decisions human beings make 3:30 Why new traders have such a hard time making the right decisions 10:08 NEW TRADER CHALLENGE: A new perspective on winning and losing trades 18:04 Which types of decisions will create the biggest opportunities for you 30:15 How your personal purchasing patterns will affect your trading strategy 40:43 How to make the decision that’s right for you 48:58 Some Questions We Discuss: How many decisions do we actually make every day? 1:48 How do habit-based and value-based decisions work together? 6:45 How many trades have we made that are value-based? 15:29 What decisions do we have to make as traders? 24:24 Is there a template for making the perfect decision? 46:00 Why should you forget about decision making by the end of this episode? 51:04 Resources Connect with us online: Trade Pro Academy Catch up with our earlier episodes: Mind Over Markets Podcast Catch up with one of our favorite traders: Anthony Drager