Psychology of Trading and Risk Management

Trading is considered by many to be 100% psychological, though many people often say the same thing about risk management. The fact is, trading psychology and risk management are both critically important and like two sides of the same coin. When one executes sound and highly disciplined risk management, the psychological challenges of trading dissipate. At the same time, the right mind-frame begets the practice of excellent risk management. It is for this reason we approach these two critically important topics together.

The greatest mistake most novice traders make is to focus over 90% of their energy and analysis on finding the ideal trade set-up, while spending significantly less in managing their positions correctly. Part of the reason most (unsuccessful) traders operate this way is because they look upon trading as an exciting game. It is this quest for excitement which attracts them to trading, and ironically, this same emotion which prevents them from succeeding. Trading is more akin to flying a modern jetliner. Most of what you need to do as a trader should be determined – or programmed – before you take off. The psychological aspect comes into play when chaos or turbulence hits. This course will help you develop your trading plan or and give you explicit direction for what to do when you hit turbulence.

There are many mental challenges any trader will face, including: self-doubt, adverse stress reactions, and a lack of knowledge or acceptance of one’s trading personality; this course addresses those issues and more. You will follow trading psychology and risk management principles employed by your lead mentor, Helen Tasker, and other top trading teachers from OFA. Helen is a highly-respected trader and trading coach who previously managed the graduate training program for a Canary Wharf based proprietary firm. She has been instrumental in helping many new traders achieve success in their careers.

Upon completion of the 7 modules of this course, we will continue to follow your progress over the following 3 months. As a recruiter for several internationally based proprietary firms we continuously scout for trading talent. We know what you need to succeed and we know what banks and proprietary firms are looking for in new hires. Risk management is at the core and we will help you meet these requirements. This course is essential for anyone hoping to have any kind of success as a professional trader.

Key ‘takeaways’ and topics to be covered in this course

  • Acquire the expertise of a highly knowledgeable, successful, and experienced trader and coach.
  • Understand the psychological factors that may be preventing you from achieving greater success
  • Develop a specific trading strategy with a clearly defined risk management plan.
  • Receive post course monitoring of progress and recruitment support.

Module 1. The Importance of Risk management

  • Examples of how different risk management strategies can yield different results.
  • Case Studies in excellent risk management, as well as risk management disasters.
  • Module 2. The 3 waves of Risk Management
  • Before, during and after the trade: Trading checklist, Trade assessment, Trade analysis
  • Development of your own personalized plan using one of our models.

Module 3. Finding the Perfect Entry Point

  • Trade reasoning and application of technical trade set-ups
  • Assessing market conditions (fundamental and technical)
  • Order management: Scaling in
  • Risk-Reward Ratio: an assessment of probabilities of success for different trading styles

Module 4. Applied Risk Management

  • Types of stops: Trailing, dollar based, % based.
  • When to place stops: when and where the retail trader is most at risk to be hit.
  • The line of least resistance (from a psychological perspective)
  • Protecting Profits and scaling out
  • Hedging vs liquidation, Reacting to market data

Module 5. Capital Management

  • Target setting and application of technical trade set-ups
  • Planning for the ‘unplannable’: limit down, market swipes, news events
  • Over trading: A plan to avoid missing out on the greater trend, effect of commission

Module 6. Trading Psychology

  • Trading from the perspective of poker and other games of chance
  • Fear, greed, and emotional trading: strategies to deal with the inevitable
  • Areas of control: understanding when to leave the market arena

Module 7. Combining Risk Management and Psychology

  • Trader types: understanding your limits and possibilities
  • Personality testing: an assessment of who you are and what you should trade
  • Insights into neuro-linguistic programming and peak performance training
  • Professional development: where and how to develop your career

Mentoring Time

  • Available in blocks of 4 hours, either one-on-one, or small groups.
  • Weekly or bi-weekly follow-up of your trading performance, specific advice concerning your trade plan and everything you would expect of a highly regarded and personable trading mentor.

Course Format

Course length: 4-8 weeks. Total class time: (5 x 1 hour) +

  • Mentoring sessions over Skype.
  • Trade supervision will be done in both live and recorded market sessions.
  • Study materials available on our web-based learning portal.
  • Follow-up on your trading performance and analysis of your P&L. (3 months).
  • Recruitment to our partner’s funding programs (for successful candidates).
  • Access to OFA’s trader chat room; advice, analysis, and support from pro traders.
  • Private or semi-private mentoring sessions with instructor anytime over the course of 2 months (total 4 hours).
  • Private mentoring available (post course).

Course price with mentoring

$750.00 Add to cart

What comes next?

Many people who take up trading do so because they hope to have a career as a full time professional trader. Though this may seem like a dream to many, it is a realistic goal. If you can achieve some basic targets in P&L and maintain disciplined risk management in the process, there may be a career (and capital) waiting for you. One of our mandates is to place our traders with well-regarded proprietary trading firms and funders. Not everybody can meet the requirements for funding, but our method of training and follow-up is focused on helping each trading student achieve the goals these firms seek, namely: consistent profitability, a focus in strategy, and a low drawdown. Being able to recruit many successful students for financial careers also helps us establish profitable relationships with institutional clients.

To ensure you are on track to meet and exceed your targets, we will continue to monitor your progress bi-weekly. This will come in the form of P&L statement analysis and frequent advice through our trader chat room. If you still feel you require mentoring support, you may speak with Helen or any of our trading mentors in 5 hour blocks of time. ($750)