A Map to Truly Understanding Trading Psychology & Your Trading

In this article, we will look at my simplified “map” to truly understanding trading psychology and its impact on your trading.

First, the following is our “map” to identify and understand trading psychology and your trading.


The webs of ideas that organize our perceptions

Positive Schemas

Ideas and perceptions that positive, healthy and reality based

Negative Schemas

Idea and perceptions that are negative, not healthy and not reality based

Cognitive Therapy

Focuses on changing negative schemas to positive schemas


Essentially, we can view our minds as made up of a multitude of webs of ideas that gather and form our perceptions. The aforementioned statement in isolation may seem harmless; however, when we look at our webs of ideas that form our perceptions and realize they can be positive or negative then we must look closer and find how this impacts us as traders.

Basically positive schema help us as traders as they keep us connected with what is really unfolding in market behavior which is transformed into price action we see on charts. Positive schema also allow us to think and reflect accurately about ourselves and our own actions and behaviors. That reflection of actions and behaviors is what promotes our development as traders. In contrast, negative schema act as road blocks to our success as traders. Basically, they disrupt our trading because our view of the market is not grounded in reality. Essentially, we can’t see market behavior and price action clearly and our actions and behaviors are out of sync with what is unfolding in the market.

What is the answer to this dilemma as traders?

First, you must identify your negative schema which basically is your negative thinking about you and how unsuccessful you are as a trader trading. Second, you need to turn the negative thoughts to positive thoughts. For example, I have a motto (in life in general) that there is no such thing as failure because with each “failure” we learn something new that promotes our success. Failure is negative and often leads us to look down on ourselves, Turned to a positive, failure becomes something that helps us develop and reach new heights and greater successes.

Last, you take each negative and positive schema and their impact on your trading and write about them in a trading journal. This allows you to reflect and ultimately grow as a trader.

Profitable trading to all!

Debbie Badawi

FxST Education Specialist

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Author Bio

Dr. Debbie Badawi’s formal education, training, and career is in the field of education. Ten years ago, upon an early retirement, she entered the world of trading equities and then found her passion in day trading and swing trading the Forex Market. Although she trades various currency pairs, she spends much of her trading focus on the EUR/USD. In addition to trading, Debbie mentors other traders, works with the team at FXST, and runs her educational consulting business where parents find educational solutions for their children. When asked what’s next or what’s Debbie’s future? Debbie smiles and precisely says, “ a simple life comforted by a six figure income and a financially free retirement.”

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