Tilt is a special psychological state, due to which a trader becomes prone to excitement and cannot make rational decisions based on technical and fundamental analysis.
Causes of Tilt
Losing trades - can lead a trader to a state of Tilt, while the size of the lost amount is far from always important. For some traders, it is enough to lose a small part of the deposit in order to start acting irrationally, trying to win back the funds quickly. More experienced traders usually fall into this state after losing a large amount.
Huge profits - Paradoxically, profits, especially large amounts, can also cause a trader to have trading tilt. After a very good trade, a trader may fall into a state of euphoria, which will also prevent him from acting adequately in further analysis.
The trader begins to overestimate his strength, ceases to be considered risk management and moves on to more rice transactions.
Downstreak - if a trader follows a strategy, making decisions that should bring profit at a distance, but does not receive it, he may lose interest in trading, be disappointed in his abilities. The reason for this is often a deviation from the mathematical expectation or a simple failure, which can be protracted. Seeing that the strategy is not working, the trader will often start to move away from it, instead of taking a break or continuing to trade on lower trades. As a result, monetary losses become even greater and problems grow like a snowball.
Alcohol - in small doses is taken even by experienced traders to calm emotions, but with frequent use, abuse, individual susceptibility, it can act the other way around, which is most often observed. Alcohol often awakens excitement, reduces the mental abilities of the brain, and in case of severe intoxication, it can completely turn off rational thinking.
Fatigue, stress, poor sleep, family problems, health problems... They also put the trader on tilt.
The process of the appearance of Tilt can take a long time or appear instantly due to a sharp change in the psychological state.
Or market manipulation.
Varieties - how to notice and fight
In most cases, a trader cannot notice that he has a Tilt condition. This is due to the fact that in such a state, he cannot act rationally not only in trading, but also in assessing his abilities. Tilt in trading is divided into two types, each of which can be identified in different ways:
Explicit - usually appears suddenly and is expressed in making too risky decisions, the presence of a lot of gross errors. For example, a trader starts taking large leverage, which is not included in his strategy, and when a trader starts transactions for the entire deposit, he goes all-in at random. Such Tilt in trading can be noticed after a few trades, it is enough to look at your last trades to ask yourself the question - “What am I doing?”. The surest way to deal with this condition is to take a break from trading. A trader needs to rest, think about his future strategy, or even take a break from trading for a while.
Hidden - a rather dangerous type of psychological state, since it is quite difficult to identify it. It usually appears gradually, growing and exacerbating the impact on performance. As a result, a smooth drop in the trader's profit or an increase in losses appears. Such a trader usually seems to work according to the usual strategy, but makes a number of mistakes, for example, the trader increases the number of transactions and increases the risk, inattentively selects entry points, and does not notice important features in the market analysis.
You can identify this state by analyzing your recent transactions. Therefore, every trader is advised to analyze trades regularly. The method of struggle is the same as in the previous case - it is important to take a break, restore the psychological state, correct the strategy, eliminating the mistakes made.
For Tilt in trading to go away, it is important to eliminate its cause, if possible. For example, you need to put up with a major loss of funds by setting yourself up to gradually earn money.
If the appearance of problems is associated with fatal mistakes - housing, family problems, etc., you need to work on yourself psychologically and learn to forget about them while trading.
Stop Loss Tilt
It is difficult to identify trading tilt and sometimes traders realize too late what caused their losses, since most or all of the deposit has already been lost. Therefore, experienced traders use stop-loss tactics. The trader just needs to set the threshold for the fall of the deposit, at which he must interrupt the game and strictly follow the rule created by themselves. For example, if the deposit drops by 10%, the player will stop trading. The break is not just for rest, but to identify the causes of the loss. The fact is that the loss may be due to other reasons - a downswing, an unsuccessful choice of an entry point, or a manipulator.
Analyzing trades during a break allows you to find out the exact problem. If a trader realizes that the loss is caused by Tilt, he begins to fight its causes, which requires a longer break. Other problems can be eliminated by in-depth analysis, and studying the history of the tool.
Tilt in trading is the first enemy of a trader after ignorance of the strategy and lack of experience, and a manipulator.
It should not be overestimated, and it should be remembered that the belief that you cannot develop a condition of Tilt often indicates that you are already subject to it.
P.S. To defeat the enemy you need to know him by sight.
Thank you for reading. Profit to you.