Trading Psychology | Why Normal Doesn’t Make Money | Part 1

Summary

Tom Hougaard argues that trading performance depends less on mastering technical or fundamental analysis than on managing human reactions—especially fear, losses, and the urge to be right. Drawing on a decade of observing traders on a trading floor, he says many repeat the same mistakes and that trading is primarily a psychological challenge.

He describes himself as a high-stakes trader and uses personal examples to illustrate the emotional demands. He says his position size was equivalent to £750 per point, compared with an average UK CFD trader’s £7 per point. A 20–30-point adverse move at his size could represent a loss comparable to a UK worker’s average annual salary. He also recounts making more than £1 million in one year and losing nearly £90,000 during the Christmas-period trading he describes.

Trading approach and framework

• Treat trading as a human and behavioral problem, not simply a lack of technical-analysis knowledge. Hougaard says traders can understand indicators and still fail to take losses appropriately.
• Manage fear rather than expect to eliminate it. He says practice and experience helped him become less reactive to trading stress.
• Remember that practice can reinforce bad habits. His formulation is that “practice makes permanent,” not perfect; repeated behavior is useful only if it is the right behavior.
• Avoid relying on forecasts or certainty. He says he does not know where markets will go and views directional opinions as potentially biased by the speaker’s existing position.
• Separate being right from making money. He frames the objective of trading as making money, not proving a prediction correct.
• Do not treat charts or indicators as a Holy Grail. He likes studying charts but warns that the brain can perceive patterns that are not meaningful (“apophenia”).
• Accept that entries may be random and emphasize money management. He says a trader could potentially have a better hit rate by flipping a coin and applying money management; he does not provide a specific money-management formula in this segment.

Markets, instruments, and trading tools mentioned

• Dow Jones index: Hougaard recounts trading a sharp Christmas-period move. He says the index fell about 500 points on Christmas Eve, then rose roughly 500–600 points on Boxing Day. After taking profit and going short, he says it rallied another 600 points, making it an approximately 1,100-point up day.
• Bitcoin and Tesla: Mentioned as examples of how a trader’s existing position can bias their market outlook.
• Contracts for difference (CFDs) and stock indices: Discussed in the context of position size, leverage, and trader losses.
• Technical tools named: Bollinger Bands, Keltner Channels, moving-average crossovers, stochastic indicators, MACD, RSI, and Fibonacci retracements.

Key figures and claims

• Hougaard cites statistics that 48% of gaps are filled within the first three hours of trading, and 78.6% of Dow Jones gaps are filled within 72 hours / three trading days. These are presented as his figures, not independently verified in the video.
• He says EU brokers had previously offered leverage as high as 200:1, but following ESMA rules the limit for retail clients became 20:1. He also remarks that offshore brokers may offer higher leverage; this is not presented as an endorsement.
• He refers to broker disclosures showing that roughly 75% of clients were losing, and says the share of losing traders could be 75–90%. He argues that these figures point to a behavioral problem, not merely a shortage of technical knowledge.
• Fibonacci retracement levels discussed include 61%, 78.6%, 88.6%, and 94.5%. Hougaard cautions that selecting ever more ratios can encourage pattern-fitting and does not by itself establish a trading edge.

Risks and cautions

Hougaard emphasizes the potential for substantial losses, particularly when trading large positions or with leverage. His personal trading results and anecdotes are not a defined strategy or a guarantee of performance. The segment contains no explicit “not financial advice” disclaimer.

Presenters and sources

• Presenter: Tom Hougaard.
• Sources referred to in the presentation: CMC Markets’ client-loss disclosures and ESMA leverage rules.
• Video source: CMC Aureon / Opto.