Have you drunk the trader Kool Aid that says it possible to be 100% successful in trading? Have you bought into the hype that says your millions of dollars are just 24 hours away?
You know what trips up most traders?
Think about the emotional charge, the adrenalin rush you get when a trade completes successfully. Few things better than that, right?
The bad news is that no trader gets to have that 100% of the time. The other side of that rush is the despair of the loss. This places you right on the emotional roller coaster ride of highs and lows, with you on the tracks as the car rushes at you or drags you over the rails behind it.
The Secret – Separate yourself from the emotions that destroy accounts AND the self confidence of traders
Desperation is a very difficult stance from which to trade effectively. If you need a successful trade to pay the electric bill, you are trading from a very dangerous place. Accept going in the reasonable chance you will have a loss.
It’s to easy to get stuck into a trade and follow it in the wrong direction or follow it too far. How often I see traders waiting for the market to validate their hunch or vindicate their ego – this one has to prove out! Make these decisions in advance and stick to them.
If the last trade was as exhilarating as climbing Mt. Everest, congratulate yourself. Celebrate! If the last trade was like being dragged behind a jeep over a glacier, congratulate yourself. Celebrate! Yes, I’m not crazy, at least not about this. If you get into gloom and doom when a trade goes south, you dramatically increase your odds of missing something important as you plan your next trade.
Honor your results, whatever they are. Then move on to the next trade as if you are recovering amnesia.
You may get tired of hearing me say this, but if you’re looking for the overnight miracle, or even the One Year Miracle where your trading results equal winning the lottery – you’re in the wrong profession. Save yourself a lot of heartache and keep the day job. No one hits 100% of the time. Plan for losses. They will happen. Accept them as part of the game.
Have you discovered that everyone is ready to give you trading advice? From your Aunt Suzy to your cousin Cecil – everyone suddenly knows what you should be doing and when. Isn’t it great how easy it is to give advice when it’s not your money on the line? The confident trader doesn’t give a jot about what every other Tom, Dick and Fanny think. They put the blinkers on and do what do best. Use your resources. Use people who are battle-tested and can really prove it. (See article: Forex Scams 101: 5 Ways How to Avoid a Forex Scam) Graciously thank Aunt Suzy for her advice and move on.
In trading, it’s easy to go for the fast buck, the quick turn. Set a time frame in advance so you can give your trading strategy time to work. Whether it’s six months or X number of trades, don’t let emotions whip you back and forth on styles an strategies, stealing any chance of long term success. Choose wisely to begin with, and then give your strategy time to work. .
I sometimes get the occasional client who decides to leave the forex signal service after we call two losing trades in a row based on the fact that the strategy “doesn’t work”. Just giving a strategy two changes to prove itself is very much like asking two people out of 100 whether they prefer beer or wine, and calling the results conclusive…best of luck to them. The mature, confident trader looks at a strategy’s success long-term.
If you are in a prolonged period of draw down, it’s time to review your strategy. Back test, changing one, yes one, element, one rule, one filter. Would that hange have turned loss to significant profit?
This may seem like mundane, boring work, and if that’s your decision, so be it. Many traders won’t bother. Only you can decide if profitability is worth the trouble to you. If you’re not willing to dig in and get your hands dirty, does it make sense to complain about a strategy that doesn’t work?