By seeing a trade develop you can see in your mind a win or a loss. Also in the markets can be seen what self-destructive behavior may impair your trading.When the price is moving in front of you, you start to anticipate what the market will do.
When traders enter the market they need to do so based on systematic methods and leave the emotions behind.When emotions get involved then it is hard to see what the market is really doing and to know how to react what is happening.Keep emotions out of trading.The current trade is just one of thousands of trades in a career.Do not get attached to any one trade.
We talked about the amount of risk a trader has in the market now it is time to talk about how you feel about money.If you have a big attachment to money then it will cause a big emotional strain when you lose some of the money.
One of the hardest things a new trader has to learn is how to loose.Losing is part of trading.Losses need to be looked at as expenses, or cost of doing business.There is no Holy Grail or magic trading system that just has to be turned on and the money will roll in.
One of the biggest mistakes a trader can make is to over trade their account.They can trade too much of their account or have two much on one trade.The more a trader puts on one trade the more emotional energy they use.Eventually they could blow up their account and have to start all over again.
Most beginning traders will over trade their accounts trying to get rich quickly.Not taking time to learn why they have made or lost on their trades.They just throw money at the market and watch what happens, for good or for bad.Experienced traders know better than to put it all in.They will plan their trades, implement their plans and grow their account gradually.
Trading any of the financial markets is a one on one activity. If someone is going to do it for you it is you. You will need to follow a trading plan and guess who is going to have to write that trading plan. You can get examples of how to construct a trading plan but you have to put in your personal information.
This is something you will actually have to write out. Long hand or computer generated but you will need a hard copy to refer to, it needs to be in front of you. You will need to have your trading rules to refer to so you stay on track. You just need to get the rules down then follow them.
When we trade properly we need to know that we are using the law of probabilities.
When you go to any gambling place you are playing with probabilities. The thing you already know is that the probabilities are in the favor of the house. When you use a trading system you are putting the advantage in your favor.
For example you have moving averages, oscillator signals, conformations, trends, time frames to put the advantage in your favor. If one indicator gives you a signal then you wait for the confirmation of the other indicator to give you another signal to enter the market. A trading system helps you identify high probability trades.
Over the next couple of weeks we will give you some of our thinking about why we are all different in our trading success.
We have been asked what kind of results will we get with your trading system, what percentages of success will I get?
Let’s look at two traders. They have the same capital, open account with the same brokerage, were taught by using the same trading system, have the same entry and exit signals. Now give them some time to trade and check back. One trader is up by 25% and the other is down by 30%. It is interesting that with the same information two different traders get such different results.
While on vacation over the 4th of July2008 we visited Mt. Rushmore, South Dakota in the black hills.You know the place with the sculptures of the presidents of the USA.As we learned about what it took to make this monument I was amazed.It took years of work for many men.