REASON TO BUY FOREVER Read more [...]
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About 70% (if you really could put a figure on it) of what you do is not even about the trade you put on. It’s how you think and how you emotionally react to your results.
It is so important to realise that we are emotional beings and a lot of how we behave can be based on the reaction to these emotions.
For instance, when we put on a trade and it loses, we want to ‘get our own back’ on the markets by making another trade that wins back our losses and more. This is in our human nature. It is a sort of competitive reaction based on our need to survive. If we don’t do this, we ‘feel’ that we have lost and have been a failure.
A machine doesn’t have emotions, so a trading ‘robot’ which puts on trades regardless of past performance, does so according to a specific plan (your trading plan) and should therefore have a better trading history than you do!
If you don’t want a robot to do your trades, then try to suppress your emotions. Always trade as though you are putting on your first trade.
Why is it that when we have a trade on that is winning, we tend to want to cash in, but when it is losing by the same amount, we think that it will recover and we will wait and ‘at least get our money back’?
These traders seem to get a few good trades that are wiped out by one or two bad ones. Again, this is all down to how we ‘feel’ about what is going on. Anyway, your Trading plan should never let you get into the situation where your losses on a trade are large.
When we feel down or have a lack of motivation, this is obviously not a good time to trade, but some of us ‘feel’ that we have to carry on and trade. The biggest mistakes I’ve made are in this category. Sometimes I’ve even traded when I’m ill from my bedside!
Your mindset is key to being the best trader you can be – attitude is paramount and having the right attitude puts you in the right frame of mind to trade your best. Basically, if your not up to it either physically or mentally, don’t trade!
Provided you have an edge and your trading plan is sound, with enough trades you will always win, just don’t let those emotions get in the way!