Psychology VS Trading
Some people are not built right emotionally to be successful traders, others are not built right intellectually to be successful writers, and most people are not built right physically to be NBA stars! But many people who try their hands at becoming successful traders are not getting all the help that is available to them.
Here are another series of Forex Trading tips that will have a high impact on your trading results...
1 - Turn Your Computer Off Once Daily Risk is Reached
Successful traders are goals-oriented traders, as well as those who manage risks with a very strict discipline...If you want to be successful, you have to set a daily maximum loss. When this level is reached, turn your computer off, uninstall the trading software, and leave your trading environment. (If you trade from home, go out, very far from where you live). It may make you laugh, but when you will apply this simple discipline, looking back later at your trading results, you will see how much money you will have saved and made.
In our early career, we used to trade with a proprietary trading firm. The company had a specific software already installed on traders' computers. When your daily drawdown reached the daily maximum, a little clock would appear on your screen giving you 1 min for recovery. If you couldn't recover the loss during that minute, the computer would freeze and stop working...till the following day.
One day, all of the 10 traders were down, which was a total losing day for the company. Imagine, if that company didn't have such software, and we were to take other trades that could have turned bad again...
Without such a radical discipline, the company would not have been able to survive till today. The firm is still alive, and still makes profits each year in the market. Our instructor told us that one of their best traders turned $50,000 into $10 millions in 3 years. But 2 years later, his account was only up for $700,000 !!! We are sure you get the point...
2 - Turn Your Computer Off Once Daily Target is Reached
The principle is the same. As with your daily risk, when your daily goal is achieved, turn your computer off, uninstall the trading platform, and walk away . The problem with emotions is, no one can manage nor master them.
As traders, we are like any car driver. We under-perform when we are too happy, and also when too nervous and frustrated. An accident is just around the corner...Overcoming the uncertainty principle is impossible ! A very good trader always has a daily, weekly and monthly goal. When the weekly goal is reached by Wednesday, please stop taking trades ! and shut down your computer.
3 - Turn Your Computer Off, Once Trade is Initiated
We are not saying to leave the computer on, and walk away from it. We say to turn the computer off as soon as you took the trade. One of the main reason why day traders don't make money is because they want to sit in front of the screen and watch the market movements. Candlesticks opening and closing show all kind of patterns you may know. And the strength of some movements is so powerful that you will think your stop loss will be hit, causing you to close a will-be winning trade. What a waste ! A market analysis before the open, and the one made in the heat of market liquidity are 2 contradictory things.
The cloud of emotions, revenge, frustration, excitation will aggressively blind your mind during critical times. And this is where trading higher time frames can help and provide you significantly good results.
4 - Encourage Yourself Looking At Other Traders' Results
Sometimes when we are in a severe series of losing trades, we think we are bad traders and others are doing better. This is very painful to accept, and at the same time very devastating on our psychology...Checking form time to time other traders' results, and knowing they are not as extraordinary as we think can reduce market frustration.
This doesn't mean we shouldn't improve our trading skills, but at least it will prevent us from giving up or quitting the forex game thinking we will never succeed in the market. Good traders make money on less than half of their trades. This means they lose more than half of their total transactions.