There are many factors to trading and indeed to the trader that ultimately decide on how or even if a trader will be successful.
It seems ridiculous that some traders trade for entertainment value and that the risk capital for something to do! But there you have it, they have accepted losing from the start.
Others lose because of bad money management. More lose because they do not understand the difference from trading to gambling. Some traders seem gifted with all the traits mentioned. They just can’t make it happen.
The amazing thing is though that losing traders call more than 50% of the trades they enter correctly. In fact currency traders call the Euro correctly 61% And the Dollar 59% of the time yet they go on to lose long term.
In fact, statistics from FXCM claim that after analysing 43 million separate trades that the average profit of 43 pips on each winning trade was set off against an average of 83 pips every losing trade.
In short, even though traders are winning more often than they lose, they lose more points or ticks than they let themselves win.
Cut your losses and let your profits run…
As you have probably gathered, although traders can win more trades than they lose on average, they are cutting their profits short and letting their losses run.
They have a key principle of trading back to front.
By trying to preserve their profits they have made, the average trader takes the profit to soon.
On the contrary, unable to take a loss they hold their position to long in the hope that they won’t lose so much.
So why not just hold a position that is winning and hope that it wins more? Or close a position that is losing so it doesn’t lose anymore?
It sounds simple but it goes way beyond simply saying do it, don’t do it.
Pain from losing
The pain of losing out weighs the pleasure of winning. The hope that your losing trade becomes a winning trade is the flaw in most people’s arsenal when it comes down to trading.
I have often tried to think of ways to help traders get over this mentality. Although I believe that it is so ingrained in some that no advice will help these traders become successful, these quick tips may help others.
7 shocking tips for becoming a winning trader
If in doubt don’t bloody do it
If you are not sure that your trade will win don’t open the position. If you are sure and you are wrong that’s OK. The markets are not playing a game with you… They do not have emotions [essentially]. The prices of the markets are moved by people’s emotions. Stack the odds in your favour and think long term.
In my previous post I mentioned the power of starting small. If you learn how to make small consistent gains over time, it will prepare you better [emotionally] for the long haul. It’s OK to be a small one… The markets don’t care about ego.
If your bank size is too large to start with you’ll find it much harder to take a loss. This will ultimately lead you to taking a bigger loss. This is because you don’t want to lose and can’t accept losing. Hoping and praying for a trade to turn round is BS. Financial trading just doesn’t work that way. You will never win them all.
Open a trade the other way, hedging, offsetting.
This works for some. If you are in a losing position open a trade in the opposite direction. This will counter any further losses but at some stage you will have to close one of the trades.
Open a position both ways
This can also help master the art of closing a trade. If you open a trade both long and short and then close out the one that is losing. You then let your profits run.
Moving your stops
This is a great strategy for locking in profit. Trailing your stop up behind your positions can often lead you into a no loss situation.
CUT YOUR ******* LOSSES QUICK AND LET YOUR ******* PROFITS RUN!!!