It’s no fun trying to do something that you know can be done but you just can’t seem to do it.
Why does trading, whether it be online, off-line, spread betting, binary trading or buying stock via a broker seem to only work for some and not for others? Why is trading the financial markets such an enigma?
Why is it that some people can make a couple of thousand pounds a day whilst others just seen to lose day in day out?
Even if someone was using the exact same method to trade the financial markets the results can and will differ.
The problem is evidently not down to the system or strategy that one is using… it seems to be more a case of the individual’s interpretation of the markets.
In fact, that is largely the difference between winning and losing traders… a winning trader just has a superior mindset when it comes to trading over the chronic losing trader.
No one Likes Losing
I am yet to meet anyone that is actually really excited about losing or opens trade and wanted to lose.
No one likes losing… I personally can’t stand losing, and when it comes to losing money, the bad taste that the loss leaves is quite unpalatable. The thing is though, I also understand that losing is what makes up the winning mind-set of a profitable trader.
I know from the years that I have been trading that long term I will be profitable.
I understand that the wins and the losses all contribute to my final results. I may have up-and-down weeks or even months, but over the long-term I will come out on top.
When you know that, trading becomes far less of a psychological rollercoaster ride.
The Fear of Losing Money
The fear of losing money can become so very intense that the sheer psychological strain on the trader is enough to stop them from ever reaching their full potential as traders.
The problem with becoming a winning trader is far more to do with your own phycology than it is to do with what system you are using.
When you lose a trade you will react to that loss. You will either accept that your decision was wrong and then wait for the next trade to present itself. If that trade loses, you still know that long term you will be profitable. You’ve been trading a long time and you have your emotions in steady order.
But when you are a new trader things are not that easy. The hurt of losing means pain, a dent in your ego and it’s taking a step back from progress.
To rectify this, you want to regain any losses as quick as possible. Even though this may mean bending the rules of your trading strategy… you do it anyway to stop the pain, heal your ego and feel like you are still going in the right direction.
The reason you act like this is because you are your own boss when it comes to trading. You don’t like being wrong, so you try not to be.
Back in the Classroom
Imagine being classroom like when you were at school… only now you are in a trading classroom, trading the financial markets… or at least trying to. There are 30 other students in the classroom with you, all sat at their trading desks trying to learn.
The trading system that all the students are trying to learn is awesome. It has an 90% strike rate. You can easily make $100,000 a year if you get it right.
The teacher is in the classroom with all of you. She’s walking around checking everyone’s work as they go. She is making sure that you are all following the rules before you make a trade.
If you make a mistake, the teacher will spot it and scold you for being stupid and not listening. They’ll say something like, “Nooooo Rachel!!! What are you doing? What have I told you? You’re not listening are you? I think that maybe you need to try something else to make money.
Even more that, if they feel you are to stupid to follow simple rules you will be asked to leave and not come back… in front of the whole classroom.
Do you think that under such conditions that you’d be more likely to stay disciplined?
It’s highly likely… because you don’t want to look stupid in front of everyone and also you don’t want to lose the chance at making some serious money.
What’s more is that even if you have a losing trade in the classroom, the strict rules that are made clear by the even stricter teacher, prevent you from doing anything else for the rest of the day. You then start the whole procedure again on the next trading school day.
We Learn Much Harder Things Than Trading
This scenario above is not unlike how things were when we were at school.
Although the truth is that at school we learnt to do things that were far harder than learning to trade actually is.
Subjects like chemistry, physics and maths. Even reading, writing and cooking. All these subjects pose a far greater challenge to learn than deciding if a price will go up and down.
So why when left trading to one’s own devices, the simplest of tasks become a challenge?
I often think about this conundrum. And I’m sure that it boils down to what we were like from a very early age. Maybe even from when we started nursery?
Girls in general are more disciplined and less rebellious at school. Is that why they say that women make better traders?
Freedom from Discipline
Leaving school is looked at as the first step to freedom and adulthood for many teenagers. Is it then that personal discipline is damaged and your success as a trader already made so much harder?
I’d really like to see some stats on this one day. There must be something to learn from such data?
Trading the Financial Markets
Trading is discipline, it’s as simple as that. And if you start out only trading once a day or checking your position only once a day you are eliminating 90% of the errors that you will make.
Stop the temptation
Over trading is a huge contributor to why traders lose money.
It is the temptation to trade, to do something with an already open trade or trying to trade for entertainment throughout the day that creates the issues.
These problems are a new trader’s nightmare. Because of the internet, charts, trading apps and so on, trading is now so more accessible to everyone. The opportunity to trade/gamble or make your fortune is always being dangled in front of your nose.
Try these simple tasks at self discipline and you’ll be ahead of most of the losing traders.
If day trading, only trade once a day, win lose or break even. There is absolutely no exception to this rule. Make your trade and walk away.
Are you using a day trading system that requires you to be seriously active at your screen when operating it? Then set time slots that you can trade. So for example you can only trade from 8-10 am each day.
If spread betting longer term [3 months plus], use stops and only trade a single position when you start out. Also get used to checking it only once a day… preferably in the evening.
Habits are good.
Repeat what is working until it is habit.
Success from trading comes from doing the simple things well, over and over. Don’t complicate things. Do what works… again and again.
Trading is Boring
If you are trading and find it boring, then that’s great. Looking at a screen all day, waiting for something to happen is one of the most pointless things one can do.
That is not what successful traders do. It stands to reason then that you shouldn’t do it.
Apparently, the original Turtle Traders played ping pong for most of the day when they were learning how to trade because there was nothing else to do.
Accept Trading for what it is
If you were hoping trading was going to be like a scene out of some blockbuster movie, then you’re in for a shock. Winning traders [individuals] just don’t trade like that.
The reality is, that trading the stock market is very laid back and personal to each individual trader. If you want multiple screens with charts and news on all day, then you’re probably better off going into Paddy Power or your local High Street bookie.
Be disciplined, trading and making any sort of income from trading means discipline… if you lack discipline, practice becoming disciplined until it’s habit. Learn to do the simple things well, over and over again… that’s what successful traders do.
Trading is not some sort of elaborate entertainment game. Trade professionally, like a winner with a winning strategy.
If you’re bored then do something, anything, but don’t trade.
When you get it all wrong, accept it and move on. The most profitable traders in the world are never always right. Don’t let your ego get in the way of long term success.