Never chase a trade: If you have been trading for quite a while you may have previously missed out in some good trades. This is a situation that each and every trader must go through, however; to be able to be consistent and a profitable trader you have to ensure you do not chase trades.
When you decide to chase a trade you will be very likely to commit mistakes. First, you will have to recalculate your risk and money management parameters. Second, you will be susceptible to the psychological pressure of the market. Remember, when you chase a trade the chances of you actually making a good level of profits is dramatically decreased.
If you make a mistake and take a erroneous trade close it immediately: I know a full time Forex trader who trades his family fund that use to commit this mistake. He would press the “sell” button instead of the “buy” button. He would call me and ask me what to do and this is what I told him every time he called. “If you take a trade by mistake, make sure you close it immediately, don’t let a small mistake turn into a large loss.”
Concentrate on the process not on profits: This trading trick change my perspective as a trader and as an investor forever. When you focus on the amount of money you are making or losing you become more exposed to the psychological influence of the market.
The reason for this is that as humans we percieve money in another way. We see $1000 as a loan payment or a vacation to the beach and as a consequence we are more likely to let our emotions control our trading. In contrast, your trading strategy and computers see $1000 as a number, a value from an equation that is used to achieve a pre determined result.
Focusing on the profits will required you to see your trading capital as a computer would, and that is as a mean to a purpose. Focus on your execution, money management, and trading strategy and your profits will increase substantially over time.
Learn from your mistakes and become a better trader: Personally I think that mistakes are a significant part of any trader’s career. Committing mistakes permits us to make corrections and make changes to our trading as you go along. Every successful trader has developed the power to learn from his/her mistakes and improve their trading from them.
Never become greedy and attempt to get back to the market: This has occurred to me when I was a beginner. A couple of times I doubled my account in only about 2 months and when I started to lose some of my earnings I would not accept my losses. As a result, I was trying to get back to the market by taking more trades. This only brought more losses and made me lose a part of my profits. When you try to get back to the market you are letting your emotions (and greed) control your trading. Emotional trading is the best way to blow up your account.
I hope I was able to enrich your trading career and assist you to become a better trader. I'll be posting more forex strategy trading tips and ideas on my upcoming articles.
No comments:
Post a Comment