How is that for a snappy eye catching title? I would bet this article is probably read first before any other on this page simply because of the title and false sense of making easy money. Sadly many people want to trade because they are looking for easy money. I’ve seen numerous people fail at this trading and only a few make it.
But the ones that made it were not looking for easy money. They were aware this was going to be the hardest easy money they would ever make in their lives. They were willing to spend countless hours studying the markets. They had sufficient startup capital to sustain the inevitable ups and downs of trading. Most had a good understanding of themselves and knew their strengths and weaknesses. All of them understood risk management as well. Most importantly, they all had a written trading plan that had a strategy they had back tested and were very confident when it came time to take a trade.
These are just a few of the traits of a successful trader. The majority of successful traders will tell you that trading is all about the mental game. I’m going to discuss a few of these mental traps with you.
Trust is a must or your game is a Bust
Have you ever noticed when you believed in something, how easy it was to start the process or follow through with your intentions?
All traders need a trading plan that makes them feel that way. Trading plans should be created and then continually reviewed until it is part of your subconscious mind. Then practiced until every conceivable event has been thrown at you and you master yourself handling those events. This practice time is what most new traders fail to recognize as their education time. Be patient folks and quit whining “But I need the money.” Trading is no place to be if you “need” the money. Remember, trading is with risk capital only.
Do You Treat Your Trading Like a Business or a Hobby?
Trading must be treated like a business in order to get paid as though it is a business. Otherwise, if it is treated like a hobby you get paid like it is a hobby. Trading can be part time or full time, but it cannot be casual if you want to be successful.
This means setting up a plan that outlines your trading hours each day, and when you are finished you are to leave the office just like a regular job. The longer you sit at your screen the more likely you are to give back morning profits or extend your losses for that day.
As well, a trader must be diligent with their premarket prep and be aware of upcoming reports that day that might impact their trading. Have a morning worksheet to fill out to help you keep on track with consistently preparing for each day. Have your levels drawn before the market opens. If you come into the office late because you are treating it as a casual hobby you end up having to be both an analyst and trader during market hours. Analysts work prior to the market open to then become a trader after the market opens. Rarely are successful traders both during the trading day.
Being in the Moment to Trade
How many times have I heard traders say before the day starts that they are not feeling well, or they had a big fight with their significant other or other family member the night before, or they have 67 things to get done today and then catch a flight somewhere.
Sound familiar? Trading involves being in the moment 100% to be able to mentally focus on your trading plan. It is easy enough to make a mistake when you are concentrating, but if you are distracted there is no way you will make consistent winning decisions.
Not being in the moment may cause you to miss trade setups and then want to chase the trade. Being distracted and angry could result in using the market to take out your anger; and this could cause major losses if you lose your self-control and turn into a revenge trader after a big loss.
SW SW SW NT!!!
Ever had a winning trade and when the next trade comes along you are still feeling euphoric? Or had a losing trade and when the next trade comes along you still have that negative attitude about your loss?
These are traits of traders who cannot let go. The acronym of this paragraph title stands for “Some will, Some won’t, So What!! Next Trade!!!” Some trades will work, while some will be losses. SO WHAT!!! Win or lose, move on to the Next Trade and forget about the last trade.
Your Gut Knows
Do you ever come in to trade in the mornings and find that you have not really prepared for the trading day? Then the first trade you want to take causes your gut (left brain) to say “wait, we are not prepared for this.” Initially you hesitate to take the trade and then grumble “If I don’t do it here I will miss the trade.” Next thing you know you are in a trade wishing you were already out of.
After you trade a while you will get intuitive signals from your body telling you if you should take a trade or not. An unprepared trader will get these signals and should yield to them and not take the trade until they are prepared.
I hope you find this information motivating enough that you are willing to work hard, allow time to learn about trading and yourself and practice, practice, practice before trading real money.
“To create more positive results in your life, replace ‘if only’ with ‘next time.'”