| Home | My photos | Forex | My trading | Contacts |
|
|
You Can't Become Rich In Your Pocket Until You Become Rich In Your Mind | ||||
|
They tend to want to get the money back right awayPAPER TRADING AFTER A LOSS My good friend Alexander gave me this little tip a short time ago, and I think every trader can learn from it. You see, Alexander is a successful off-the-floor trader. One of the main reasons he is successful (when others are not) is because he uses some excellent techniques to keep him disciplined with his trading. Im going to tell you about one of those excellent techniques that you can easily incorporate into your own trading. Heres the problem I see with many off-the-floor traders: Whenever they have a losing trade (whether its a $300 losing trade or a $3,000 losing trade), they tend to want to get the money back right away (preferably in the very next trade). But what this does is put you in a very poor frame of mind. Think about it for a second, whenever we lose something (especially money), we want it back immediately. On a subconscious level, we are almost desperate to get the money back as soon as possible. As Im sure you realize, this kind of thinking will usually prevent you from being successful on your next trade. And then if you end up making a poor decision on your next trade, youll have two losing trades in a row, and the cycle will most likely continue until you can get yourself in the right frame of mind. That is why Im going to suggest you try something new. I think it may help you a lot. After your next losing trade, heres what you should do: PAPERTRADE! Thats right, have your next trade be a paper trade. Do the trade as you normally would. The next opportunity that comes up, dont really do the trade, just do it on paper. But you must make it as real as possible. Write it down like you would a normal trade. Even pick up the phone and pretend to put the order in with your broker. Then follow the trade as you normally would. Remember to put your stop order in and (hypothetically) trail your stop order if the market does move in your direction. If youre going to do this, its important that you take it seriously. If youre just going to look at the market and say I would have done this or that, youre just wasting your time. If youre going to do this, its important that you take it seriously. If youre just going to look at the market and say I would have done this or that, youre just wasting your time. It must be real, whether it takes five minutes and then you get out of the paper trade, or it takes two hours as you continue to trail your hypothetical stop as the market moves in your direction. You must take it seriously for it to help you. This will do two positive things for your trading: 1) It will help your discipline as you learn you dont need to get back that losing trade immediately to be successful. 2) More importantly, this will give your subconscious some time to let go of the losing trade. In other words, you feel the most (emotional) pain right after the losing trade. But as time passes, the emotional pain goes away and then its easier to find successful trades. So doing this paper trade will give you some time to forget about the losing trade. And again, if you give yourself some time, you wont be as anxious to chase the market and have two bad trades in a row. It works. Give it a try! SELF-IMPROVEMENT If you want to develop into a successful trader, you will need to engage in some selfimprovement. If you dont already, you need to realize the market is always right and you can take money out of the market as long as you dont impose a rigid mental structure on its behavior. In other words, dont get locked in an opinion and refuse to admit that you could be wrong about the market direction. Every successful trader realizes that he could just as easily be wrong as being right. You need to let go of the fear of being wrong so that you can watch and observe the market from an objective clear viewpoint. If you cant let go of that fear, it will cause you to make mistakes and poor trading decisions. This is because if you concentrate on your fear, it will cause your subconscious to act out that fear and give you the losses youre trying to avoid. It will happen this way every time. That is just the way our subconscious mind works. What you think about is what you get. (We will talk much more about this in Section 3.) To improve as a trader, you will also need to set some defined trading rules to guide your trading behavior. You must learn how to adhere to these rules no matter how tempting it will be to break them. And trust me, it will be tempting to break them often. The fear of missing out will cause you to want to break your rules (especially in the beginning). But you must avoid breaking your rules no matter how tempting. Your rules are what will keep you acting in your own best interest. Certainly, breaking your rules will not be acting in your best interest. The most important thing about self-improvement is to learn to be objective and avoid indulging in illusions. On the other hand, if you refuse to acknowledge your mistakes by blaming the market or some other factor, then you obviously are indulging in illusions. If thats the case, improving yourself will be very difficult if not impossible. To improve yourself, you must be honest with yourself. Only you are responsible for your results. Blaming the market, the broker, the floor traders, whatever, is just going to delay your self-improvement. The less illusions we believe in, the clearer we can see what is really going on in the market and inside ourselves. The clearer things are the more we will learn and grow. It will then be much easier to make good market decisions regardless of the circumstances, as you get in the habit of acting in your own best interest. And just like bad habits, good habits can become just as strong and powerful. But it takes time and effort. Nobody likes to admit their mistakes, but this is exactly what we need to do to improve ourselves. If we dont confront our mistakes, we will simply keep repeating them as they become a stronger and stronger habit. We obviously want to avoid that situation. Taking responsibility for our actions is the first step to self-improvement. Realizing whatever results we get were because of the decisions we made. Nobody else is responsible. Blaming others just slows the learning process. If you trade poorly and lose money, its your fault. But, on the other hand, if you trade well and make money, its also your fault. You will improve yourself a lot when you simply admit that you are the only one whos responsible for your results. You must confront the conditions that exist in reality (not the illusions). Identify what you need to learn or change to be more effective, and then get on the daily task of improving yourself. Its not as hard as you think, and learning to improve yourself is always acting in your own best interest. |
|
|||||||||||||||
Previous Issues
|
| ©2007 Olesia | Home • My photos • Forex • News • My trading • Contacts |