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Trading is an interesting profession and has no peak as in other occupations. It is in fact an endless journey of discovery of oneself and trading itself. Trading for us at beginning was very tough not that we were not successful in other endeavours but we took it like every beginner thinking that it was easy. With this perception, we approached trading without a plan or proper trading education on how the market works. What do you expect? Your guess is as good as mind. It was a total disaster after taking many losses; we were almost psychologically blown a way. At this stage, two important things happened to us, our P&L was in the red and we were down emotionally.
Our worst loss which stands out in all our losses was a trade we took (short EURUSD) in anticipation of French Referendum thinking that it would be in favour of the European Union but we got a margin call after the result was negative. Please do not ask us about a stop loss we did put a stop loss but we later removed it because we were so confident it was going to be a winning trade. We have been declaring losses so we thought this time around we would take a large position and cover all our losses. We were subsequently charged to court (trading), tried and found guilty (for losses).Punishment, six months without trading. While serving our term we embraced trading education especially technical analysis and trading psychology. So when we got a handle of certain strategies applying technical analysis and trading psychology we started trading again but not without losses but we followed our trading plan anyway and things improved especially when we became comfortable with losses as expenses in the business of trading. Valuable Lessons/Tips Never Trade Without A Trading Education-acquire proper trading education because the knowledge through trial and error in the market can be more expensive and time consuming than the normal trading education. Never Trade Without A Plan Having a trading plan is a most in this business when you want to succeed. This plan most specify and predetermine your entries, exits, stop loss, position size and your psychology (your emotion at the time you click enter). There could be more you could have on your plan but the most important thing is that you must follow it, because when you follow your plan you have a chance of succeeding in trading. You may be tempted to say do I have to follow this plan everyday, just go to a near by Airport and observe what pilots do everyday; they follow their flight plan and check each one before taking off. They can as well say, we feel better flying without our plan today because we do it everytime. That you know will be disastrous. Do Not Be Smarter Than Your Emotion What do traders do when they are tired? They wait for an opportunity instead of turning off their computers and call it a day they stay on waiting to initiate a position and if the trade turns out to be a loser they become angry adding to the tiredness. You can not win at trading when you are not in your right frame of mind. When you have problems with your spouse please do not trade, when you have a string of losses do not trade, take some time off and go over your losses until you know what went wrong before you put on another trade. When any thing occupies your mind apart from the market and following your trading plan if you are ready to trade, do all you can to resolve it before you start trading for the day. When you can not, go out an have some fresh air. Cut Your Losses Shut And Let Your Winners Run The professionals do exactly as is stated here but what do new traders do? They do the opposite by letting their losses run and cutting their winners shut. In other words, they are patient with their losses and impatient with their winners thinking that their positions would come back. The hard truth is the market does not know whether you are winning or losing. It will go wherever it wants to go and do what it has been doing, which is moving up, down and sideways. It is now left to you to find opportunities within these up moves and down moves. Becoming A Professional Trader Takes Time Do not ask any trader to tell you how many years it will take you to become a professional or experienced trader. The truth is that real professional traders know that the education of a trader never ends. It is ongoing because market is not static, it changes so when you think you have acquired enough trading knowledge and market conditions change and you can not cope with the changes you automatically become a learner. The fastest way to become a good trader is to learn from the professional traders (their strategies and how they apply them) taking into consideration your own psychological make up. |
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