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 me at beginning was very tough not that I was not successful in other endeavors but I took it like every beginner thinking that it was easy.
With this perception, I approached trading without a plan or proper trading education on how the market works. What do you expect? Your guess is as good as mine. It was a total disaster after taking many losses; I was almost psychologically blown a way. At this stage, two important things happened to me, my P&L was in the red and I was down emotionally.
My Worst Trade
My worst loss that stands out in all my losses was a trade I took (bought EUR/USD)
in anticipation of French Referendum thinking that it would be in favor of the European Union but alas I got a margin call after the result was negative.
Please do not ask me about a stop loss I did put a stop loss but I later removed it because I was so confident it was going to be a winning trade. Hey, can’t you understand. I have been declaring losses so I thought this time round I would take a large position and cover all my losses. I was subsequently charged to court (trading), tried and found guilty (for losses). Punishment, six months without trading. While serving my term I embraced trading education especially technical analysis and trading psychology. So when I got a handle of certain strategies applying technical analysis and trading psychology I started trading again but not without losses but I followed my trading plan anyway and things improved especially when I became comfortable with losses as expenses in the business of trading.
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 if 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 damn plan everyday, just go to a near by Airport and observe what pilots do everyday; they follow their plan and check each one before taking off. He can as well say, I feel better flying without my plan because I do it every time. 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 when the trade turns out to be a loser they become angry adding to the tiredness. Hey, you know what, you can not win at trading if you are not in your right frame of mind. If you have problems with your spouse please do not trade, if 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 can put on another trade. If any thing occupies your mind apart from the market and following your trading plan when you are ready to trade, do all you can to resolved it before you start trading for the day. If you cannot go golfing.
Cut Your Losses Shut And Let Your Winners Run -This one sounds familiar, right.The professionals do exactly as is stated here but what do novice 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 and down. It is now left to you to find opportunities within these up moves and down moves.
Becoming A Professional Trader Takes Time – This might sound funny. Do not ask any trader to tell you how many years it will take you to become a professional/experience 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 if you think you have acquired enough trading knowledge and market conditions change and you cannot 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.
Mohammed Isah is a private trader and an independent technical analyst. He
initially traded stocks and now primarily focuses on forex. You can contact Mohammed on his pivot points
reports and other inquiries at: email@example.com.