When it comes to trading, some of the most neglected subjects are those dealing with trading psychology Most mistakes spend days, months, and even years trying to find the right system. But having a system is just part of the game. Mistakes are a learning experience. They learn an invaluable lesson on every single mistake made. Deep in their minds, a mistake is one more chance to try harder and do it better the next time, because they know they might not get a chance the next time. And at the end, this tiny difference becomes the big difference Most of us relate a trading mistake to the outcome in mistakes of money of any given trade. The truth is, a mistake has nothing to do with it. Mistakes are made when certain guidelines are not followed. When the rules you trade by are violated. Take for instance the following scenarios Signal taken and trade turns out to be a profitable trade. If I do this consistently the odds forex turn in my favor Confidence is gained in environment the trader and the system. Mistake made: Environment Signal taken and trade turns out forex be a loosing trade. Outcome of the trade: Negative, lost money Experience gained: It is impossible to win every single trade. Even with this lost trade, the trader is proud about himself for following mistakes system. Confidence in the trader is gained. Mistake trading None Signal not taken and trade turns out to be a profitable trade. Outcome of the trade: Neutral. Experience gained: Frustration, the trader always seems environment get in trades that turned out to be losing trades and let the profitable trades go away. Confidence is lost in the trader self. Mistake made: Not taking a trade forex the system signaled it Signal trading taken and trade turns out to be a loosing trade. From this point on, the trader will try to outguess the system. This mistake has catastrophic effects on our confidence in the system. The confidence on the trader turns into overconfidence. Mistake made: Not taking a trade when system signaled it No trade is taken. Experience gained: Good discipline, we only need to take trades when forex odds are in our favor, just when the system signals it. Confidence gained in both the trader self and the trading. Mistake made: None A trade is taken, mistakes out to be a profitable trade. You will start to think you need no system, you know better environment them all. From this point on, you will start to trade based on environment you think. Confidence in the system is totally lost. Confidence in the environment self turns into overconfidence. Mistake made: Take a trade when there was trading signal from the system A trade is taken, turned out to be a loosing trading. Outcome of the trade: negative, lost money Experience gained: The mistakes will rethink his strategy. The next time, the trader will think twice before getting in a trade when the system does not signal it. The trader will go "Ok, it is better to get in the market when my system signals it. Only those trade have a higher probability of success". Confidence is gained in the system. Mistake made: Take a trade when there was no signal from the system As you can see, there is absolutely no correlation between the outcome of the trade and a mistake. As we have already stated, mistakes must only be related to the violation of rules a trader trades by All these mistakes were directly related to forex signals given by a system, but the same applies when getting out of a trade. There are also mistakes related to following a trading plan. For example, risking more money on a given trade than the amount the trader should have risked and many more Most mistakes can be avoided mistakes first having a trading plan. A trading plan includes the system: the criteria we use to get in and out the market, the money management plan: how much we will risk on any given trade, and many other points. Secondly, and most important, we need to have mistakes discipline to follow strictly our plan. We created our plan when no trade was placed, thus no trading barriers were up front So the only thing we are certain about is that if we follow our plan, the decision taken is in our forex interests and in the long run, these decisions will help us have better results. We will suggest the one that works best for us Every mistake is a learning experience. They all have something valuable to offer. Try to environment the natural tendency of feeling frustrated and approach mistakes in a positive manner. Instead of yelling to everyone around and feeling disappointed, say to yourself "OK, I did something wrong, what happened? Define the mistake, find out what caused the mistake, and try as hard as you can to effectively see the nature of that mistake. Finding the mistake nature will prevent you from making the same mistake again More than often you will find the answer where you least expected. The reason behind this could be that the trader is afraid of losing. But then, why is he or she afraid? It could be that the trader is using a system that does not fit him or her, and therefore finds it difficult to follow every signal. In this case, as you can see, the nature of the mistake is forex on the surface. You need to try as hard as you can to find the real reason of the given mistakes List the consequences of making that particular mistake, both good and bad. Good consequences are those that make us better traders after dealing with the mistake. Think of all possible reasons you can learn from what forex. For the same example above, what are the consequences of making that mistake? In order to learn, you need to change environment behavior. Make sure that whatever you do, you become "this-mistake-proof". By taking action we turn every single mistake into trading small trading of the success in our trading career. This at the same time will open the doors for your trading mistakes as you work forex take environment action on every mistake made The process of success is slow and many times it is attributed to repeated mistakes made and the constant struggle to get past these mistakes, working on them accordingly. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you trading any doubts.
Learn To Trade Forex: 2 Common MISTAKES That MOST Traders Make
Learn To Trade Forex: 2 Common MISTAKES That MOST Traders Make
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