Think Like A Trader Blog

Thursday, 8 October 2015

Mistakes Happen When Trading Forex and Indices

Reading Time – 4 Minutes

Everyone makes mistakes when they are trading. Even the trader who has been at it for fifteen to twenty years. Mistakes happen and you need to learn to deal with them. Hedge funds have an enormous staff including some of the ‘best’ minds in the community and decisions are made only when numerous people agree on them…and they still make mistakes.

I made a mistake on Monday of this week. I had a losing trade. My concentration slipped and I entered a reversal against the trade. It was emotional trading, yes, sometimes it still pops up. I took a loss of 3% on the account instead of the 1% which was normal and all part of trading. It was an emotional mistake. But guess what? We’re emotional creatures!

The important aspect of the mistake was that it didn’t spiral out and continue its wrecking ball rampage. I caught it after the mistake, I chided myself, and I stepped away from the computer. A lot of people wont walk away but rather become determined to make the money back, usually by taking trades outwith their plan, or increasing risk. This is the main difference between professionals and amateurs – they both make mistakes  (the professional a lot less than the amateur), but the professional accepts the mistake and moves on. The amateur lets one mistake snowball into something that is very difficult to come back from.

So what did I do? Well, I already said I walked away from the computer. Next day I was back at the desk. I had analysed the mistake and determined not to allow it to happen again. I have methods for eliminating emotional trading as much as possible and guess what – during the mistake I didn’t follow the rules! Go figure.

It’s now Thursday and the mistake has been rectified in a financial sense as well as a mental one. I was angry with myself, of course, but the key thing is that I let it go. You cant dwell on it and take it into the next day of trading or you will be faced with disaster.

Have you ever seen a professional footballer, basketballer, rugby player or tennis player make a mistake? I’m talking about the ones at the very top of their game. The people on the big money who receive wages most people can only dream of. I’m sure you have. Because mistakes happen and are outwith your control. How you react to them is very much in your control.

Training site to learn how to trade the 5 minute timeframe, including emotional control –

No comments:

Post a Comment