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 – decisivetrading.usefedora.com
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