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I’ll start off with a simple truth – this blog post will
contain nothing technical. I won’t point out a ‘secret’ indicator (available at
a low, low price!) nor will I teach you how to place support and resistance at
pinpoint accurate locations.
The truth is that when it comes to the technical
information, it is out there for everyone to see. You can learn anything you
want about trading, relatively easily. A course, a seminar, or mountains of
books – whatever your preference may be. And yet, the vast majority of people
fail to become successful traders.
Why is that?
Most people see failure and instantly start blaming their
methods. They discard them. They shout and rage. And then they move onto the
next set of methods. It happens over and over again. Very few people ever catch
onto the real issue – the failure has nothing to do with the methods, and
everything to do with you.
The human brain is ill suited to trading. In fact, on some
days, I wonder how it even gets me through the day. The brain turns into a
screaming mess as soon as you click to enter an order. It wants to give you all
of the wrong advice. It doesn’t handle emotion well. It reminds me of a crowd
rushing to get out of somewhere in an emergency. Every individual is so eager
to get to safety, they crush toward doors, blocking exits, trampling people
under them, screaming, shouting. Common sense goes out the window. The fact
that remaining calm and walking out would result in more of the safety the
brain craves doesn’t even come into the equation. Emotions take over.
If you want to improve as a trader, you need to work on
yourself. Specifically, ways to remain calm.
What do I suggest?
1) Meditation
Yikes. Scary word that makes you think of Buddhist monks and
hippies sitting in big circles.
The thing is, it works. I’m not interested if it brings you
to enlightenment, or if you find yourself floating three feet above the ground.
All that matters is it helps you control your mental state. The mind when in a
panic is like a washing machine that is spinning at full speed. Except what is
also happening is that more and more stuff is being loaded in. Thoughts come
screaming at you. And the more that come, the more weight in the machine, the more
it starts to wobble and shake as it spins. Round and round it goes until it
destroys itself. For a washing machine, that means breaking down. For you, that
means destroying your trading progress.
There are multiple different ways to approach meditation,
and you can choose just about any you want. The key aim is to learn the process
of removing yourself from the often-riotous thoughts of your mind. The more you
meditate, the easier it becomes to sit back from the fear/greed/anger, or whatever
it may be. When you can do that, you are more able to follow a trading plan
without constant mistakes.
2) Learn to Take
Breaks
Again, relatively simple, but this will help fast track your
trading. There are a few different reasons for this:
-
I look at concentration and discipline like
fuel. You only have a certain sized fuel tank and then when it runs dry, you
start to make mistakes. Staring at charts all day is very difficult and WILL
result in unnecessary slipups.
-
Trading is addictive. Yes, it is true. You don’t
get the ‘gamble aware’ warnings on every broker site for no reason. People get
addicted to the feeling of winning money. When they lose money, they can fall
into dark holes and, you guessed it, make poor decisions.
So, what can you do to help? Don’t just sit at the screen.
Have other things to do. Read a book. Watch videos. Do anything except sit and
stare at the screen all day. Another good and more simplistic reason for this
is that screen watching is very boring. You don’t want to spend the majority of
your day/life being miserable.
With the gambling side of things, it is vitally important
that you realise when you are no longer enjoying what you are doing. That
causes mistakes and losses. Always be ready to walk away and shut down the
computer. Set rules like ‘If I lose X trades, I am done for the day,’ or, ‘If I
take a loss, I am not allowed to trade again for fifteen minutes.’ Both of
those will help pull you away from emotional mistakes made because of losses.
At the end of it all guys, enjoy what you do. Trading is
extremely difficult and has a high failure rate. I wish I could wave a magic
wand and make everyone who wanted to be a trader successful, but it just isn’t possible.
So, all I can say, is make sure it is fun for you. If it isn’t, there are a
million different endeavours you could be focusing on that you would enjoy.
I wish you all a great 2018!
James Orr