Thursday, 11 January 2018

Two Ways to Improve Your Trading in 2018


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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

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