Reading Time - 4 Minutes
Into November we march. Where exactly did the year go?
Seriously, it seems two minutes ago I was writing my Christmas list to Santa and
here we are again.
As we move into a new month, traders will either have made
some nice progress in October, or else they will be coming off the back of a
difficult one. Perhaps a normal drawdown, but maybe something worse, a scalper’s
swing at your trading account from emotional trading and mistakes that has done
so much damage that it is difficult to get yourself out of bed and down to the
computer in the morning to carry on.
The reason I was thinking about this today is simple – I made
a mistake yesterday. I can hear the intake of breath as you read this. A
mistake? Professional traders don’t make mistakes!
Well, yes, we do. A lot of ‘traders’ don’t admit to it,
because they are offering up an over polished veneer in an attempt to part you with
your hard earned so that they can continue to live out the ‘trader lifestyle’
on the back of your hard earned.
We make mistakes. There is no superpowered trader who works
flawlessly. And yesterday, I made one. It was one of those where you stare at
it afterward and wonder what in the hell you were doing. The trade entry was
perfect, exactly what I was looking for. But I aimed for a poor profit target,
ignoring a red flag and being rewarded with a nice loss.
But that got me thinking about one of the most important differences
between a successful trader and one who is spinning their wheels and making
mistakes that lead to serious account damage. And the difference is fairy
simple, but plays a huge part in progressing as a trader.
A professional trader is able to take each trade completely
on its own merit.
That’s it.
Simple, right?
But what does it mean?
Well, for a lot of people, when they have a mistake like
that, they go through the frustration and annoyance, which is normal. But, and
it is a big but – they then allow that mistake to influence their future
actions, and not in a good way!
Maybe they will force a trade, desperate for a quick fix to
the loss. They want to make the money back and ‘reset’ themselves, because that
loss wasn’t fair!
Or, perhaps they DO practice patience and wait for a solid
setup. But when in that trade, instead of trading it how they should trade it,
they decide to hold onto it until it clears the loss from the previous trade.
It doesn’t matter that their plan tells them to exit earlier, they will just
change the rules this one little time.
Worst case? Those who turn into a wrecking ball after
the mistake and set about destroying their account, all that they have worked
so hard for, in a desperate attempt to make amends for the simple mistake.
I think a lot of the problem is the aforementioned ‘squeaky
clean’ traders who shovel up piles of horse manure and offer it forward to you
as their experience of trading. But that is not where all of the blame lies. Unfortunately, a lot of it comes right back to you.
So, you need to understand that mistakes happen, to all of
us. It is not possible to do everything perfectly. Look at sport stars who are
on hundreds of thousands per week… they make mistakes all the time. You are
human and you are flawed, and that is all part of trading.
Your focus must be on reducing the number of mistakes first
and foremost. As you progress, they should become less frequent. And then, your
next step should be to learn to fully accept them. Mark it down as part of your
normal trading losses. You can even have a little section in your trading diary
called ‘one of my cock ups.’ Just don’t carry the mistake with you into future
trades. That is a recipe for disaster and it is something that happens all too
frequently.
It is a new month. Whatever happened last month, put it
behind you. Clear your head and get ready for November. Understand that you
will, for certain, make a mistake this month and in most cases, it will cost
you money. Accept that it is all part of the process. Realise that it happens
to us all. Even the ‘Twitter Gurus’ who post success after success after
success are only human. It is OK to make mistakes.
I am hoping that you all have a great November, mistakes and
all.
James Orr