Despite what some people may lead you to believe; day trading, swing trading and trend trading is not anywhere as difficult as they would like you to think. It really boils down to two key components.
First, you have to have an approach that helps you identify trades that have a consistently high probability of making money. Once you have this you must exploit this "edge" over and over again.
The only way to do this is to use the necessary discipline to never deviate from your system. The minute you start tinkering or tweaking things is when you will lose your edge!!!
You will most likely be tempted to do this after you have had a few losers. This is the time however to keep your focus and remind yourself that your system has a statistical advantage that has held up over time.
Think about this for a moment? If you go gambling in Las Vegas and can even gain a 1% advantage over the house you can make a literal fortune by exploiting this edge. That little one percent advantage can make the casino lose a whole lot of money over time. As a matter of fact the minute they notice that you have a viable system they will label you a cheat and ban you from the playing. It sure is a good thing that can't happen to traders!
Now consider what happens if you have a trading strategy that produces trades that go into the money more than 60 to 80% of the time?
Now the second step to success is to manage your emotions. Two of the biggest indicators of a trader who is not managing their emotions are FEAR & GREED. These two emotions will wipe out every trader over time, both experienced and inexperienced alike.
Let's talk about them for a minute...
FEAR: Fear of losing money or fear of being wrong is what causes traders to have this emotion.
"Trading with scared money" often causes the fear of losing money. This is when a trader is risking money that should be used for the rent, food, children's education etc. If this is the case the only solution is to find additional funds that you are willing to put at risk. This helps to put the mind at ease and reduces the fear.
Fear of being wrong is simply the part in all of us that just doesn't like to be wrong. The cure for this is to simply realize and accept that losses are part of this game. Think about this? A baseball player only need hit the ball once for every three times at the plate and this will get him into the Hall of Fame.
I feel this every once in a while and remind myself that... My approach for trading has both historically and real-time produced consistent winning trades. This gives me the confidence to step up to the plate and keep swinging. Also I tell myself that the only way to earn the big money is to get into the game.
GREED: Traders who are greedy are often the exact opposite of the ones who are fearful. They have no fear and this can get them into trouble. They will tend to over trade, not follow the rules and basically "wing it". Sometimes this will work, but it always ends up back-firing.
One of the biggest problems when greed sets in is the inability to know when to take profits. These traders are so bent on making a killing that they are never happy. If they are up 10, 20 or 30% they don't even think about cashing out, as they want more. This often leads to the inability to see the trade turning against then and they will allow winning trades to turn into big losing ones.
One solution for this is to realize that making 3, 5, 10 or 15% on a regular short time basis adds up really quick. I know for me personally, once I was confident in my methodology, I no longer felt the occasional feelings of greed. Now I don't worry about "going for broke" as I know that there is always another good trade waiting for me.
This article is courtesy of Dr. Jeffrey Wilde, a trading veteran with 15 years of experience in all major markets. He is a trading coach to over 1400 traders in 38 countries.
For additional info: http://www.win-at-trading.com
Everyone knows that the Holy Grail of investing and trading... Read More
How much are you willing to pay for a tank... Read More
There is a tremendous amount of software, complicated high priced... Read More
"Through wisdom is a house built. And by understanding it... Read More
Investments are scary for some people, especially those who have... Read More
The Roth is kind of weird until you get used... Read More
The technology boom of the '90s romanticized the "rags-to-riches" ideal... Read More
For most people, there is a direct correlation between how... Read More
Typical day traders and swing traders look for stocks with... Read More
What is an Angel Investor? An Angel is usually a... Read More
Many Young people live for Today. They really don't fully... Read More
The Perfect Mutual Fund is the one you build yourself!The... Read More
Based on consistent results I think Buy & Hold should... Read More
They're real, but few survive. High risk investing is dangerous... Read More
Those unfamiliar with the process of making and managing investments... Read More
I love to collect quotes as they concisely promote a... Read More
The stock market fell sharply Thu and Fri before and... Read More
The forex market is what is called an international exchange... Read More
Most People just don't understand the power of using their... Read More
With visions of an ATM in every neighborhood in China,... Read More
The financial characteristics of the automobile dealership are attractive:". .... Read More
Online trading is so seductive - just sit, click, and... Read More
Convertibles are stealing the show with their safe investment image... Read More
"Hey Joe! I need help finding a broker. I notice... Read More
You have rowed a boat at some time haven't you?... Read More
A Savings Incentive Match Plan for Employees plan, better known... Read More
The first point to mastering money management is that you... Read More
"All human power is a compound of time and patience!"... Read More
When developing a plan for your finances, the toughest question... Read More
Here is a small summary of the three major approaches... Read More
You are 55 years old (or somewhere around there) and... Read More
Recently, my family and I took a trip to Maine... Read More
Ask this question to 100 people and you will receive... Read More
The last time you spoke with your broker did he... Read More
The Federal Reserve recently raised its target federal funds rate... Read More
Today, I am going to start a multi-part series about... Read More
There is a lot to know about investing. It all... Read More
Mutual fund managers use fake fund names to part you... Read More
Larry, Moe and Curley were sitting in their favorite restaurant... Read More
Investments are scary for some people, especially those who have... Read More
The Nature of Penny StocksFor anyone new to investing in... Read More
For a successful retirement investment plan to work in the... Read More
Let's first understand what maniac means. According to Webster a... Read More
"There is nothing more frightful than ignorance in action!" Johann... Read More
All this talk about Investing is encouraging lately. Over the... Read More
Here are some useful tips on investing. When you make... Read More
I've been involved in online trading, specifically with stock and... Read More
You wouldn't build your home on anything less than a... Read More
Are you as good an investor as you think? Do... Read More
Asset allocation is a critical component of investing success. Both... Read More
This column has often focused on intangible investments like stocks... Read More
Those unfamiliar with the process of making and managing investments... Read More
This article attempts to help give the investor a broader... Read More
How much are you willing to pay for a tank... Read More
Looking Inside Your Tenant's Mind Basic Mind-Reading Report 101 for... Read More
Firing an employee seems to be easier and easier for... Read More
If you know next to nothing, how do you go... Read More
A SEP is a special type of IRA. Under a... Read More
Denial is a ubiquitous psychological defense mechanism. It involves the... Read More
If you are looking for a safe investment and you... Read More
Step 1: Spend less than you earnPerhaps the simplest financial... Read More
Investors usually don't have an aversion to buying an asset.... Read More
"You can be poor when you're young, but you can't... Read More
The following lists of questions are suggested questions to ask... Read More
Ask this question to 100 people and you will receive... Read More
In 1519, Hernando Cortes, beached on the shores of unexplored... Read More
Investing |