position, which causes an increase in your heart rate. Take quiet times during
the day to help you focus your attention on the business at hand; after
all, not everyone can be staring at a quote screen all day without taking a
breather. Relaxation techniques through yoga exercises actually work and
are easy to do. Take in a few deep breaths through your nose. While doing
so, tell yourself to relax, and say to yourself that you are in control and focused
in the now. One more version is to take a long deep breath and hold
it for about 10 seconds. You are going to slowly exhale and at the same time
concentrate on saying to yourself: “I am calm and relaxed.” You should repeat
it at least six times.
Trade the Plan
When you have no plan of attack or specific plan of action before entering
a trade, you are trading by the seat of your pants. This will invite negative
emotions of fear and doubt because you don’t know how much money may
be made or lost.
Scared Money
It does not take a fortune to trade the markets with success. Traders with
less than $3,000 in their trading accounts can and do trade futures successfully.
And traders with $100,000 or more in their trading accounts can and
do lose it. It all comes down to how you manage your risks and trades. Let
the winners ride; and, for gosh sakes, get out of the losers when the signals
turn on you. Don’t get burned by not being able to admit defeat. There will
be another trade. If you trade with money you cannot afford to lose, odds
are you will lose it because you will accept small profits to build your account.
Trade your plan.
Instant Gratification
Beginning traders, if you expect to quit your day job, don’t! Use trading to
supplement your income, and find out first if you can make a good living
trading. Find out if trading is even fun for you after the first few months.
High-Risk Gamblers
Using protective stop mechanisms are crucial. Whether you use a stopclose-
only, a hard stop, a timing stop, or a dollar amount, don’t be a gambler
who risks it all. No stop method is perfect, but at least you have a good idea
of how much money you are willing to risk on the trade.
Patience and Discipline Go Hand in Hand
While patience and discipline are often discussed in this book, as are many
other virtues, these are the essence of what trading successfully is about.
You must wait for your setups and demonstrate the discipline to act on
them. Getting bored is one great way to enter bad trades. You need to practice
patience, otherwise you are setting yourself up for a loss.
Picking Tops and Bottoms
It’s all about human nature. We all want to buy cheap and sell expensive. In
trading, we discover new values that dispel our beliefs in what truly is cheap
or expensive. That is why it is important to use a rule-based approach in the
market and to trade on signals rather than depend on gut instincts.
Overtrading or Trading Too Many Positions
Oftentimes, traders are unclear about the word diversification and act by
taking trading signals on similar markets simultaneously, such as the euro
and the cable. To add to the stress, they trade with excessive positions. It
goes without saying that if you find this happenening to you at this point in
your trading career, ask yourself what the risk parameters of the trading
strategy are and what aspect of the overall position you like. I have asked
many traders when they are in this predicament if they begin a thought
process on how the trade is working and if it is an acceptable position or
size of position for the overall account. If the answer is no, that the trade is
not acceptable, then action needs to be taken by eliminating a portion of
the trade or cutting the trade entirely.
Is Your Trading Environment
Conducive to Trading?
Is the place in which you are trading set up to allow you to concentrate or
focus on your trading? If there are distractions, then the slightest interruption
can cause a negative thought to interfere with a trading decision. Once
you are in a trade, you cannot control the market—only your thoughts and
actions. You have the ultimate power over your own thoughts and actions.
If you have any distractions (loud neighbors, poor seating, bad lighting, or,
my favorite, listening to a financial station and being subjected to someone
else’s opinion), these are the factors that may influence your thoughts and
then your actions. Therefore, make sure your trading space or environment
makes you comfortable and relaxed.
And remember, try to eliminate outside distractions that can spark
emotional responses, especially something irritating, something that can
invoke anger. If you are in a frustrated mood or simply anxious or impatient
from sitting with a trade for too long, that emotional response could
trigger inappropriate action, such as getting out of the market right before
the move occurs. Stay calm, cool, and collected. Be the master of your
emotions!
Source: Forex Conquered: High Probability Systems and Strategies for Active Traders
