Most traders will tend to give excuses, justifications or blames when they committed mistakes. It is fine to make mistakes but never OK to repeat them.
These are some of the common excuses:
- Blame the broker
- Blame the guru
- Blame the unexpected news
- Blame anything else except oneself (applies to weather as well :P)
A Mature Trader
Would you rather spend more time justifying that it is ok to lose money or seek solutions to how successful traders make money consistently over and over again?
The choice is up to you to make.
A mature trader will take full responsibilities for the outcome of every trade. It will take time, and it will take discipline.
There are many obstacles that prevent most traders that have an excellent trading plan from following it properly. Almost all of these factors are psychological. These psychological roadblocks can take a serious toll on trading performance.
There are three primary mistakes that derail even the best trading plan.
1. Taking a trade that is not part of the plan.
This is extremely tempting. There could be due to many reasons why a trader would take a trade that is not part of the plan. He could be having a winning streak and think he is invincible. On the contrary, he could be having a losing streak and desperate for a win. You may have receive a tip from your broker or guru.
Tendency for you to lose in making these trades are high, and often make the traders more miserable. If the traders won, it will only encourage him to continue a behaviour that will not be profitable in the long term.
2. Not taking a trade that is part of the plan.
Often, this usually occurs when the trader is having a losing streak. The losing streak diminished trader’s confidence on his system. He is too afraid to take on another trade. But often to see the trade he passed on become the big winner.
Not taking a trade when you are supposed to is a serious error that many traders made. That is why most traders do not maximise the results of their trading system.
In automated trading systems, it is very important that a trader do not interfere with the trade decisions made by the automated system. It takes discipline to do so. Automated system allow people to trade without emotions, however it does not guarantee that people will keep on trading the system at times when their equity are in drawdown.
As such, it is why most traders do not maximise the results of automatic trading system. A profitable automated system in the hands of an undisciplined traders will be unable to perform.
3. Changing the rules of the trading plan based on a statistically insignificant event.
This could happen when you had the sudden urge to change your system entirely due to a losing streak. It is insufficient to change your rule because of a small sample of trades. It is necessary to reevaluate your trading system from time to time. But do not make major changes based off on just 10 5 losing trades.
Fortunately, these mistakes can be minimised or completely eliminated if you are disciplined in your trading. Hopefully, these will encourage you to stay discipline from the start.
Discipline means designing, testing and following your trading system. For more information, refer to my articles on 5 Questions For A Winning Trading System.
Record – Keeping
Good traders keep good records as tools for learning and discipline. Records of trades made will indicate areas you are good at and areas that require improvement.
1. Spreadsheet of all your trades
This will track your entry and exit positions, cost of trading, slippages, time of trade, technical indicators level at point of trade, profit per trade etc…
2. Equity Balance
This tells you whether you are making money or losing money.
3. Trading Diary
This serves as a graphical notes of all your trades. Print out profitable trade you made and add in explanation of why it is a profitable trade. Print out past mistakes you made and paste them on your walls to remind you not to commit the mistake again.
Training for Battle
Take Responsibility of Your Trading
Be proactive and start on a journey to discover the winning habits of successful traders. Every challenge at the end will come several solutions. Seek solutions and be responsible for your trading career.
Constant Evaluations and Self-Learning
Challenge yourself from time to time to over-perform by evaluating your weakness, and keep improving your shortcomings, measuring your performance from time to time to know where you stand. Never stop learning.
Training until actions become automatic
The mature trader arrives at a stage where most trading actions have become nearly automatic. To reach this point, you need to trade for some time. The longer you trade and the more trades you made, the more you will get better as a trader.
Trade a small size while learning and put on many trades. The first criteria for a beginning trader is to learn how to trade, not to make money. That is why Learn, the L(Learn) precede the earn. Once you’ve learnt to trade, you will earn.