Those of you that have been trading for an extended period of time can attest to the fact that trading will test your patience, nerves and frustration levels like nothing you’ve ever experienced. This is because the markets are always in motion and this, in turn, leads to constant uncertainty. Since the human mind is not programmed to think in these terms, for many traders this is a major cause of stress, especially for those that haven’t learned how to re-program their mind to deal with the vagaries of the market place. Consequently, a trader has to come up with the proper trading strategies to deal with these issues and be profitable.
So what’s the best antidote for this malady? There are actually several. The first one is to have a very straight forward process that is repeatable. By definition, a process has to have a consistent and detailed set of rules. If a trader has this he can then be accountable and take responsibility for every decision that he makes. The alternative to not having a trading strategy is that all his decisions will be driven by all of the emotions that come with putting money at risk.
The second, and probably most important antidote to deal with this malady, and subsequently being profitable is having the correct mindset. Once the rules are in place, a trader must make decisions based on his method. The mindset comes when a trader begins to take full responsibility and is accepting of the outcome once the decision is made. In other words, once action is taken a trader must be perfectly OK with the end result.
As an example of trading strategies, let me show you with a real trade that I took what this looks like. The trade was in the 30 year bonds. As you can see by the picture the entry stop and target were predetermined before the trade was placed.
The way this trade was setup there were only three possible outcomes. The first would have been a loss of approximately $156.25 plus commission and possible slippage per contract, which I was OK with because it fit the percentage loss allowable in my risk management rules. The second outcome would have been a scratch (breakeven) trade because my rules allow for me to adjust my stop to entry once the profit exceeds the risk by two times the amount, and I’m OK with that. And finally, the profit target is achieved, which is what occurred here. Now if you’ll notice, after the profit target was achieved, Bonds continued to decline quite a bit actually. So what if I wasn’t OK taking profits when I did? Would I have been frustrated (kicking myself) that I left money on the table? Would I chase price lower or lose out on another opportunity because I became emotional about what happened in this trade?
You see that being OK is a good mindset to have. Is it easy? Of course not. That’s what’s so great about what we teach here at Online Trading Academy. That is, the Set-and-Forget strategy of finding quality levels and letting the percentages work over large sample sizes. So on your next series of trades, ask yourself if you’re OK with the final result. If you’re not, then you either don’t have a method you believe in, don’t trust yourself to make the right decisions, or you’re are not willing to take responsibility for your actions. And that is not how you will become profitable. Thankfully there’s help available, but only if you take action.
So until next time, I hope everyone has a great week of trading profits.
This content is intended to provide educational information only. This information should not be construed as individual or customized legal, tax, financial or investment services. As each individual's situation is unique, a qualified professional should be consulted before making legal, tax, financial and investment decisions. The educational information provided in this article does not comprise any course or a part of any course that may be used as an educational credit for any certification purpose and will not prepare any User to be accredited for any licenses in any industry and will not prepare any User to get a job. Reproduced by permission from OTAcademy.com click here for Terms of Use: https://www.otacademy.com/about/terms
Editors’ Picks
AUD/USD recovers to near 0.6450, shrugs off mixed Australian jobs data
AUD/USD is rebounding to near 0.6450 amid renewed US Dollar weakness in the Asian session on Thursday. The pair reverses mixed Australian employment data-led minor losses, as risk sentiment recovers.
USD/JPY bounces back toward 154.50 amid risk-recovery
USD/JPY bounces back toward 154.50 in Asian trading on Thursday, having tested 154.00 on the latest US Dollar pullback and Japan's FX intervention risks. A recovery in risk appetite is aiding the rebound in the pair.
Gold rebounds on market caution, aims to reach $2,400
Gold price recovers its recent losses, trading around $2,370 per troy ounce during the Asian session on Thursday. The safe-haven yellow metal gains ground as traders exercise caution amidst heightened geopolitical tensions in the Middle East.
Manta Network price braces for volatility as $44 million worth of MANTA is due to flood markets
Manta Network price was not spared from the broader market crash instigated by a weakness in the Bitcoin market. While analysts call a bottoming out in the BTC price, the Web3 modular ecosystem token could suffer further impact.
Investors hunkering down
Amidst a relentless cautionary deluge of commentary from global financial leaders gathered at the International Monetary Fund and World Bank Spring meetings in Washington, investors appear to be taking a hiatus after witnessing significant market movements in recent weeks.
RECOMMENDED LESSONS
Making money in forex is easy if you know how the bankers trade!
Discover how to make money in forex is easy if you know how the bankers trade!
5 Forex News Events You Need To Know
In the fast moving world of currency markets, it is extremely important for new traders to know the list of important forex news...
Top 10 Chart Patterns Every Trader Should Know
Chart patterns are one of the most effective trading tools for a trader. They are pure price-action, and form on the basis of underlying buying and...
7 Ways to Avoid Forex Scams
The forex industry is recently seeing more and more scams. Here are 7 ways to avoid losing your money in such scams: Forex scams are becoming frequent. Michael Greenberg reports on luxurious expenses, including a submarine bought from the money taken from forex traders. Here’s another report of a forex fraud. So, how can we avoid falling in such forex scams?
What Are the 10 Fatal Mistakes Traders Make
Trading is exciting. Trading is hard. Trading is extremely hard. Some say that it takes more than 10,000 hours to master. Others believe that trading is the way to quick riches. They might be both wrong. What is important to know that no matter how experienced you are, mistakes will be part of the trading process.