It looked like it would keep going up, but the price action soon stalled and headed to the downside. It was on the NQ E-mini and Martha had placed a market order as an extended candle on the 30-minute chart had blasted off and had continued to go upward. Martha had been trading for several months and believed that the seminars she had taken had provided enough of an education in the markets to prepare her for live trading. “How hard could it be?” she had said to herself after completing the course. She made a plan and made sure that she had a few rules. Additionally, Martha thought that the brief instruction in the discipline of trading was more than enough because, as she put it, “I have that part handled.” There had been a number of her colleagues that had made a few ventures into the markets and she had commented to herself, “Hadn’t they done well?” It didn’t matter to her that when she spoke with her friends even they had admitted that they really did not have a plan and simply “went with the crowd.” Martha was not fazed by that admission and barreled forward with an unbridled confidence that she would prevail. However, this confidence was not based upon a foundation of competence and was established before she had a string of losses. Therefore this latest turn in the price action left her feeling confused, frustrated, fragmented and frazzled. She couldn’t figure out what was going wrong. This stuff was supposed to be easy…wasn’t that what the seminar had intimated? Unfortunately, Martha not only lost in that NQ trade, she proceeded to lose consistently for several weeks that ended in a blown account. She blamed her failure on the seminar, the market news channels, her friends and anyone or anything else that came to mind…that is, anything else but her.

The bottom line is that Martha had not “positioned” herself for trading success. Yes, she took a course and had studied her material ardently; however what she failed to take into account was that success in any important and valuable endeavor requires more than just a few classes, it requires both an educational foundation and a mindset that is supportive to the task at hand.
Trading, as anyone who has traded for any length of time will come to know, is arguably the single most challenging business venture on the planet. The reason for this is simply that trading is the only business where if you are in an active trade you are gaining or losing money with every movement of the tick. Money is an extremely powerful stimulant in our society and from the early years of childhood we are taught that capital is directly associated with power and influence. Additionally, money becomes a part of personal identity and people who have it tend to feel a higher self-esteem than those who don’t. Trading requires both mechanical data expertise (the ability to analyze and process market order flow, price action, indicators and economic reports while planning and executing according to rule-based strategies) and internal data expertise (the ability to manage thoughts, emotions and behavior) which are the precursors to getting any result. The internal data, or your mindset and attitude, are crucial to your ability to see the mechanical data without distortion which often leads to erroneous interpretations and a lack of effective follow-through.

So, Martha had set herself up for failure. Her educational foundations were flimsy to begin with and she did not recognize that participating in the markets is almost exclusively mental and emotional as you negotiate mechanical and internal data. Actually, without a mindset that holds oneself accountable for all results, that focuses on skill-building and process mastery as foundational principles and that maintains commitment as sacrosanct, any level of success will be almost entirely illusive. This is positioning yourself for success. To position yourself for success it is important to recognize that skill-building and process mastery are where true “competence” is developed. Confidence that is not based in competence is only hubris, and promotes delusions that defy reality. Actually, skill-building can be demonstrated as an equation; P + EF + FL + H = Skill. P is for protocols (strategies, rules, procedures and set-ups that include both mechanical and internal data). Protocols are established sequential steps that will drive you to the goal. Added to protocols are EF, effective routines. Effective routines are the prioritized lists of behaviors that execute the protocol which with repetition will become a habit, and that neutralize behavior as a variable. It is important to have consistent behavior in order to safeguard against erratic and irresponsible conduct. Next add FL, feedback loop. The feedback loop is where the protocols and effective routines are measured, verified and documented. Any endeavor that you want to become proficient in must be measured. H stands for habituation. Habituation of the protocols, effective routines and the feedback loop is essential to instilling mastery into this process. Once you have done that you have developed a level of skill. However, it is important to remember that development of skill is an ongoing progression.

One of the definitions of trading is that it is a journey in self-discovery. As you trade in a self-aware state, you will learn more about yourself and become aware of the issues that stem from limiting beliefs about money, the market, and your relationship to them. Having a mindset that holds you accountable for all results necessarily means that you are prone to identify improvables early and often; and as well you are establishing the first steps to ensuring your position on the pathway to using the information and data in efficient ways. Your success, that is trading with your best and in the interests of your best, depends upon this positioning.

May all your trades be green.

Learn to Trade Now

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Education feed Join Telegram

Editors’ Picks

EUR/USD: 1.0100 remains in sight below 21 DMA, EU GDP, Fed minutes awaited

EUR/USD: 1.0100 remains in sight below 21 DMA, EU GDP, Fed minutes awaited

EUR/USD consolidates the previous rebound amid a cautiously optimistic mood. US dollar takes a breather ahead of Fed minutes, the euro awaits Eurozone GDP. The shared currency remains weighed down by recession fears and gas crises.

EUR/USD News

GBP/USD pokes weekly resistance line around 1.2100

GBP/USD pokes weekly resistance line around 1.2100

GBP/USD picks up bids to extend the previous day’s recovery to 1.2100 during Wednesday’s Asian session. In doing so, the Cable pair approaches a one-week-old resistance line while also portraying the third bounce off the 50% Fibonacci retracement level of July-August advances.

GBP/USD News

USD/JPY leans bullish above 134.00, traces firmer yields ahead of Fed Minutes

USD/JPY leans bullish above 134.00, traces firmer yields ahead of Fed Minutes

USD/JPY holds onto the latest bullish bias while picking up bids to refresh the intraday high near 134.40 as Tokyo opens on Wednesday. The yen pair’s latest run-up could be linked to the firmer yields.The quote ignores the US dollar pullback while trying to justify the mixed data at home and abroad.

USD/JPY News

Editors’ Picks

AUD/USD struggles around 0.7000 amid weaker USD, Australian Wage data miss

AUD/USD struggles around 0.7000 amid weaker USD, Australian Wage data miss

AUD/USD is trading close to 0.7000, consolidating the dismal Australian wage price data-led losses. Softening wage growth data could prompt the RBA to slow down its policy tightening. The US dollar looks to extend the previous sell-off ahead of the FOMC minutes.

AUD/USD News

EUR/USD: 1.0100 remains in sight below 21 DMA, EU GDP, Fed minutes awaited

EUR/USD: 1.0100 remains in sight below 21 DMA, EU GDP, Fed minutes awaited

EUR/USD consolidates the previous rebound amid a cautiously optimistic mood. US dollar takes a breather ahead of Fed minutes, the euro awaits Eurozone GDP. The shared currency remains weighed down by recession fears and gas crises.

EUR/USD News

Gold bears are lurking below $1,785

Gold bears are lurking below $1,785

Gold is flat on the day trading at around $1,776.50 and sticking to a tight range of between $1,773.91 to a high of $1,776.85. The yellow metal fell due to rising Treasury yields weighed on investor appetite. A slightly stronger US dollar was also a headwind for investor demand. 

Gold News

Dogecoin price to provide a buying opportunity before exploding 35%

Dogecoin price to provide a buying opportunity before exploding 35%

Dogecoin price sees a slow decline in bullish momentum as a major hurdle puts an end to its explosive move. A pullback is emerging for DOGE and is likely an opportunity that will allow bulls to recuperate and prepare for the next rally.

Read more

FXStreet Premium users exceed expectations

FXStreet Premium users exceed expectations

Tap into our 20 years Forex trading experience and get ahead of the markets. Maximize our actionable content, be part of our community, and chat with our experts. Join FXStreet Premium today!

BECOME PREMIUM

RECOMMENDED LESSONS

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.

Strategy

Money Management

Psychology