By Darrell Martin
In the first article of this series, some tips were presented as well as some of the reasons why traders fail.
The article talked of sitting down with a friendly knowledgeable trading expert who could give you tips and pointers to help you in your trading. There are several other things that cause traders to stop trading.
When you are trading demo, it is imperative that you trade it as if you were trading live both in size and discipline. Inconsistency can be a problem if you don’t treat your demo account as if it were your live account. Don’t carry your bad mistakes with you into live.
Having proper risk management will help you be consistent. If you are not going to do 20 contracts in live, don’t do 20 contracts in demo. You have to be consistent and consistently follow the rules.
This leads into another problem of Rewarding Bad Behavior. This is when you do the wrong thing such as when you break the rules and it works, so you do it again. After a while it does not work and you wonder why it did not work.
You have to re-learn it the right way and follow the rules. Don’t do the wrong thing and get rewarded for it or you will wonder why the same strategy does not work the next time.
You have to Choose the Right System, Platform and Strategies. This involves asking yourself some questions. How many hours a day are you available to trade? What is your risk tolerance? What is your experience?
You have to find what type of trade works for the time of day you can trade. You have to check out the market conditions, know your own depth of knowledge, your account size and your risk tolerance. Learn a strategy or two to begin with so that you have more than one play in your play book. You can add more strategies as you master them.
Sometimes traders are so focused on Understanding The ABC’s But Not The 123’s. The ABC’s are the rules. They are the parts of trading that tell you that there is a green arrow here so get in. Take profit when it hits this certain level. Put your stop loss at this point. They are the systems to help you trade.
Usually you don’t break the rules to get into the trade. The 123’s are the Why behind the trade. This is where you are thinking not just following. Is there a news release coming out that might affect my trading? Why is the market reacting this way? This is the 123’s of trading.
Not Taking Every Trade can be a reason that traders fail. There are some trades that you should not take like the ones where the price is not right. However, if you don’t take the executable ones, you mess up your stats.
Now, you may say that this is impossible to do because you’re watching eight different markets using a new system on each one, but that is another mistake that traders make: Monitoring Too Many Markets Or Systems At Once.
You’ve got to have the tools to do this: alerts, scanner and other tools to help you do this. Make sure you get one system down before you add another one.
You have to be Willing To Take A Loss. Treat your trading like a business and don’t freak out if you have a loss. Sometimes you can think of a loss as a bill. In a business, you have to pay the bills and not freak out. You’ve got to be willing to limit your risk and to take a loss when it applies. Some traders are Trying To Find THAT ONE Trade That Wins 100% Of The Time.
If such a trade exists, you would not have to worry about losing. Remember, there will be losses. You have to manage them. In a business, you will have expenses and losses. You expect both of these. You need to make sure that whatever your probabilities and your profitabilities are that in the end, they line up to be net positive. That’s the goal.
As soon as you accept the fact that losses will happen and that it is your responsibility to manage them, you will be twice ahead of any trader you know. You can’t just hear it, you’ve got to own it.
When you believe it, you will start managing your account instead of blowing it out. The key is good risk management. It is not thinking that you will get lucky and buy a lotto ticket with your small account!
In the next and final article in this series, the topic of “gambling or trading” will be addressed as well as some other important tips to help you when you trade. For even more information or to register for trading courses, go to www.apexinvesting.com. Apex Investing Institute offers free education, and free access to the Nadex Binary and Spread Scanner Analyzers. Member traders are invited to trade in the chat rooms, take advantage of trade signal services, use key indicators and access the Apex Forum. The forum content is updated daily and includes over 10,000 members. In a supportive learning community of seasoned as well as up and coming traders, traders of all levels learn how to trade Nadex binaries and spreads in depth, as well as futures, forex, stock and options, and gain an edge for successful trading overall.