Almost Half Of Your Trading Success Depends On…

Why is it that only 5% of stock traders make great returns while he rest of us lag the market, or worst yet, lose money?  Is it a robust system?  Partly.

What I’m about to tell you accounts for about 40% of trading success, and all of it relates to YOU.

For example, how did you feel before you entered a trade?  Did you feel anxious?  Did you hesitate?  How about after you exited?  Were you happy or regretful?  What about when you were in the trade?  Did you deviate from your plan because you had a hunch?

Traders spend a lot of time finding trades, they spend a lot of time searching for a system they are comfortable with, but after all that, they lose sense of one of the most important things in trading….. managing their emotions.  Once this happens, you can bet destructive money management will soon follow.  This is so important I’ll give you a SIMPLE thing you can do in a second, to help manage your emotions.

Do You Have Characteristics Of A Winning Trader?

Winning traders pay attention to reality.  In other words, they do not waste time and energy on wishful thinking or regretting what has happened.

They use a system they are comfortable with, that is in line with their innate time frame.  Short-term traders are not suited for playing long-term trends and will sell out before the trend plays out.  Long-term traders will get frustrated being stopped out too often by playing more volatile short-term trends.  Make sure to reflect on your feeling when testing out a system.

They know that the markets are not there for entertainment.  They do not count their money while “working” their trades.  Counting unrealized profits get people excited as if they were playing a game, and this is how amateurs make poor decisions and eventually wash out of the markets.

If you start feeling giddy, get out!  Analyze the markets from the sidelines.  The markets will always be their so take your time if you’re not emotionally ready yet.

If your trading starts feeling like a job, you’re probably doing it right  Go look for something else to entertain you, or set up a separate “entertainment” account if you need a little excitement.

A Simple Way To Help Manage Your Emotions

OK, here’s a simple thing you can do to keep you from getting caught up in the gyrations of the markets.

Do your research and decision making WHEN THE MARKETS ARE CLOSED.  Likewise, place your orders WHEN THE MARKETS ARE CLOSED.

Whenever you enter a trade, place that stop-loss order AS SOON AS YOU’RE IN.  A lot of brokerage firms have conditional orders (where one  triggers another (OTA) so make use of these type or orders to keep as much emotion out of the game.  Once you are in the trade, adjust your stop-loss order according to your plan (and that stop-loss order is only adjust in one direction… IN THE DIRECTION OF THE TRADE, i.e. if you’re long, adjust only up, if you’re short, adjust only down.

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