Click here to get a PDF of this post

Trading can be one of the most frustrating things many people will ever do. It is very counter-intuitive. At times, trends seem to go farther than anyone thought possible, and at other times, the market fails to trend at all. When the market seems to be ready to plunge, it rallies unexpectedly. When a stock or market appears to be going to the moon, it reverses and plunges. A trader’s own emotions can cause their biggest trading errors. Greed for big wins leads to huge losses, and the desire to be proven right causes a trader to hold losing trades longer than they should.

What traders experience:

  1. Breakout trades reverse back into the price range and cause a loss.
  2. Buying strength and selling weakness short does not work in  a range bound market.
  3. Selling resistance short and buying support does not work in a market trend.
  4. When the maximum danger of being long is present, that’s is when the best reward is possible.
  5. The best winning trades will always seem to be with a small position size, and the biggest losing trades will be positioned too big.
  6. Backtesting a great winning trading system won’t guarantee success. The first time you trade it, you may have a losing streak that will test your faith.
  7. The market environment will change constantly, making your trading system have winning and losing streaks. This is guaranteed to take you on an emotional roller coaster.
  8. Your best trades will seem crazy to the majority.
  9. Your can’t miss trade, will be a loser.
  10. Your stop loss level that you think can’t be hit, will be reached, and then the market will reverse in your favor when you are out.

The key to getting through this frustration is risk management. If you focus on following a trading plan with discipline, using a profitable trading system, and trading good signals with an edge, you will avoid misguided emotional signals and find profitability.