This is a guest post from Tino @tradersreality. This article originally appeared on tradersreality.com and is reposted here with permission.
Anyone entering into the trading world, usually creates the illusiion that once you start, then all your dreams and desires will manifest and you can go on to become your own boss and do whatever you like.
This is the part where you expect me to say “if only it was that simple”
Instead I will say.
STOP…. DON’T WASTE YOUR TIME.
If you, like many, have succumbed into the idea that trading gives you this carefree lifestyle, then you are mistaken.
Trading is a tough business. One that must be taken very seriously and not one to approach with a “Tt can’t be that difficult” mindset.
The problem that most new traders have is they focus more on the desire to “BE” a trader as opposed to focusing on “becoming” a trader. Both imply the same result, but different approaches.
There appears to be so much focus on the idea that in order to be a trader, you must develop into this perfect trading machine that does not lose, but only wins. This, hands down is the main reason why nearly every trader that enters into the world of trading takes massive losses and simply quits.
What traders starting out need to realize is, trading is not about hitting the home runs. It’s about getting on the bases. The continuous succession of landing bases (taking small wins) is what creates the confidence in your ability as a trader and your discipline to follow your plan over and over.
I fell into this trap time after time. I simply would not close any position until it was in the green, no doubt I blew many accounts coming to the realization that this was not the way to approach trading.
So…How do we overcome the need to win on every trade?
Once again, the word probabilities peeks it’s head up and takes precedence. Trading is no different to sales. It’s a numbers game. If you stick to a process that when applied optimally, then you are going to make profitable trades. You will always lose on some trades, but the discipline is in making sure that your losses do not deplete your account to the point where you are left with no capital at all.
As this is a short post, it’s important that you come to the understanding that you do not have to win on every trade. You have to approach each trade with the mindset of “I have placed my trade, I have no control of the outcome, but I can control how much I lose”. THAT’S IT.
The irony is, trading can be such a simple process. The problem is, once a trade is placed, the accessibility to move stops allows the trader to continually adjust his indecision about his position. E.g. you place a trade and your stop. You then notice it’s moving very fast towards your stop, so you move your stop because you say to yourself “I want to give this trade a chance”. In the end you keep moving your stop and you are fixated on the trade approaching your stop and you are trying to find the sweet spot that price eventually reverses and continues in your desired direction. DON’T DO THIS. This approach is the most costly and in the end your trading morale will be diminished and you will just quit.
Find a method that suits you and one that you are committed to sticking with, but more importantly, give your chosen method a chance. Give your self a sample size of trades with the chosen method and if after say, 50 trades you are yet to see a profit, head back to the lab and work out how you can improve.
Trade Well My Friends
You can follow Tino on twitter at @Tradersreality and visit his website at tradersreality.com.