Thanks to Reynaldo Soriano for the following guest post. We hope you enjoy the free trading education:
Looking At The Facts
Have you ever made a small losing trade and thought, “It’s okay, I will win on the next trade.” The next trade comes along, and you lose. After that, the next trade is another loser, and so is the next, until finally, you are in a severe drawdown. Before you get yourself into trouble financially that could be problematic, it is imperative to constantly monitor your progress if you want to survive in the game of trading. It is important to take a good look at the facts and make adjustments.
People are well known for their eternal optimism. Let’s be honest, who wouldn’t want to think they were making a killing in the markets. When you are not profitable though, it’s easy to fall into a state of denial. In order to build up our ego, we ignore how poorly things are going and tend to look at the external world through rose-colored glasses. There are periods when it is useful to look on the bright side. To win consistently in the markets, you have to truly believe that you can be successful. Focusing on your limitations or the inherent challenges the markets often pose may get you down. And when that happens, you make think it’s difficult or even impossible to master the markets.
On the other hand, too much denial may prevent you from taking necessary steps you need to improve your trading performance. At times, denial can go too far. For instance, if you keep putting money into your trading account every month, you may not face the fact that your trading strategies just aren’t working. Successful, consistent, profitable traders monitor their process of trading carefully. They keep a trade diary or a trading journal to identify strategies that work and don’t work. They identify the specific market conditions that are optimal to their trading methods. They also report their emotions to isolate psychological factors from market factors. Some trading strategies just do not work under particular market conditions. And if you are bogged down with neurotical emotions such as fear and greed to name a few, no trading method is going to produce a profit. It may be hard to face the facts, but unless you do and embrace it, you will never be able to identify your weaknesses, make changes, and improve your trading skills.
Don’t be scared to keep a trading journal or trading diary and identify what works and what does not work in your trading. Don’t let denial prevent you from taking a good honest look at what you’re doing. You may be surprised to find that you are doing a lot right, and that by making a few minor changes, you can improve your trading. The mindful, conscious trader is the winning trader. By taking an honest look at your limitations, you will be able to hone your trading skills, reach higher levels of performance, and take home consistent, profitable trades.
By Reynaldo Soriano
Author – “Why You Could Be Destined To Fail in Trading and How You Can Avoid It!”
Comments