In fact failure (losing trades) is intrinsic to trading. You cannot trade and never lose. It is impossible to be in the controlling seat and there will always be unpredictability. Learning to read charts and how to trade technically is relatively straight-forward. Learning the psychology to deal with the inevitable losses is what separates the winners from the losers. Perceived failure undermines confidence and a failure of confidence undermines motivation. This can lead down two different paths: one where the desire to trade and succeed as a trader dwindles; the other to renewed determination not to give in.
“Our greatest glory is not in never falling, but in rising every time we fall”. This quote by Confucius is wholly relevant to the mindset a trader must develop if they are to succeed; it cannot be overemphasized.
The issue is primarily to do with how we buy into trading in the first place. More often than not we have read or been told that trading is the easy and fast way to making considerable money. In the mind’s eye of the novice, wealth and trading are synonymous. This of course is naïve because the reality is that the vast majority of novice traders fail. Our expectations are set too high. Inevitably trading is not some stand-alone activity that sits outside the normal laws that apply to success. It takes hard work and perseverance. The rewards are certainly there, but they don’t hang like heavy fruits waiting to be plucked by any passer by.
It is important to grasp the reality of learning to trade and not think of it as a ‘get rich quick’ scheme. That will only lead to disappointment. Knowing that losing trades are a part of the process of being a trader, a natural expense, which we accept and learn from is probably the most important early step to take and one that starts to put us into the mindset of the professional – emotion free trading. This allows us to follow our trading plan and apply our trading strategies with consistency and discipline, and rules out emotional reaction to loss. If a trade is entered only when our rules are met and then managed with discipline we have nothing to fear, even if it loses. There is a lot to be gained from reviewing losing trades, a process that all professionals go through.
It is perfectly possible for any of us to learn the skills required to trade successfully. Our main obstacles are ourselves, i.e., how much do we really want it? How much effort are we really prepared to put in?
To understand more we need to be around the professionals, seeing how they trade the market and learning first hand the importance of price action strategies and self-discipline. By doing so we put ourselves on the road to fearing less and understanding more, ultimately the road to success.
Editors’ Picks
AUD/USD: The hunt for the 0.7000 hurdle
AUD/USD quickly left behind Wednesday’s strong pullback and rose markedly past the 0.6900 barrier on Thursday, boosted by news of fresh stimulus in China as well as renewed weakness in the US Dollar.
EUR/USD refocuses its attention to 1.1200 and above
Rising appetite for the risk-associated assets, the offered stance in the Greenback and Chinese stimulus all contributed to the resurgence of the upside momentum in EUR/USD, which managed to retest the 1.1190 zone on Thursday.
Gold holding at higher ground at around $2,670
Gold breaks to new high of $2,673 on Thursday. Falling interest rates globally, intensifying geopolitical conflicts and heightened Fed easing bets are the main factors.
Bitcoin displays bullish signals amid supportive macroeconomic developments and growing institutional demand
Bitcoin (BTC) trades slightly up, around $64,000 on Thursday, following a rejection from the upper consolidation level of $64,700 the previous day. BTC’s price has been consolidating between $62,000 and $64,700 for the past week.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
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