I am back to the rescue – our mentor has been sitting up a little too long and this has taken a toll on him. I offer to take over whenever he finds it hard to sit up at his pc to write his piece. Today , he is reeling from fatigue, partially from taking a flight too soon, perhaps. So please bear with me with this blog which will appeal to those who are newbies, especially.
Lately, I came across newbies who paper-trade and who seem to think a successful paper trade is the end all . Those of us who have traded with real money know trading is probably one of the hardest professions in the world.
I would like to cover the most common question: “What is the single most important mental or emotional concern you have that is preventing you from being a successful trader?”
The answers could be many but the most common is that we are over-trading or trading too much before we are ready. In other words, we are probably trading at the wrong pace.Most of us start out at paper–trading. There is no actual money on the line, and you practise executing your trades the way your trading plan commands, a mechanical trade. There is no ego at stake. The phantom “equity” seems to rise with ease because there is no risk or stress involved.
So you chomp up the pace to trade with real money. This time you will trade with real emotions, following your trading plans, perhaps initially, with great success. When you experience the excitement of success you are looking for, you feel you are now ready to step up the pace of your trading at full speed!Only this time, the move is against you, and it is a big one which decimates your emotion or ego. So you succumb to the temptation to remove your stops believing the market will rebound and you will recover.Luckily, you recall that you must stick to your trading plan which includes not removing your stops!
The market takes out your stops, and you suffer what you are prepared to lose under your trading plan. Then the market keeps going against you, and you realize you have done the right thing by sticking to your plan. You are so proud of yourself you feel good in spite of losing some money.
This ideal scenario happens to only a minority of traders who are elite traders while the rest of us tend to up the pace too quickly and not emotionally ready to handle our plans.So, the only way we can join this trading elite is to develop our mind to develop our trading plans.
If we scale back, we may yet trade successfully with consistent profits over a period of time of up to three years as novice traders. After all, trading is no rocket science we hear , only we need good discipline with our trading plan, good money management and winning psychology to become successful.
NUGGET OF WISDOM – TRADER PAUL TUDOR JONES:
“Don’t focus on making money, focus on protecting what you have.”
ANA AKA IDKIT