3 Rules for Trading Success!

A very warm evening to all my readers :)

Have you ever considered to become a financial market trader?

Have you ever experienced success when you first started to trade?

trading

You might know, that traders and active investors are a largely misperceived breed and their profession/discipline is also misunderstood. Trading, whether that of Forex, Futures, Stocks, Bonds or Options, is usually viewed as gambling by the public. It is seen as a way to get rick quick through fortune. But there is so much more to it than meets the eye.

Legitimate day traders, swing traders, and active investors are true masters of their craft, rising above human nature to churn out profits consistently from the market. Just like great artists, athletes, and professionals train years to become proficient, so do great traders, honing their skills of analysis, risk control, and mental discipline to gain an edge in the markets.

As any other discipline, to become successful in trading, there is the need to be discipline and to follow the rules. :)

disciplined_trading_cycle

Below I have listed three rules to follow to become a long-term successful trader. Only when you master them, you can see consistent results in your trading. :)

Rule 1:  Your desire to ‘win’ is the problem.

Male hand holding gold medal against the dramatic sky

They say that the worst thing in life is not death, but what dies within you while you are still alive. I strongly believe in this :)

Dreams are powerful things, and nothing is worse than when life makes them seem impossible to achieve.  In the words of a famous 1980’s song, dreams are like ‘china in your hand’ – they can break easily.

As trader, you might be familiar with this scenario: when first started out in trading, the stock market was your best friend.  Everything looked so easy: technology, advanced trading software and online brokerage accounts made trading seem like child’s play. And then the worst thing that could befall a new trader to start winning.

Then the markets began to reward you for trading without any discipline or proper planning.  Skimming the indices for a few points here and there – jumping in and jumping out like a trapeze artist, instead of risking 1% of your capital on each trade risk 20%, instead of honouring your stop-loss, you would start to move it as soon as you feared you might be losing.  As you started to win more and more trades, you began to over-leverage and over-trade your position.  And yes, the markets still rewarded you with money. Not surprisingly, your good fortune did not last for very long, within a few months you reduced your beautiful trading account to 30% of its original value.’  Does it sound familiar?

If you have experienced losses in your early days of trading, consider yourself very fortunate.  That should have taught you a very important lesson about risk – there are sharks and piranhas everywhere ready to take your money.  More importantly the market has no responsibility to make you money as it does not know your existence and the market never loses!

 

Summary:  Traders should focus on executing their trading plans and minimising their risks and NOT whether they will win or lose on any single trade.  Profits will come to you if you take care of the risk.

risk

Rule 2: Your worst enemy: You & your Perfectionism

cycle of perfectionism

Few things in life are ever perfect such as holding your newborn baby for the first time or the smile of the love of your life. :)

The desire to get things perfect and ‘just right’ may serve you well in other professions – but it is a curse when it comes to trading or starting any business.

I have seen many traders follow a pattern: they go from over-confident to over-cautious.  After a losing streak, they begin to question their system.  Now a trade has to ‘feel right’ to them before they take action and by the time the feeling comes it is much too late to enter. And then begins the next inevitable stage: the search for the magic pill – a foolproof and easy trading system that gets you in and out at exact tops and bottoms and you never lose.

People that spent time looking for such a ‘magic pill’ – it does not exist so please do not waste your time.  (I say this just in case you saw that movie ‘Limitless’ which coincidentally was about a guy who swallows a pill and becomes a stock market genius.  An excellent movie, but it’s not going to happen!)

Summary:  There are no shortcuts to success – only hard work and adhering to a proper trading plan.

champions-know-there-are-no-shortcuts-to-the-top

3: Trade to make a living, NOT to make a killing

trading 1

A question I often get asked in my coaching sessions is ‘Can I trade a £2,000 account to be able to quit my job?’  This is clearly not realistic.  Another favourite is:  ‘How do I turn £2,000 into £1 million in six months?’  Err… You’ve got to be kidding me!

There are companies out there who allow you to leverage your money through the medium of spread betting, CFDs or options.  You could use £2,000 to trade on 100:1 leverage and if you are fortunate ‘make a fortune’.  But that good fortune only has to turn into bad fortune once before you lose everything.  And just because you can do something does not mean you should do it.  You could drive a fast car at ridiculous speeds down a small country road – but you will only be a danger to yourself and everyone else.

Write this phrase down on a piece of paper and stick it on your computer so you never forget it:

Amateur traders focus on how much money they can MAKE, Professional traders focus on how much money they can LOSE. 

Summary: The sole reason you should trade is for the purpose of  becoming financially free to be able to cover all of your monthly expenses and luxuries.  The millions will come to you as a result of adhering to a solid trading plan with discipline.

freedom (1)

Remember that to the extent of  sticking to your trading plan and discipline, you will become a successful trader! :)

Trading+Discipline

To your Trading Success :)

Viv :)

 

 

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The Wisdom of Failure

A very good evening to all my readers, :)

Have you ever asked yourself:

How do you climb back onto the saddle when the horse has flung you off: when your plans fall to pieces?

Looking back, as we approach another year end and tabulating whether my successes have been more than my failures. It is clear that failure has left its imprint.

Life will constantly test your resolve and level of commitment.

If only we could have patience in the midst of our trials. Coping with rejection and apparent failure is a serious matter.

plan vs reality

If you focus on positive thinking, even the harshest defeat is only a stepping-stone. :)

Never let Success get to your Head. Never let Failure get to your Heart. “I didn’t get consumed by losses,” said Don Shula, “and I didn’t get overwhelmed by successes.”

Many of us have stifled our life by heeding some misguided critic who implied we were not good enough. Few things in life are certain but failure is.

Failure seems as something to be avoided at all cost. Although it leaves a sour taste, we should embrace failure for the learning opportunity it is. Failure is the oldest teacher, and perhaps the wisest of them all. Some things are impossible to completely grasp without first falling down.

We live in a culture that values perfectionism and failure is often viewed as a sign of weakness. People become so fixated on not failing that they never move forward. When it comes to failing, our egos are our own worst enemies. It is easier to accept failure in private, but once the failure is obvious to everyone around you, it becomes harder to accept it. Holding onto failures for way too long is destructive.

What is the importance  of failure?

  • It’s a learning Experience. Failure drives us to change. It represents opportunity and growth. It gives new direction.There is always one or more lessons to learn in what you may see as a failure.
  • It builds Character. We learn how to behave when we finally accomplish our goals. The humility we gain through our failures allows us to better handle and appreciate success.
  • It makes you Stronger. It is with persistence we overcome failure to achieve success . When people fail, they feel unaccomplished, and so they try again and again, until they finally reach success.
  • Your chances of Succeeding Increases. Failures are the pillars for success. You gain experiences you could not get any other way. Some things can only be learned through trial and error.
  • Failure is a type of Freedom. You might ask: Why? Because the worst has happened. Now, you can relax and rebuild again.

Success does not come easy. Everyone must face one hurdle after another. If you think that once you have the success you crave, you can relax, you are sadly mistaken.

the finish line

Failure can be costly, not only emotionally but financially as well. Some industries are very unforgiving as one or more failures may instantly get you the boot. The worse thing anyone can do, is not learn from failures.

“Failure is the tuition you pay for success.” ~Walter Brunell

In recent years, more and more executives have embraced the point of view, that failure is a prerequisite to invention. ‘The fastest way to succeed’, IBM’s Thomas Watson, Sr., once said, ‘is to double your failure rate.’ The growing acceptance of failure is changing the way companies approach innovation.

‘There is no failure. Only feedback.’ ~Robert Allen

However, distinguishing between excusable and inexcusable failure is crucial. Managing failure is key. Some mistakes are unpardonable for example producing and marketing a dysfunctional product caused by poor quality control. Encouraging failure doesn’t mean abandoning or supervision or respect for sound practices. Managing for failure requires leaders to be more engaged, not less.

Finally, don’t let the fear of failure hold you back.

I wish you the very best in life and success :)and remember that ‘Our best success often come after our greatest disappointments.’ ~Henry Ward Beecher

Remember to take risks: if you win, you will be happy; if you lose, you will be wise. Always find joy in your journey for as George Bailey said it best “It’s a Wonderful Life!” :)

take risks if u win

I really appreciate that you are taking the time to read this post.

To your successes! :)

Viv :)