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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Trading in the zone!

 Have you have been so focused on doing something that you have not been aware of people walking around you or heard any surrounding noise?

Have you ever driven in a motorway and listen to your favourite music? Have you felt in tune with it?

I hope you agree with me that when you are in tune with something or someone, you are completely focused without any distractions or noticing any noise.

Most of you, who know me well, have already identified the subject of this article, and yes, you are not wrong. It’s about trading and in particular it is related to a famous trading book: Trading in the zone by Mark Douglas.

trading in the zone

I love this book because it is related to trading psychology and if you are a trader or you are thinking of taking up this career than this is an absolute must read for you. I have read it so many times that I have lost count. :-)

You will get the most from this book if you already have a trading system or execute the trades as effectively as you would like. :-)

This book taps into your belief systems, which in turn determine your actions, in a very coherent manner. ‘A belief system is nothing more than a thought you’ve though over and over again’ – Wayne Dyer. It is no exaggeration to say that if your trading methodology has a genuine edge, this book could transform you into the owner of your very own casino if you allow it to.

belief-system-2

The knowledge the author offers is also applicable to other areas of life including quitting smoking – it’s all about positively energising the concept that you’re a non smoker and de-energising the concept that you are a smoker.

Before you turn off condemning that comment as psycho-babble, you should remember, as the author explains, to keep your mind open to information according to what you already believe to be true.

An exceptionally fine book on the most important aspects of trading in which the author selflessly shares his soul in addition to his knowledge.

emotional guidance scale

For example, he shares the 5 fundamental truths of trading:

  1. Anything can happen whilst trading
  2. You do not need to know what is going to happen next in order to make money
  3. There is a random distribution between wins and losses for any given set of variables that define an edge
  4. An edge is nothing more than an indication of a higher probability of one thing happening over another
  5. Every moment in the market is unique

probability mindset

He also shares, the 7 principles of trading consistency:

  1. I objectively identify my edge
  2. I predefine the risk of every trade
  3. I completely accept the risk or I am willing to let go of the trade
  4. I act on my edges without hesitation or reservation
  5. I pay myself as the market makes money available to me
  6. I continually monitor my susceptibility to make errors
  7. I understand the absolute necessity of these principles of consistent success and therefore I will never violate them

consistency is key

So to think like a trader means to think in terms of probabilities, identify your edge, execute your trades the same way each and every time and take every setup that fits your criteria. Look to analyze your trades in sample sizes and not individually. Doing these things (over time), can help develop a level of confidence and consistency in your trading.

consistence creates confidence

He suggests an excellent Trading Mission Statement:

I am a determined trading athlete. My goal as an online trading athlete is to be confident and have belief.

Sticking tenaciously to my plan will help me become a full time trader, trading for a living.

Set and go!!!

Also, he outlines the importance of having a Trading Plan:

‘To have time to do what I want to do and still have the money to do it as well, e.g. travelling, etc.’

forex-trading-plan

To attain the best possible impact on your trading mindset, read with an open mind, make notes, re-read, and re-read again as the knowledge in the book contains has to sink deep into your personality and character arena.

success 2

Happy reading :-)

To your trading success :-)

Viv :-)

Keys to Manage Stress

Hello to all my readers :-)

Have you ever felt like a mouse running on a tread wheel and getting nowhere?

Have you ever felt angry because you work so many hours and do not have the time to spend with your dear ones?

You can feel assure that you are not alone. According to a mental-health charity in the UK, 1 in 5  British workers said that stress had made them physically sick during their career, and unmanageable pressure had caused 1 in 4 to cry while at work. Prescriptions for antidepressants saw an unprecedented rise during one recent year of economic recession.

To manage any issues, we need to get to understand the stress cycle and the root of the problem.

Stress cycle

Ask yourself:

What has caused you stress?

The answer could be multiple, for example: insecurity – financial or health, a demanding routine, interpersonal conflicts or a traumatic experience.

Sources of stress

Also ask: ‘How has stress affected you?’

Stress Body Mind

Some symptoms could be health disorders, emotional exhaustion, sleep problems, deteriorating relationships or depression.

You also need to remember that stress activates an amazing system in your body, your emergency response system. Hormones are released to increase your breathing, heart rate and blood pressure.

So learning how to deal with stress is important to both your physical and mental well-being.

How can we manage stress?

outsourcing stress

Stress in itself is not necessarily harmful. The American Psychological Association has noted: ‘Stress is to the human condition what tension is to the violin string: too little and the music is dull and raspy; too much and the music is shrill or the string snaps. Stress can be the kiss of death or the spice of life. The issue, really, is how to manage it.’

I also came across to a very good quote of stress:

stress is

Here some practical advice to manage stress:

  1. Insecurity

Not one of us has total security.

How can we cope with feelings of insecurity?

Try these suggestions:

* Confide in a trusted family member or friend. Studies show that the support of loved ones consistently confers protection against stress-related disorders.

* Focus on positive scenarios. If you focus on negatives ones, they will drain your emotional reserves. Remember that what you fear may not happen.

  1. Demanding routine

A relentless routine of commuting, working, studying or caring for children or elderly parents can keep stress level high.

Moreover, stopping some of these activities may be out of question.

What can we do to cope?

* Give yourself some downtime, and get adequate rest.

* Set sound priorities and adopt a modest lifestyle. Consider simplifying your life, perhaps by reducing expenses or time spent at work.

‘Making certain lifestyle changes is the best start’ to relieving stress’, says the National Institutes of Health (NIH) in the US.

Start with eating a well-balanced, healthy diet as well as getting enough sleep and exercise. Also limit caffeine and alcohol intake and don’t use nicotine, cocaine or other street drugs.’ The NIH also suggests taking breaks from work, spending time with family or friends, learning to make things with your hands, hobbies or learning to play a musical instrument. I will also add dancing.

stress management

To your success :-)

Viv :-)