The Disadvantages Of A Losing Trader In The Financial Markets
Most will tell you about the opportunity that is trading the markets, and how best that profit can be realized. Knowing exactly when and how to precisely enter and exit the market, minimize risk while increasing capital, establishing a protocol for profitable trading.
The goal of trading is to profit, the penultimate goal being exiting with a profit. But at face value, for most, trading is more like gambling, where one can’t determine or tell what’s behind the market forces, knowing what it can do to dispel your trading decisions.
Self discipline and determination becomes key to trading success. No one should ever tell you what you should be doing next, not exactly, you need to know that move for yourself, this since there’s no set of “hard rules” when it comes to trading.
Some will tell you what to do, and it may work for a while, they could be right for a time, but realize that the market is constantly fluctuating out of everyone’s control, and trading is all about watching the market, attempting to analyze it, and acting on your own.
Understanding And Managing Risk
Some think that those who seizes the opportunity first, wins, and then that opportunity will be gone. That the random opportunities which appears in a trader’s life becomes a crisis in supply.
What happens is that something, somehow, an event has interrupted the normal flow of supply and demand, which dramatically raises or lowers the price of the financial instrument, and this becomes a temporary opportunity for profit.
There will also be others who’ll jump on these opportunities the same way that you will. These traders may be the regular suppliers, those who may have surplus stock, or a trader who may have a completely different objective.
Judge The Risk Before Making Your Move
Deception becomes a career for some, so always be on the lookout and be wary of those offering cutthroat deals or extremely tempting offers. Always thoroughly read and understand the conditions of a contract, count and counter all the zeros, read the fine print.
Betting to win means not allowing the house to make all the rules. The small difference which exists between luck and success is the amount of risk that you’re able to manage.
At times, you could get lucky but most often not, so risk analysis and strict money management lies at the heart of any method which can be deemed reliable. Failure and setbacks will happen but this is the risk of speculation, where there’s casualties and losses, as it’s a zero sum game.
So always play the stakes and the risk levels which you can afford to lose, never lay down all your cookies and then have nothing left to fight another day.
Make every possible effort to know the market. This will help in determining how you can establish all of its nuances when trading. Every trader needs to know their territory and the market inside out.
The Trading Field
Trading becomes a world of compound interest, opportunities and challenges. There’s the opportunity of buying and selling of more instruments in a single item market.
The nature of the markets are chaotic on purpose. This because the reaction and movement of it is the aggregate behavior of thousands of others, so as a result, it can’t be trusted or predicted.
It will change on you in an instance, void plans, steal profits, render all your prior knowledge obsolete, and can make you penniless if you don’t use discipline.
Their patterns are always fractal, its price movement is a forever moving target, so never rely on it. One day it could be favorable for you, but will completely shift the next day, or the next hour.
This is the foundation of the traders mindset, and it can help you in making yourself more profitable gains while calculating better risk.
The Psychology Of Trading
When it comes to trading psychology, there’s two distinct types of mindsets. The one which fails to take responsibility, and the one who recovers from their failures.
The winning trader will view every failure as a small setback, objectifying what went wrong, this to avoid similar mistakes in the future. A winning trader will see these setbacks as part of the process. Success usually comes to those who really want it.
The losing trader will never take responsibility for their actions. Their mindsets are completely offset. What they tend to do is blame external forces for their losses and their mistakes.
What the winning trader will do is take take complete accountability for their actions while the losing traders will blame others, the markets, the trading system.
There’s Only Two Outcomes: Win Or Lose
Every successful trader dreams of success, to get better. Then they follow these thoughts by taking action. What losing traders will do is leave their thoughts hanging.
They’ll spend too much of their time dwelling on the past by visualizing instead of correcting themselves. These traders who think too much are always looking for the perfect opportunity in a trade.
They also tend to constantly move from one method to another, making it difficult for them to pinpoint what they’re looking for or doing wrong. What they never realize are its effects before making any new decisions.
Winning trading is a combination of risk taking and using a good methodology. Most new traders lose because they lack the patience and the discipline, reacting to their immediate emotions.
They’ll rush in or out of trades while abandoning their plan or method. They’re driven by greed while risking too much of their capital. Undisciplined traders will trade recklessly and then lose it all.