Yesterday we talked about how that ‘Trading Psychology’ book won’t fix your problems, and how there are three things you must attend to first, or you’re just wasting your time
If you missed it, you can read it on my blog here
Continuing on why that ‘Trading Psychology’ book won’t help you…
Today we’ll look at the second matter which you must address or you’ll never get beyond it being difficult to consistently stick to your rules and do what you’re supposed to do
Now this may sound elementary, but you would be amazed at how many traders are NOT following this common sense guideline
Larry sent me an email the other day saying how he feels pretty good about his system, but he just has this lingering doubt about it.
He tells me that he’s hit some pretty painful losses with it, the memory of which plays through his mind every time he’s got an entry lining up
The fear of repeating those losers make him so anxious he finds it almost impossible to take the trades
And when he does muster the courage to force himself to get in, he’s a nervous wreck, getting out early half the time and cheating himself out of hundreds in profits every week
The irony is, he stands by his system, saying that he likes it and thinks it’s pretty decent
The problem with all this is that Larry is going to the markets every day with a system that is only ‘pretty good’, one in which he has less than 100% confidence
And in trading, if you do this, if you try to trade with a system that isn’t VERY reliable and one you can count on to produce, then you really shouldn’t be trading real money with it
In order to trade effectively, to act when it’s time to act, and to make good clear decisions, you simply MUST have a very high level of confidence in your system
Doubt and fear come from lack of confidence, a lack of KNOWING that you’re good going into every trade
This puts you in a state from the get-go in which you are very likely to make mistakes and consequently lose money and miss out on profits that you otherwise should have
The smart thing to do is to have the patience to establish the confidence you need to trade comfortably
So many traders are encouraged by unscrupulous brokers to get busy trading before a sufficient level of confidence is reached – because they only get paid when you trade, and they have gotten used to the ‘churn’ of trader turnover, so they don’t care
Also, so many systems are sold with exaggerated (or even sometimes false) claims, and unfortunately most traders can only find out the truth of how good or bad a system is by risking money in the markets with a ‘try it and see’ approach
If you try to trade with a system that you FEEL is pretty good, but you don’t KNOW it’s solid, then you put yourself and your trading account at risk
This is one of those situations where ‘pretty good’ just isn’t good enough
All the mental tricks in the book won’t save you if you aren’t 100% with your system
You must know your system is solid and also have realistic expectations for what your system can or can’t do, so that when you do hit those losing trades that are inevitable, you can keep your cool and stick to your system, knowing that it will deliver
Now the third aspect of trading which you must address before that book on “Trading Psychology” will actually help you is one overlooked by most traders, and pertains to these first two in a big way
You’ll discover it in the next email, along with how these all come together, and most importantly, how you can attend to them in a straightforward and effective manner
Keep an eye out for the next email and read it when you get it!
Cheers
Brian McAboy
The Trading Business Coach
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