Trading is a Skill and it takes time to develop the Skill.Trading is simply like learning to drive a car, it is a skill that anyone can learn. Trading doesn’t take extreme intelligence or any superhuman gifts, it simply is hard work, just like learning to drive a car.
Any person who need to become master of a particular skill needs to work on his weakness. Same apply to trading. One advantage of trading is most of traders have the same weakness, Person needs to realize the weakness and work on it to get rid of them. Let me discuss few generic trading weakness and how to get rid of them.
1. Trading very frequently.
How many times have you had a profitable week, only to give it all back at the end of the week on a few trades? Once traders losses
The other common problem with frequent trading is that many traders get into revenge mode. Many traders may try to “get their money back” from a market that handed them their most recent loss. Sometimes a little perspective is all that is needed to see the markets more clearly. By sitting in the bushes until the “free money” is lying there you force yourself to become a more disciplined trader.
2. Finding it difficult to re-enter a trade.
If you find that you are often stopped out on a trade, but the trade eventually goes in the expected direction without you, you may want to work on this skill. Learning to re-enter is tricky because it may lead to overtrading, but it is invaluable in making sure that you eventually collect your profits – especially for traders who trade lower timeframe (5 minute, 10 minute, etc) charts.
Deciding to re-enter a trade is a difficult decision because you are admitting that you were wrong. By re-entering the trade you have decided that the original timing of the trade was off, and that now is the better time to get into the market.
3. Inconsistent risk management.
Most of traders who lost big money in trading is due to lack of risk management.Its is one of the most important pillar for trading success.Before taking any trade just calculate what % of your account is at risk on the next trade. Many traders blindly buy Options thinking of rosy scenarios we will double or tripple our money but never think of loss they can make. Knowing how much you can loose before you enter the trader help to avoid the painful exit from the trade. So make a vow to yourself “NEVER EVER ENTER THE TRADE BEFORE YOU HAVE DEFINED THE STOPLOSS ”
Great advise. I’d like to one more from my own experience. Traders must work hard to find their own system that clearly defines entry/exit points, and must then have the discipline to ‘stick to it.’ Over time, this system should get refined until they find their own comfort level with it. I know you’ve mentioned it elsewhere under having a Trading Plan but it’s important to keep reminding yourselves EVERYDAY! Tc.