Amateur traders find trading is shortcut way of getting rich quickly, But traders needs to be aware of the stressful aspects of trading and what to do deal with them.Its inevitable a trader has to experience this stressful time in his trading career. Below we have discussed stressful situation experienced by traders and how to deal with them.
- The pain of losing money. (Trade smaller so it is not painful, it is just an outcome)
- The pain of being wrong about a trade you were sure about. (You lost simply because the market didn’t match your trade, trend followers lose money in choppy markets, swing traders lose money in trending markets, it’s the market not you.)
- The pain of a draw down in capital.(Even the world’s best money managers do not continually hit all time equity highs. Your path may look like this 10,0000 to 20,0000 to 15,0000 to 25,0000 to 20,0000 to 30,0000. Mine was rockier than most, and after blood, sweat and tears I am now able to trade profitably.
- Consecutive trading losses hurt. They make you doubt yourself, your method, and your system. (You need to remember your winning trades, your winning years, or your back-testing, or paper trading of the method.)
- The embarrassment of public losses. You told everyone who would listen about a great trade, and you were wrong. (Never be overconfident in any trade, but always be sure of your stop loss.)
- The pain of of admitting you were wrong. (Cut your loss and move on to the next trade, trade reality not your ego.)
- Losing paper profits, you are up 20% on a trade then a massive whip saw takes back those profits in one move. (Take your trailing stop and move on to the next trade, there is truly no reason to cry over spilled milk.)
- You are following a guru and come to realize he truly is a salesman not a trader. (You stop following gurus and look to learn how to trade you yourself.)
- You buy a super hot stock that you have researched for many weeks then it goes down due to a bear market. (Only trade stocks long in up-trending markets)
- You start trading a system that did amazing in back-testing and promptly lose 10% of your account. (You have to stick with it so it can win in the long term, you may need to make slight adjustments in position sizing or stops to account for volatility that you may have missed.)
Whatever the pain, just don’t quit, there is gold to be found in trading right over the long term.
Follow on Facebook during Market Hours: http://www.facebook.com/pages/Brameshs-Tech/140117182685863