It’s not all about fun and games when it comes to trading. Traders do not profit from every trade. In fact, most do not profit on half of their trades. It’s not like other careers, jobs, or hobbies where you work for a while before getting paid. Our goal is more to be an entrepreneur. Overcoming the Pains in Trading is more important in trading.
- It’s possible that our concept will work, but it’s also possible that it won’t.
- The value of the equity, option, or futures contract we just purchased could rise or fall.
- We may have enough capital to pay off our house after many years of hard work, or we may lose $50,000 of our hard-earned money.
- In a raging bull market, we could make a million dollars or we could waste five years of hard work with nothing to show for it.
Here Are 10 Of The Most Important Aspects OF Overcoming the Pains In Trading
- The agony of financial loss. (Make the trade smaller so it’s less painful.)
- The agony of being wrong about a trade you thought you knew everything about. (You lost simply because the market was not favorable to your particular trade. Trend followers lose money in choppy markets, swing traders lose money in trending markets. The market, not you, chooses the winning trade.)
- The agony of a capital reduction. (Even the best money managers in the world do not consistently hit all-time equity highs.) $10,000 to $20,000 to $15,000 to $25,000 to $20,000 to $30,000 and then the climb into six figures and beyond could be your path.)
- Consecutive trading losses are difficult to overcome. They cause you to question your own abilities, your method, and your system. (You’ll need to remember your winning trades, winning years, or proof of your method’s profitability in back-testing or paper trading.)
- The humiliation of public losses. You told everyone you knew about a fantastic trade, and you were completely wrong. (In any trade, never be overconfident, but always be sure of your stop loss.) Always be unsure whether you’ll win or lose a trade; just stick to your strategy.)
- The agony of admitting you were mistaken. (Cut your losses and move on to the next trade, trade reality rather than your ego.)
- You are up to $1,000 on a trade and then a massive fall takes back those profits in one move, resulting in a loss of paper profits. (It’s pointless to cry over spilled milk; take your trailing stop and move on to the next trade.)
- You’re following a guru and you’ve realized he’s a salesman rather than a trader. (You stop listening to gurus and start learning how to trade on your own.)
- When you take a position that meets all of your entry criteria, it hits your stop loss. (Follow your strategy, exit the trade, and move on.)
- You begin trading a system that performed exceptionally well in back-testing and promptly lose 10% of your account in a drawdown. (You should double-check your research to see if you made any errors. If the method is valid, stick with it so it can win in the long run. You may need to make minor adjustments to position sizing or stops to account for volatility that you may have overlooked.)
Whatever the pain, don’t give up. There are huge rewards to be found in trading correctly over time.
Trading Mentality Of A New Trader