A very good morning to you…
I only ever write a blog when something in my life causes me to pause and take stock of a particular event or events. Over the last few months, I have continued to notice the same elements holding new traders, and even more established traders, back from achieving the results they want. So I just want to put down in writing what I believe to be the 3 things a trader needs to work on most to ensure that they do what every trader wants to do, exponentially grow their capital over time.
The three elements are as follows:
Now I don’t need to explain why I feel this area is so important as past blogs will explain that. However I feel it’s still worth touching on because I still see the same common mistake’s made every day where traders are consistently looking for the holy grail of trading through new strategies, new magical indicators, new stop loss management techniques etc…When the technical side of trading will ONLY work if you have the mindset to be self disciplined enough to follow your technical rules every single time, even through a losing period.
So identify the mistakes that you are making, understand WHY you are making these (the most important part) and then put a plan in place to overcome this. Please see previous blogs for advice on this. Work on your trader psychology EVERY DAY. It is not an overnight quick fix. You are having to overcome many years of conditioning to re-wire your brain to create the most beneficial mindset for your trading. It will take time. Don’t put pressure on yourself to change in a flash. But do reward good trading behavior and punish (non physical that is!) bad trading behavior. This is a conditioning technique to help you, overtime, subconsciously act the way you need to in the trading environment.
Not just related to trading success but success in all walks of life. Taking on a new skill like trading is not going to click from day 1 (if it does then great but you will be in the top 0.01% of people this happens to). Remind yourself that trading is a skill, just like driving a car, and that you need to continually work at it until it starts to become a natural process.
It saddens me to see so many people (new traders, new members at the gym, new aspiring entrepreneurs) drop out when in the early days, when the going gets a little tough. It is those people who have the deep rooted desire, motivation and persistence to drive through this difficult stage, knowing fully that this is the stage that will set them up for many years of success. Why? Because this is the time we make most of our mistakes and mistakes are wonderful so long as we learn from them, as they make us stronger in the future. Learning from mistakes is essentially EXPERIENCE. Experience in any field is going to put you in a stronger position. There is a stigma, especially in the UK, that making a mistake is a terrible thing to do. Rubbish.
Mistakes are essential. I put my success in trading now down to all the mistakes I made for the first 12-18 months of trading (of which their were a lot!). I still make mistakes but I treat them in the same way every time; what can I learn from this experience to make me a better performer in the future? This way I always respond positively which does wonders for my Psychology (surprise surprise I know but everything is interlinked!). Persistence can drain at times, don’t get me wrong. There were times where my persistence was struggling and I needed to go back to my underlying purpose for why I was trading. So make sure you are aware of your own specific purpose for trading (see earlier blog).
The nature of the industry we are in means that we are constantly bombarded with stories of wonder returns, strategies that never lose and traders that consistently hit triple digit % returns. Great, these are always going to be around us but rather than compare yourself to these stories, compare yourself to reality. See how well your 1-3% per month fairs to the banks offering? See how your capital growth compares to current property returns? stock market returns? By doing this you now start to see just how great that 3% return was you made last month. When you do this you start to feel great about your trading because you see just how well you are doing in comparison to all other asset classes and this in turn works on keeping your mindset positive.
So in summary, keep these 3 P’s close to your trading plan. Build them into your thinking going forward because they all interlink to that all important trader Psychology because as all my readers know TRADING IS 80% PSYCHOLOGY AND THE REST IS IN YOUR HEAD Have a great week and happy trading
Tom Franklin is a 26 year old guy living in London who trades the financial markets full time as well as coach finance, self motivation and health and fitness.