You may have a brilliant trading system, but if you feel
scared, irritated or upset, your account is very likely to suffer.
To win in any competition, something more that just muscular
strength or strength of intellect is required. In order to be the best one, the
psychology of a winner is needed. A lot of obstacles are encountered by
everyone who aspires to success in trading: temptation, fear, exhilaration of
quick profits and shock of a series of bargains with losses. Even the best
trading strategy sometimes arouses losses as well. Nothing but non-fading
desire to achieve your aim and strength of mind may lead to achievement of the
highest trading skills.
Many beginning and experienced traders share the common
opinion that psychology is the most important condition of success. It is
psychological reasons which they explain their winnings and losses with. Those
people who want to achieve success in any field, try to reach the highest
efficiency: mental, emotional and spiritual.
This is a training course for people who are ready to:
improve understanding of their strengths and weak points
concerning trading. The sufficient understanding level will mean that you know
your abilities to manage risks and understand the way you react to tense
situations, you are aware what level of emotion control you have, and you
realize whether your way of thinking is independent or you are prone to be
influenced by external sources. You will also know to what extent self-assured
you are, etc.;
arrange your trading activity more efficiently;
make mistakes and continue working in spite of them;
take initial steps to achieve success.
Features Needed for a Successful Trader
What is he like, an ideal trader?
If to ask experts in the trading field, they can describe an
ideal trader as follows: intuitive, but logical and objective; able to act on
the spot, but disciplined; self-assured, but able to accept criticism towards
him.
As a result of many-year study, Dr. Van Tharp, a well-known
specialist in success psychology, pointed out the main features common for successful
traders.
Firstly, absolute faith and understanding that we create our
life by ourselves.
Secondly, interest in his own personality and desire really
to understand himself.
Thirdly, discipline in continuous work over himself.
Fourth, best traders tend to be convinced in the following
things:
money is of no importance;
it is natural to lose in the market;
trading is a game;
winners win before the game begins;
for success it is required to think over the situation;
Fifthly, ability to develop strategies.
In general, the style of a successful trader` s personality
consists in combination of experience, skills, knowledge, discipline, and
intuition. Now let us discuss an ideal trader` s features in more detailed way.
Discipline
You have possibly heard it a numerous number of times:
"Discipline is the key factor of successful trade". Discipline is
mentioned almost in every trading book, and in many of them this word is
indicated even in the title. Why is discipline so important?
Successful trading is to significant extent profit gaining
out of possibility. Let us assume that a given trading strategy used to provide
75 % of profitable bargains in the past. In this case, there is high
possibility that this strategy will show the same result in the future, but
perhaps, it will not do. Unexpected factors, for example, the market behavior
change, may impair the strategy and reduce its profitability. But insufficient
discipline can make the situation even worse. When a strategy has high
possibility of success, the only way to use this advantage consists in trying
to follow your trading plan flawlessly. A disciplined trader trusts his
strategy and seeks for an opportunity to gain some profit out of its
possibility on the base of his plan.
An undisciplined trader hesitates. He does not always follow
his trading plan, often relinquishes it, makes deviations or changes the
strategy. By doing so, he misses his chance to use the advantage of his trading
strategy.
What are your discipline and self-control like? Is it difficult
for you to follow your trading plan? Would you like to get more disciplined in
trading?
If you have some problems with discipline, try to apply some
exercises to develop this feature. Assess your self-control level in your
everyday life and try to increase it.
Are you usually late for appointments?
Do you spend more money per month that your budget allows
you?
Do you often fail to fulfill your promises?
A disciplined trader is not necessarily pedantic in all life
aspects, but the behavior style we follow in our everyday life can make impact
on our trading activity. If you frequently waste your money, eat too much or
cannot suppress your desire to get pleasures, it may be more difficult for you
to keep discipline in trading than for others.
Discipline is the key to successful trading, and it is of
vital importance that we should do everything we can to strengthen it.
Assurance in your abilities and in trading success.
Like any other person, a trader must be guided with success
in his activity. It means that it is very important for a trader to increase,
keep and strengthen self-assurance. I do not need explain to you why
self-assurance is so important. I will only say that only a self-assured person
have positive attitude to criticism towards himself, does not give way to
despair in case of bad luck and is able to admit his mistakes. Self-assurance
may be called the axis supporting a trader` personality. It supports all
qualities needed for success, such as independence in decision making, creative
feature, ability to respond adequately to criticism, discipline and so on.
Ability to think positively
A trader needs the ability to think positively, perhaps, like
no one else.
Positive attitude is vitally important for success, and
negative thoughts are one of the most difficult ordeals for a trader to pass.
It is essential for a trader to start changing his negative thoughts for
positive ones. Doubts and lack of confidence and self-assurance are poisonous
not only for traders, but for everyone who would like to achieve success. No
one can be successful for a long time, if his mind records many negative
thoughts and relatively few positive ones, it will be not enough them to
protect yourself from negative exposure.
A negatively thinking person is condemned to lack of
assurance and inability to undertake steps needed to reach success. Achievement
of small intermediate goals will help reduce the negative influence of negative
thoughts and develop positive way of thinking.
Since the subconscious part of the brain is more powerful
than any computer, it is impossible to rub out any images, sounds and smells
you encounter during your life, they are recorded forever. But if you become less perceptive to all
negative things and will increase the number of positive thoughts, this will
help you to get rid of all negative “records” and create the emotional state
contributing to your success.
Patience
It is difficult for many beginning traders to admit an
indisputable fact: you will not be able to get wealthy already tomorrow. Even
after a series of successful bargains you can gain but small profit.
Experienced traders are aware of it. They can hope for gaining larger profit finally,
but during a separate day they focus on following their trading plan as
accurately as possible. Many know it, but few are ready to put up with it. Most
beginning traders initially live by hopes for enormous profits which will
provide luxurious life for them.
What harm is in persecution of great wealth? There is no
harm, if you realize that it is nothing but fancy. On the contrary, if you
dream of great money which will change your life, you will conclude bargains
neglecting risks. You will expose your capital to unnecessarily high risks by
deviating from your trading plan in hope to get rich in a short time. You may
be visited by thoughts like this: "If I cannot make big money quickly, it
is not worth wasting my time for trading".
You will hardly be so lucky that you will make money for the
rest of your life after several fortunate bargains. To achieve success, you
will have to make efforts like all experienced and successful traders. Sometime
you will become rich, but it will happen not tomorrow, and, perhaps, not this
year.
And now, let us come to today. Focus on the process of
trading study. Trading is a pleasure, and you must enjoy it. Then you will be
satisfied with your trading results no matter what they are.
Flexibility
Although a flexible trader knows commonly accepted opinions,
he may notice that in the current market situation those hypothesizes do not
justify themselves.
Flexible traders are able to adjust to different situations.
They can consider what must happen according to common opinion alongside with
what is actually happening. In case of lack of flexibility, traders are
restricted with their strict adherence to one-sided opinions. They are not open
to perception of the actual situation, they look for confirmation of their
hypotheses instead of acting in accordance with the changing market conditions.
When the time comes and the situation starts developing according to their
opinion, they will possible say, “I said it would happen”. Yes, common opinion
sometimes justifies itself. If to wait for quite a long time, the prejudice
will be proved. But at what cost? In expectation of this, it is possible to
miss many good opportunities for trading. instead of allowing prejudices
prevailing over you, it is better to assess the current market situation and
undertake appropriate active measures.
Intuition
The market often deviates from rules and develops in
different way. There emerge a numerous number of various situations, and
intuitive mind is required to analyze them and compile a reasonable plan of
actions.
Do you need only facts and clear details, and no “I feel
that”? Or are you really more intuitive and do not believe in facts, thinking
that reality is perceived individually by every person?
Maybe, you have taken something from both of the types. A
rational trader would prefer following a certain set of rules, in order to know
for sure how to behave in the market. An intuitive trader, on the contrary,
just considers different rules as principles which can either work or not work
as well. For instance, a resistance may be at a round number or at the level of
the previous peak, and may be somewhere else. No one knows everything in
advance, and accepted principles are nothing but possibilities. All signals and
indicators are subjective, they may be a little inaccurate and reflect reality
with some deviations.
Thus, it is more profitable to be an intuitive trader to
certain extent. Reading graphs and feeling the market are subjective. Trade
decisions are based on well founded assumptions. They are not accurate, they
are accidental and unpredictable. Trading experts noticed long ago that it is
very difficult to learn trading for too rational traders. They want to find all
facts and accurate rules, which may be used to predict the market. They think
that if to find a "correct" set of signals, it is possible to make a
large profit. But if it were so, geniuses in economic and in other fields, the
market multi-millionaires would exist, but they do not exist. Why? Because
markets are so complex and chaotic that intuition, guesses and some kind of
creative skills are required in order to win successively.
Thus, if you are an intuitive type by nature, you have good
inclinations. And if you are too rational, try to develop intuition. Become a
little more intuitive trader, and you will see that your profit grows.
Features, appreciated in other fields, but not contributing
to success in trading
Many traders entered the market after having made a carrier
in another field. However, achievement of success in trading strongly differs
from success in other fields. The market is reluctant to encourage the points
appreciated in other occupations. Some specific features of your disposition
can make you number one in the world, but not number one in the market.
Thus, let us discuss the character features, not
contributing success in trading. Let us take, for instance, conformism. While
rising by the steps of carrier ladder, it is very important to feel to what
extent you are compatible with an organization you work for. It is required to
be able to define what direction is chosen for the company by its managers,
regardless whether you agree with it or not. Conformism is often preferred to
independence. If you have worked in a team, you should know that no one likes
people questioning the team decisions and promoting the idea of their own at
its expense.
In trading, conformism is rather a weak point than a strength.
Traders should search for final answers only in themselves. They do not rely on
others` opinions, they doubt the prevailing opinions and constantly try to find
a new trading plan earlier than others, in order to win the crowd instead of
following it.
Sociability is connected with conformism. In many
professions, people have to work in parallel with others, feel their needs, and
sometimes yield them at the expense of their own interests. Successful traders,
on the contrary, are pronounced individualists. A trader should take
independent decisions and seek for them in himself in order to find a correct
solution. He should spend more time analyzing markets and preparing his
bargains alone instead of wasting his time for communication with other people.
Traders must find the appropriate balance between the need for communication
and organization of their time for trading.
In conclusion, it is required to mark that, maybe, no one
possesses ideal features of a trader. We must aspire to the best possible combination
of the best personal features. Therefore it is useful to know your abilities in
order to have opportunities to change and approach your trading personality to
the ideal.
In the process of our work, we will endeavor to reveal our
features, which can improve the results of our trade, and the features
impairing it.
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