The psychological part of the trade is as important as systems and indicators you use, says Headley Prayz, and here he outlines what he had learned about trade from legendary trader.
Today, we will discuss some insights from an excellent book for traders, “Long-term secrets of short-term trading” by Larry Williams.
1: “Why do most traders lose most of your time? The markets can change direction very rapidly, and most traders can not” .Dori best traders (or the best trading systems) are often wrong. This does not derecognise trader or system – this is only part of the trade. The challenge for marketers is the assumption that signal trading may have been wrong. In a case like this, Williams rightly points out that we have been trained to “hold on” and “have faith in our initial idea,” even if it is obviously wrong course of action. This is just our ego, which needs to be right so bad that often ignore the signals out to warn the trader for the upcoming issue.
His analogy can help you work on this issue. He compared the trade robbing a bank. A bank robber can successfully break into a bank and start to chase money, but when the supervising person warns man in the safe that the cops are on their way, the thief left the money and run. If the thief was like most traders, it could remain in the bank and hopes that warning cops on the road was a false warning. As Williams says, “The moment you learn to trade reality, not desire, will drill a wall of fire to become a successful trader.”
2: This is not a trade, it is a battle.
Too many marketers believe that their latest deal is a reflection of how good they are traders (but they are the only ones who feel this way about yourself). This boils down to one word – expectation. If you expect to win all the time, or even most of the time you are about to cause a lot of grief. This frustration, however, is quite the same force that will really make your negative perception of themselves in reality. And even better deal can be harmful if you allow her to deform disciplined you podhod.Faktat of the matter is that this is a game of probabilities, and have to play for a long time. Focus on the war – not the battle.
3: The amount of (or lack of) evidence of a market move does not make it more or less veroyaten.Vsichki traders, but especially new traders have one of two problems. They either buy too soon, too late or buy (and in fact, when comes down to it, these are the only two problems in the trade). The first problem with buying too soon is a sign that you do not want to miss a move. Of course, if you enter and the movement never became reality, trade suffers. The second problem is the opposite – the trader wants to make sure that the move will happen, so that he or she will wait for all the right signals to verify that the move is true. Of course, at that time, most of this move is behind you.
Although it is easier said than done, need to find a balance between these two extremes. In this case, the best teacher is experience.
4: What is the difference between winning traders and losing traders?
Well, first, there are some similarities. Both are completely consumed by the idea of trading. Winners and losers are committed to doing this, and do not intend “to go back.” The same black-and-white mentality is also evident in their personal lives. But what is the difference?
Here’s what Williams notes:
Losing traders have unrealistic expectations about the kind of profits they can make, usually aiming too high. They also discussed with you before entering the transaction, and even after experiencing the deal is closed. But one great thing Williams noticed about this group is that they have devoted little attention to money management (ie defense). And the winners? This group has a strong focus on cash management, and voluntarily quit a deal if it does not move, even if it is not a waste of money at that time! There is also very little internal dialogue for the selection of trade and trade management; this group just take action instead suffers from analytical paralysis. Finally, the most profitable traders focusing on a small niche market or several techniques, instead of trying to be able to do everything.
We hope that the second description fits a little better, but if your first seems a little too familiar, at least now you know how to start to go past this barrier.