Who or What Is Pulling Your Strings?

When you are trading do your emotions drive your actions?  Do you chase price, only to have the market turn as soon as you pull the trigger? Do you bail out of a trade as soon as it looks like it could go against you? If so you are probably at the mercy of the 2 key emotions that can stop you becoming a successful consistently profitable trader, and they are FEAR & GREED.  Fear can lead HESITANCY which can make you fail to take a potentially good trade and Greed can lead you to take on too much Risk and make poor unplanned entries and eventually probably blowing up your account.  Lastly the result of poor trades due to all the above can lead to UNCERTAINTY, with you wondering what the heck is going on in the markets

The best traders have learnt to control their emotions when trading.  How have they achieved this?  By knowing their chosen strategies inside out, backed up by a robust Trading Plan and historic data which proves their strategy works, if implemented with constancy and accuracy over a period of time.  If ever uncertain about the markets or a particular trade then check your plan and if necessary stay out!

All traders have losses but the best traders minimise their losses by precise implementation of their strategies and using strict Risk and Money Management.  Having such a robust Trading Plan and following it to the letter, provided the right market signals are given, leads to unemotional trading, but you do need to understand and work on one’s own Psychological Trading profile.

My own Psychological Trading profile is that I have an impulsive nature when trading and thus I have worked on developing my trade planning, patience & discipline, but more on the latter two topics in a future blog.

If you need help with any of the any of the above here are a few pointers:

• Great Book on Trading Psychology:    
• Personal Mentorship & Workshops
• Trading Beliefs

Top Trading Tip: Try and plan down to the last detail every trade you take as this can take the emotion out of the equation.  Try and focus on the process and not on potential gains or losses.  Also give some thought to and try and identify and analyse what your own Psychological Trading Profile is, as once recognised, you will be half way to addressing it and improving your trading.  And If you are ever in doubt then stay out!