You will feel worry, even fear. Here lies the moment of truth. Do you have the guts to be afraid and act anyhow? When a fireman runs into a burning building I suppose he is frightened but he does it anyway and achieves the desired outcome. Unless you can overcome or accept your fear and do it anyway, you will not be a successful trader.
However, once you learn to manage your fear, it gets easier and easier and in time there is no panic. The conflicting reaction can become a matter – you’re overconfident and not focused sufficient on the risk you're taking.
Both the incapability to start a trade, or close a down trade can create serious psychological issues for a trader going forward. By calling notice to these possible stumbling blocks beforehand, you can properly prepare prior to your first real trade and develop good trading habits from day one.
Begin by analyzing yourself. Are you the type of person that can control their emotions and flawlessly carry out trades, oftentimes under very stressful conditions? Are you the type of person who’s overconfident and prone to take more risk than they should? Before your first real trade you need to look within yourself and get the answers. We can correct any deficits before they result in paralysis (not pulling the trigger) or a vast loss (overconfidence). A vast loss can prematurely end your trading career, or prolong your success until you can raise additional capital.
The difficulty doesn’t end with “pulling the trigger”. In fact what comes next is equally or perhaps more difficult. Once you are in the trade the next hurdle is staying in the trade. When trading foreign exchange you exit the trade as soon as possible after entry when it is not working. The majority people who have been victorious in non-trading ventures find this concept difficult to apply.
For example, real estate moguls make their fortune riding out the bad times and selling during the boom periods. The difficulty with trying to adapt a 'hold on until it comes back' strategy in foreign exchange is that most of the time the currencies are in long-term persistent, directional trends and your equity will be wiped out before the currency comes back.
The other side of the coin is staying in a trade that is working. The most ordinary pitfall is closing out a winning position without a valid reason. Once again, fear is the culprit. Your subconscious devil will be scaring you non-stop with questions like “what if news comes out and you wind up with a loss”. The reality is if news comes out in a currency that is going up, the news has a higher probability of being positive than negative (more on why that is so in a later article).
So your fear is just a baseless annoyance. Don’t aim and clash the fear. Accept it. Have a giggle about it and then move on to the job at hand, which is determining an exit plan based on actual price movement. As Garth says in Waynesworld “Live in the now man”. Worrying on what could be is illogical. Studying your chart and determining a purpose exit point is reality based and normal.
One more ordinary pitfall is closing a winning position because you are bored with it; it’s not moving. In Football, after a star running back breaks free for a 50-yard gain, he comes out of the game temporarily for a breather. When he reenters the game he is a serious threat to gain more yards – this is indisputable. So when your position takes a breather after a winning move, the next likely event is further gains – so why close it?
If you can be brave under fire and deliberately patient, foreign exchange trading may be for you. If you’re a natural gunslinger and reckless you will need to tone your act down a notch or two and we can help you make the necessary adjustments. If putting your money at risk makes you a anxious wreck it’s because you lack the knowledge base to be confident in your decision making.
Endurance to increase information through learn and Focus
A lot of new traders believe all you need to profitably trade foreign currencies are charts, technological indicators and a small bankroll. The majority of them blow up (lose all their money) within a few weeks or months; some are at first successful and it takes as long as a year before they blow up. A minute alternative with good money organization skills, endurance, and a market niche go on to be successful traders. Armed with charts, technological indicators, and a small finance, the chance of succeeding is probably 500 to 1.
To enlarge your chances of success to near confidence requires knowledge; acquiring knowledge takes hard work, study, dedication and focus. Compile your knowledge base without taking any shortcuts, thereby assuring a solid base to build upon.
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