In Part 1 of our series last week, we emphasised the importance of Psychology over Methodology.
Instilling in yourself a degree of acceptance when it comes to market behaviour.
Acceptance leads to harmony and peace of mind. A human state that if achieved, will go a long way towards your journey of becoming a successful trader.
The Top 5 Things Traders Need to Accept
1) Accept that s**t happens – perfectly good trades can turn against you for numerous reasons. We all know that feeling when a stock we are riding suddenly goes into a trading halt. There is exaltation that it could be good news, yet also dread that it could be bad. We need to accept that anything can happen, anywhere, and at any time.
2) Accept your fear yet don’t succumb to paralysis – a little bit of fear is Ok. Yet paralysis is where things become problematic because it results in inaction. Mark Douglas summed it up perfectly when he said ‘What you fear is not the markets, but rather your inability to do what you need to do, when you need to do it, without hesitation’.
3) Accept that you don’t know what the market is going to do today, tomorrow or any other day. Place nil expectations on every trade you take.
4) Accept that you are going to lose – in fact accept that you are going to lose frequently. Your ego will tell you this is unacceptable. Yet in trading losing is the cost of doing business. Your education and part of your personal development. The key is to cut your losses short and let your winners run.
5) Accept that markets will constantly move against you as part of every trade. This is something many new traders fail to grasp. And it constantly gets them into a psychological twist. Even your most successful trades will spend time reversing and back filling as part of the process. Some of your best trades will be those that you gave plenty of room to breathe.
Ultimately there are only two things you can control when it comes to your trading: your position sizing and your risk management. All other market factors are beyond your control.
Only by accepting this fact will you be able to start trading in that seemingly mythical place that successful traders call ‘The Zone’.