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Two Categories of Losers
There are a whole host of characters who regularly lose money in the market place, and most fall into two catogories: False Ego Traders & Nervous Traders The false ego mistakes come from a mixture of false pride and bravado and are the most dangerous mistakes to make. The trader, generally a beginner or intermediate -- call him Tader A -- gets an opinion in his head about market direction. His analysis may have even been sound, but his opinion keeps him from reading/seeing the signs that a change is occuring in the market he has targeted. He subconsciously see the changes, but false pride is the devil, and blocks the information from making it into his conscious decision making process. The change he needs to see may even be pointed out to him by a fellow trader --Trader B-- but Trader A's false ego blocks this because he knows "I'm smarter than Trader B...In fact I think its a good idea to fade Trader B". Trader A is also likely someone who is accustomed to being listened to. He may have been upper management in a company, or even owned the company. "People better listen to me" is how he sees it. He is likely more accustomed to talking rather then listening. Despite trader A's previous success' Mother Market will bring him down quickly. Any early success he has in the market will only make for bigger losses down the road as he gets caught in the spiral of trying to make up for lost money and still make money. He doesn't just want to get his money back, he wants that and then some. His time is valuable. He is going to make the market pay. Well we all know how that works out, which is to say we won't be seeing Trader A around for long. Then there is Trader C, who is a nervous trader. Trader C is nervous because he had a bad day trading early on, and could not stop thinking that if he lost that same amount of money every day, he would be penniless in 54 trading days. Trader C worked hard his whole life, and despite having never got the big promotion or raise Trader C managed to save some money. Trader C is not used to people listening to him. But he is good at seeing things develop around him which makes him sensitive to change. This is a good thing for Trader C, who is more an analyst than a trader. But Trader C can never seem to catch the big one because every time he sees a trade up decent money, he remembers that loser in the begining, and he grabs the money rather then let the profit run. He also sets his stops too tight, and has a hard time following the rules when a trade goes against him. Trader C needs a shot of Trader A's bravado. There are a lot of Trader C's in the market place. Often times Trader A types who survive will morph into Trader C types. Trader C though is in his rut becasue he can't seem to make more than he risks. The way to avoid being someone who ends up paying the advertising costs for the big Forex firms like Trader's A & C is to understand how dangerous and competitve trading is to begin with. And prepare for it from that mind-set. Be "reality orientated". Two things I hear a lot in this busienss: #1) I wish I would have started out demo trading. #2) I wish I would have stayed in my demo account longer. I've been around the trading game since 1980 and I can tell you that most of you will see something in yourself in Trader A & Trader C. Beleve me, we all have more in common than we are different. And when you shine a light on something that had been in the shadows, the shadows disappear. Jay Norris [url]www.brewerfx.com/jnorrisedu/[/url] To attend a complimentary webinar on improving your trading focus go to: [url]http://www.brewerinvestmentgroup.com/email/jnorriswebinarevent100708/jwebinargraphicsweb.html[/url] DISCLAIMER: Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor. The value of currencies may fluctuate and investors may lose all or more than their original investments. Risks also include, but are not limited to, the potential for changing political and/or economic conditions that may substantially affect the price and/or liquidity of a currency. The impact of seasonal and geopolitical events is already factored into market prices. Prices in the underlying cash or physical markets do not necessarily move in tandem with futures and options prices. The leveraged nature of FX trading means that any market movement will have an equally proportional effect on your deposited funds and such may work against you as well as for you. In no event should the content of this correspondence be construed as an express or implied promise or guarantee by B.I.G. Forex, LLC and Brewer Investment Group, LLC or its subsidiaries and/or affiliates that you will profit or that losses can or will be limited in any manner whatsoever. Loss-limiting strategies such as stop loss orders may not be effective because market conditions or technology issues may make it impossible to execute such orders. Likewise, strategies using combinations of positions such as “spread” or “straddle” trades may be just as risky as simple long and short positions. Past results are no indication of future performance. Information contained in this correspondence is intended for informational purposes only and was obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.
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