What is below is a conclusion of different books I have read plus what is said here about "Trading Philosophy". I have read it for more than 10 times & I'm planing to read it every trading morning. It is very very good for me. I hope it would be great for everybody. This is what I'm planing to be a mental frame work for my trading. This will be updated as I (or any trader) continues his way ...
Dear Hani, I would be pleased if you add/edit statements to this.
With Regards,
My Trading Philosophy:
· Emotional Control
Dear Hani, I would be pleased if you add/edit statements to this.
With Regards,
My Trading Philosophy:
· Emotional Control
- It is very difficult to learn how to trade if I’m under a great deal of financial pressure: I shouldn’t expect to become a successful trader if I have a limited trading capital or I’m trading with money I can’t afford to lose.
- Trade with no fear: Fear will limit my learning’s. I should NOT care to be right or wrong; it will help it to be easier to move in & out of a position, cutting my losses short to make myself available to take the next opportunity.
- Defining a tolerance of taking a loss that I’m completely comfortable with to avoid pain & fear and trade accordingly & flawlessly: This will let the market to teach me about myself & itself. I should stick to it till it has become a second nature in me and the positive cycle (gaining confidence in myself => learning more => making money => gaining more confidence) has been formed. After that I could increase my risk, step by step.
· Ability to change my mind to flow with the market
- Take only what market offers me, NOT what I expect.
- The market is always right: Because the balance of sell & buy’s will define the market way, this has nothing to do with what I think about it.
- The fewer acceptances I have for different types of market behavior, the more the market will turn on me: In one moment it is satisfying all my needs & the next it’s a greedy monster taking away every thing from me!
· Self-Discipline
- My focus: To learn from the market NOT request money from it; this will cause to determine that:
- I should take total responsibility & don’t blame the market.
- To understand that mistakes don’t exist; they are only pointing the way to me.
- There is no missing opportunity: Missed opportunities are trades that could have always turned out perfectly because they are only in my mind were anything is possible!! If it was possible for us to have it, we would. Besides as long as the market is moving there is no real missing opportunity it is just a matter of time.
- Seeing a partial of my capital as tuition for being educated from the market: This will release my energy to learn and money, a by-product will come.
- Plan your trades, Trade your plans: I will look at Daily time frame for taking long-term positions & M15 for short-term ones. At the beginning of my trading day, I will consider all situations that the price could take. Then, I will make a plan for every one of those situations including when to get in & out, how much to take risk according to its Reward:Risk ratio (After releasing my mind from the way that market go, I have realized that Reward:Risk ratio is most important to consider when opening a position)
- Dealing with losses:
- Predefine what a loss is in every potential trade: Determining what the market does to tell me that the trade no longer represents an opportunity at least in my time frame.
- Execute my losing trades immediately upon perception that they exist: to avoid fear & bad experience, to release my energy to take advantage of next opportunity.
- Becoming an expert in identifying significant reference levels. So there will be no belief to buy or sell. I will be just looking for signs & opportunities.
- Monitoring myself in trading and analyzing the results at the end of each working day & week.
Manage probability while following the TREND.