Forex Education Article

Tip#1: Stick to High Probability Trades

Always keep in mind your risk-reward ratio when considering taking a new trading position, and make sure that you are not risking more to earn less since that is a recipe for net losses over the long term.

In essence, your risk on any trade is simply the potential financial loss that you might incur as a result of the worst case situation coming to pass. Conversely, your reward is the potential financial gain that you can earn from your currency trading position if the move you expect ends up occurring.

Overall, your risk-reward ratio should always be greater than 1:1 for you to be playing the odds in a way that will lead to your eventual trading success over time. In practice, many traders prefer to only take trades that have risk-reward ratios of 1:2 or better, which would mean that they might look to risk 100 pips to make 200 pips.

Tip#2: Remain Patient and Calm When Trading

One of the most important things a forex trader can learn involves the art of "sitting on your hands". This popular market phrase refers to being able to patiently wait for a really good trade with a favorable risk-reward ratio to come your way before pulling the trigger and entering a position.

To do this, you have to stay calm and remember to avoid getting into the excitement of trading which can easily lead to costly errors like overtrading and choosing to take trades with poor expected returns. Another potential problem with getting over-excited or otherwise over-emotional when trading is that it can often result in a costly loss of one's precious trading discipline.

Tip#3: Good Trading Involves Taking Losses

While just about everyone likes to make money trading, the fact remains that almost all forex traders have to go through tough times where a string of losses seem to appear from out of nowhere. This phenomenon can often cause great distress, especially among new traders. Without a proper money management strategy, a string of losses could be enough to put a forex trader out of business, and in many cases it has.

Professional forex traders generally keep well aware that they may run into a series of losing trades, which is why virtually all profitable trading plans contain a good money management component. This key part of any trader's system will usually include such items as how to perform position sizing and where to place stop loss orders to manage risk.

Perhaps one of the most time honored and popular sayings among forex traders has a number of variations along the lines of the following words of wisdom:
"Cut your losses short, but let your profits run on."
This forex trading maxim has roots going back over a hundred and fifty years and pertains to trading in just about any financial market.
The basic idea behind the saying is to encourage traders to get out of losing trades quickly but to cultivate the patience to stay in their winning trades in order to let trading profits accumulate over time.
When it comes to following this guideline when trading forex, a trader needs to learn to manage their normal human emotions that might interfere with them cutting losses and letting profits run successfully.
Remembering these wise words has kept many a novice trader from blowing out their trading accounts before they had time to become successful.
Cut Your Losses Short: Manage Your Risk Wisely
Maybe no one ever goes broke taking a profit, as another well-known Wall Street trader saying implies. Nevertheless, a large number of former forex traders have managed to completely wipe out their trading accounts because they did not have the discipline to take what would initially have been a small loss quickly.
Managing risk responsibly by keeping losses small makes up one of the most important money management activities in a trading strategy, and most successful forex traders learn to employ this concept strictly in their trading activities.
In most cases, successful traders will manage their risk when trading forex by entering a stop loss order immediately upon taking a position. This allows the trader to control their risk to a certain degree on each trade they take.
Exchange rates can behave extremely erratically at times, especially after monetary policy shifts, major news announcements or central bank intervention. As a result, being prepared for the worst that can happen can ultimately save a forex trader both money and frustration in the long run. To have a degree of mental flexibility can really help when trading markets that disagree with your initial assessment of their direction.
Let Your Profits Run On: Allow Profits to Accumulate
While managing risk is very important, you will make an unlikely candidate for a successful forex trader if you do not allow your winning trades to run their course and earn you the big money that the forex market sometimes offers.
The key to doing this is to remember that once you have a winning position, you then need to cultivate the patience to allow for the position to mature into a sizeable gain, without giving into the temptation to rush in to take your profits too quickly.
Also, a useful strategy that successful forex traders use to protect their accumulated profits involves using a trailing stop loss order that will get you out of the trade once the market has reversed substantially.
Trailing stops makes up one of the primary techniques used by successful forex traders allow their profits to accumulate over time. Using them also has the distinct advantage of helping prevent winning trades from turning into losers, which forms the basis of yet another popular Wall Street trading maxim.
Furthermore, having a string of winning trades can sometimes boost the confidence level of a novice trader to the point that they start to overtrade.
This common trading error can seriously impact the trader's lifestyle - not to mention their trading account - especially if they get caught up in making unprofitable trades and start chasing the market to make up for their accumulating losses and excessive commissions.
Learn to Maintain Discipline Whether Winning or Losing
Trading in an objective and disciplined way based on a sound trade plan is far likelier to be profitable in the long run than allowing your emotions to rule your trading responses. Nevertheless, doing so takes time and diligence to put in practice, although it will generally be well worth the effort.
Basically, learning to understand, anticipate and manage your emotional reactions as soon as they develop will save you both money and frustration when trading forex.
After all, trading is a business, and to stay in that business for any length of time, you will need to figure out how to make money and be satisfied with the process of doing so.

As traders, we are continuously told by veterans not to try to time markets due to the great risks involved. It is a fact that if you make a sizable commitment in either direction and the market fails to act in the anticipated manner, the losses could be sizable. Such losses are not suffered by retail traders only, but are also the bane of hedge funds managers, and investment and trading legends.
But while it is true that timing the markets in the short-term can be dangerous and counterproductive with respect to the acquisition of prudent and conservative trading techniques, it is possible to take advantage of certain events in such a way that a reversal in a long-term trend can be recognized in time to allow the prevention of losses, and maximization of profits. When we speak about catching reversals and timing the market, we are not emphasizing precision and scientific accuracy, but rather the aspect of profitability. In this context, successfully timing a trade allows a trader to gradually build up his position with minimal risk, and maximum long-term profitability. The exact beginning or end of a trend may not be evident, but it is still possible to time it for optimal results within the constraints of retail trading.
Before going on with our discussion, we must repeat that in order to apply the ideas presented here, one must be very conservative at the earliest stages of a potential trend. Only by minimizing our exposure at the initial stages can we expect to survive the inevitable disappointing results that we will encounter every once a while.

1. Interest Rate: Forex trends follow the dynamics of interest rate gaps. It is generally understood that directions of forex trends coincide with the direction of interest rate policies of the central banks involved.
Two considerations must dominate the validity of interest rate reversals before traders determine if the change is tradeable or not. First, is the central bank following its own wisdom and analysis in changing the course of policy, or is it obeying the dictates of the market? Second, does the central bank follow the prevailing trend in its group, or is it taking an isolated course for whatever reason? If the central bank is being forced to change policy direction by market events, or other factors, the trend reversal generally possesses a lower degree of tradeability, because such decisions can often prove to be counter-productive in the longer run. The 80s and the 90s are full of such examples in the emerging market universe. Similarly, if the central bank is changing policy in defiance of the general trend in its own group of peers (like emerging economies, advanced economies, or third world countries), one must carefully consider the possibility of a policy error. The bank may simply be responding to internal conditions that are isolated, at least for the short term, from external developments, which could justify the indepent course of monetary policy. But it is equally possible that a policy error is being made, which could signal a false trend change.

2. Interventions: Interventions fall into the two categories of coordinated, and isolated. If a central bank is intervening in the currency market, for whatever reason, there is a good chance that the behavior will lead to a trend reversal, at least for a period of a few months. The criterion that will help us isolate false signals from reliable ones, once again, is the relationship between external trends, and the policy direction of the central bank. Our basic assumption is that interventions that go against prevailing external trends are highly unlikely to be successful, while those that are in harmony with them emit some of the safest and easiest trade signals. An example of central bank intervention that goes against the overall trend is the 2010 Euro purchasing program of the SNB, which failed to reverse the appreciation trend of the CHF since it was initiated in isolation and went against general market consensus. An example of a successful central bank intervention is that of the RBNZ(Reserve Bank of New Zealand) in 2007, which in fact precisely marked the reversal point in the NZDUSD pair. In that case, the RBNZ policy was in positive alignment with general USD appreciation and risk aversion trends soon to emerge, and proved to be highly successful.

3. Bubbles: Bubbles are harder to identify, but offer the greatest short-term potential among these categories. They are easiest to trade when they burst, but because of the high volatility that follows the breakdown, it is difficult to be sure that the bubble is really finished. A good example is the bursting oil bubble of 2008. After the end of the bubble, prices quickly collapsed to around $20 from a peak close to $150, but within a few months they were back near $80, as volatility made directional long-term trading very difficult.

i want to know about safe SL some times my SL hit and then market goes in my favor but i got loss.

Follow this Thread http://www.forexfactory.com/showthre...=498520&page=8

If you learn nothing else, learn this:

Good Trade A trade taken in accordance with your rules.

Winning Trade A trade that makes money.

Bad Trade A trade taken that is not in accordance with your rules.

Losing Trade A trade that loses money.

Thanks
Dopey

Lucky Lil
Basket Case Bob has a new girlfriend! Let me tell you about her. Lucky Lil is a successful lawyer that is ready for a change. She is a methodical thinker that plans every step and her farsighted style has served her well in her career. Now, she wants to model that success and apply it to trading, believing that a farsighted approach is best suited for her.
With $300,000 in the bank, she begins working on a business plan because she is starting a new business, the business of trading. During the day, she continues as a lawyer, but in her spare time, she works on her startup company. Once her business plan is completed, she starts to implement it.
She contacts several top traders and asks them for advice. "Which trading strategies work best?" "What resources will I need?" "How can I spend the least amount of time and get the most bang for my buck?" Her questions are numerous, but her patience runs deep.
The traders recommend the usual resources, such as books, seminars, and tapes. She compares the responses from each trader and learns their approach to trading. "Jeff's style works for me, but not Larry's." Like a hearty stew, she boils off the parts she dislikes and keeps what she expects will work for her, building an extensive library of resources and contacts in the process.
She hires a system designer to create a platform of hardware, software, and techniques to implement the trading strategies that her favorite traders suggested, using an approach that fits her style.
When that is done, she hires a trading coach to steer her through the mine fields encountered each day to minimize losses. The coach is there for technical assistance and for emotional support. When she stumbles, she wants a knowledgeable shoulder to cry on. When she succeeds, she wants someone there to share her success with and who encourages her to improve her trading skills.
Putting all of this in place took Lucky Lil 13 months of work and cost her dearly: $100,000, leaving her $200,000 to trade. But during the startup phase of her company, she still practiced as a lawyer and was able to earn $100,000. Now, she was ready to trade for a living.

Basket Case Bob
Bob is unlike Lil in several ways. Lucky Lil is farsighted, carefully studying her options before taking the next step. Basket Case Bob is the guy sitting at a red light, engine revving, hands gripping the steering wheel, waiting for the light to change. Traffic does not move fast enough for Bob. He is responsive, not planning ahead, but handling situations as they occur.
Bob is very personable, and his people skills allowed him to earn a good living as a manufacturer's representative selling plumbing supplies. Although he likes meeting people, he dislikes the travel time, being stranded on the road, and the long boring hours spent alone in a car driving from one customer to the next. He yearns for a new life, a life as a successful trader.
With $200,000 saved, he decides to quit his job and begins trading from home full time. Whereas Lucky Lil spent months making plans, preparing, testing, and learning her trading skills, Bob is lazy. "Planning is a waste of time," he says. He is disorganized and hates details. With skills crafted over years of dealing with people, he understands supply and demand, fear and greed. He can see those emotions reflected in the charts he stares at each day.
He signed up with a full service broker and took every trade the man suggested. The man's title was as good as his skills: the trades made Bob broker. He lost half his money, $100,000, and then decided on a new approach.
He went hunting for an investment adviser and selected the man with the most polished delivery. "He's a salesman, and so am I," he said. "I understand him. One salesman would never cheat another." That belief cost him the other $100,000.
Looking back over the year it took him to burn though the $200,000, he decided that the solitary life of a trader was not for him. He needed other people to share his feelings. He enjoyed the company of others too much to spend countless hours each day, alone, starring at monitors. Besides, he was broke. He needed a job. He went back to sales.

Randy Andy
Randy Andy is a farsighted trader wannabe. He followed the same preparation as Lucky Lil by interviewing top traders, gathering resources such as computers, software, and books, while keeping his day job. He spent countless hours researching trading setups, ones to make money, but also the physical layout of his trading office.
A year went by and he was still adjusting the monitors. When he had it down perfectly, he saw a picture of another trader with larger screens and decided that the layout he had just wouldn't do. He scrapped it all and went with a bank of larger monitors, starring at him like giant eyeballs.
After that, he started searching for a broker to handle his trades. Should he go with a full service broker or a discount shop? He couldn't decide. He listened to other traders, polled the audience in a chat room for suggestions, looked at recommendations from his favorite trading magazines. Another year went by.
Five years later, his office has been re-equipped with new computers, larger monitors, upgraded furniture with the best software that money can by. He is still shopping for a broker, after dumping the last five, still doing research on the best trading techniques, still pondering whether he wants to trade stocks, futures, or options. He hasn't made up his mind if day trading, swing trading, or position trading are right for him.
Randy Andy is a farsighted trader that has yet to trade. He uses the many choices of creating a startup business as an excuse not to move forward. He is using the planning process as a mechanism to avoid trading, to avoid taking risk, and to avoid making decisions.

Smooth Sally
Friction between their trading styles caused heated arguments between Bob and Lil. He gave her the shove, and she gave him the finger, and the two went their separate ways.
Now, we find that Basket Case Bob has a new girl friend: Smooth Sally. He chose better this time because she is also a responsive trader.
Little bumps along the road of life, like a car accident, would not phase Sally. She is a cool player, letting things ebb and flow naturally. She lives day-by-day, not making long range plans. She knows what she likes and dislikes, has general goals, but no specific timeframe to achieve them. It's like she is going on a road trip by just pointing her car in the direction of the sun each morning and following wherever it leads.
When an opportunity presents itself that intrigues her, she pounces and focuses her energy on making the opportunity work for her.
What makes Smooth Sally different from Basket Case Bob is that she has the uncanny ability to sift through and discard the bad opportunities, the scams, and the bad trades. Bob just trades them all.
Being chatted up in a Chicago bar by a group of floor traders, she asked many interesting and penetrating questions. Just the quality of her questions impressed the men. When she said "I'd like to try that!" one of the other spontaneous and responsive traders said, "Sold!"
She started as a runner and impressed her coworkers immediately. She worked hard, being both fast and efficient. When she made a mistake, she admitted it and learned from it.
Several months later, a trader offered to train her as a broker.
A casual observer would say she has good luck. Those that know her well would say that luck had little to do with her success. It was her hard work and ability to sniff out a winning opportunity that made her successful. Perhaps that is what luck really is, the desire to keep pounding away until the breaks come.

Trader Types
Farsighted traders are methodical, detail oriented, planning every stage of their trade. Responsive traders prefer to take what comes. They know a good trade when they see it. Which approach to trading, responsive or farsighted, better suits your style? Lucky Lil saved $300,000 and hired a trading coach for support, a programmer to build her trading systems, bought computers, software, and so on, spending $100,000 while still working as a lawyer.
Smooth Sally didn't have a plan because she didn't need one. When an opportunity presented itself, she jumped in and did the best she could, creating opportunities along the way.
Which type of trader are you?
If you are a farsighted trader, one that likes to plan ahead, then be sure to cover all possible contingencies. Reuse the trading plan so the planning process does not overwhelm you by taking too much time to create. Then follow the plan. Clear away any self doubts you may have and trade with confidence. Take each signal as it comes and trade it.
If you are a responsive trader, then learn to listen to the intuitive signals whispered to you in your mind. Learning to hear and trust those voices only comes from experience. Try to determine what works best for you. Make smart trading choices instead of taking every opportunity that comes along.
Both the farsighted and the responsive styles are valid approaches. I use a combination of both. I like to plan my trades but when the voice says sell, I do (well, sometimes). Time and time again, when I ignore that voice, I either cut my profits short or have a loss staring at me.

Bulkowski's

GEORGE ANGELL KEYS IN ON VOLATILITY AND LIQUIDITY

Volatility and liquidity are the two elements independent trader George Angell looks for in a market to trade. Currently, Angell exclusively trades the S&P 500 futures, putting on intraday trades only, never holding positions overnight. "Liquidity and volatility are the two things you have to have. You can't day-trade something like oats--it wouldn't work" Angell said. Back in the early 1970s, Angell first became interested in the commodities markets. "I bought sugar and it went limit up ... then I bought copper and it went limit up, so I bought some more. Then it went limit down. I called my broker and told him to sell and he said to whom?" Angell said. "That's when I realized I had more to learn, Angell added. In the early 1980s, Angell headed for the Chicago trading pits. He was a local trader at the MidAmerican Commodity Exchange, focusing primarily on gold. While Angell now trades for himself, off-floor, from a screen, he called trading on the floor "an invaluable experience. "People on the floor are very short-term oriented" Angell said. "It taught me to get in, capture the trend, get your money and leave" he said. Now, however, Angell prefers off-floor trading. "I'm alone in a room trading. When Im on the floor there are thousands of people. It's a social event. People want to talk about their positions, they want to have coffee. You lose your concentration... you can't see the forest for the tress," Angell said. Technology has revolutionized the capability of off-floor traders in the past 10 years, according to Angell. "The playing field has been leveled," Angell said, explaining that technology has decreased the advantage the floor trader was once seen as having over an off-floor trader. "The key beneficiary is the public trader. The public can't scalp, but they can day-trade," he explained. Angell disregards fundamentals, relying on technicals 100%. He has developed two proprietary trading systems: LSS and Spyglass, which he utilizes in his day trading, along with "discretion and personal judgment. "Everybody needs some sort of mechanical system. It enables you to take the difficult trades you wouldn't normally take on the seat of your pants" Angell noted. Also, "every day I go in without an opinion ... and I let the market tell me where it wants to go ... opinions are what get you in trouble," Angell added. While a lot of people don't have the discipline to trade without stops," Angell said he doesn't use them. "The problem with stop trading is that you get out at the worst possible moment. Instead of stops, I use action points. That means when it hits that point I'll get out, but I'll wait for the bounce (if the market is going down)" Angell explained. Angell has traded the bond market as well. He keys m on his two key elements of volatility and liquidity when judging markets. "Occasionally, markets die on you. For instance, in 1980 we had a big gold market. It had gone to $850 per ounce...but volatility dried up and then liquidity dried up. At that point I went to the bonds," Angell said. When the S&P 500 contract was launched at the Chicago Mercantile Exchange, Angell started trading that market. However, he noted after the stock market crash of 1987, liquidity dried up in the S&Ps, and Angell moved back to the bonds for a time. "Big institutions are trading bonds and there are thousands to buy and sell at every tick. Nobody can play with that market. Nobody can manipulate it. That's why orange juice goes limit up all the time-because there is nobody to sell it," he said. When asked about GLOBEX trading, Angell said, "I don't pay any attention to it, because there's not enough liquidity there. On Eurodollars," Angell noted, "there is huge liquidity but not enough volatility to make money." On the differences between markets, Angell noted that "all the markets have different characteristics and you have to know your market very well. On the floor, a guy who trades lumber isn't going to trade the S&P. And traders trade the markets differently. People are known according to how they trade. This guy is a scalper. This guy trades back months. This guy is a spreader. This guy is a position day-trader. The novice trader needs to know he's got to be a specialist." When asked why many futures traders don't succeed, Angell pointed to three main factors. "One, a lack of discipline. Two, they are underfinanced. Three, they don't know what it's all about. They don't know about paradoxical even" Angell said. The dictionary definition of "paradox" is an apparent contradiction, which is nevertheless somehow true, Angell explained. One example of this in the markets is that "the whole game on the floor is to run the stops" he said. "In the market, everyone thinks it's going up, but everyone won't make money," he added. Advice that Angell has for beginning traders? "Be well-enough financed with risk capital that you can afford to lose. Don't think about the money, drink about the market, and the money will take care of itself," Angell concluded.

Thank you so much hasib, for those educational articles, I’d love to read those, and just started. I am really hoping I can learn many things of forex trading from this article. Because I am new here, I need good guidance for my trading. Also I know the value of forex education to become professional trader. Looking forward more from you and all guys from here.

Hasib, Thank you for the nice article, but absence the most important thing money management. Please share more about if you have

The very important point or trading money management and risk management is missing. You should also include this section to your article.

Recovering from a drawdown can be extremely difficult and illustrates why money management is so important. Those new to trading believe that if they lose 10%, they will be back to breakeven on the first 10% gain. Unfortunately, this is not true. In order to make back a 10% loss, you must make at least 11.11% on your remaining equity. Even worse is that as the drawdowns deepen, the recovery percentage begins to grow geometrically. For example, a 50% loss requires a 100% return just to get back to breakeven. This is illustrated in Table 1.1 and Figure 1.1 below. I strongly urge you to make a copy of these figures and paste them near your trading desk. Professional traders and money mangers are well aware of how difficult it is to recover from drawdowns. Those who succeed long term have the utmost respect for risk. They get on top and stay on top, not by being gunslingers and taking huge risks, but by controlling risk through proper money management. Sure, we all like to read about famous traders who parlay small sums into fortunes, but what these stories fail to mention is that many such traders, through lack of respect for risk, are eventually wiped out.

Very informative and interesting article, can you please explore more on risk management? It will be helpful for all to understand things clearly.

Hello , I am a beginner in trading , so any suggestion for informative articles to read ?

To Empower Your Trading: Do This
Dr. Woody Johnson

Emotional management is crucial to the ability to focus on what matters most in the trade. For instance, planning, stringent rule following and keeping commitments are some emotional management skills you’ll want to hone.
There are those who would say that you should trade like a robot, meaning without emotions. They contend that, if you can do this you would be able to sidestep fear and greed. Well, if that were possible, you could avoid feeling any of the negative emotions that drive unwanted bad behaviors. However, what is also true is that you would be void of positive powerful emotions like inspiration, determination, joy, love and curiosity that substantially support decision making and good behaviors. Positive emotions lead to good decisions and behaviors that take you in the right direction, just as negative emotions lead to bad decisions and behaviors that take you in the wrong direction.

The research is clear that emotions govern decision making, not rational thought, despite what many think. Countless individuals contend that logic is what determines how and what they decide; but when you make a choice of which way to go on just about anything, especially important items like businesses, cars and houses, the final determinant is how you feel. So, while taking emotions out of the trading equation, you would allow you to avoid those pesky emotions like fear and greed, you would also not have the advantage of those wonderful emotions that assist you in making the right decision.

Emotions drive behavior, and the power of emotions and how they impact directly and massively upon what you do is very valuable. Consider just about every rule violation you’ve ever come upon; whether moving a stop, chasing a trade or whatever puts you and your account at greater risk of loss, aren’t fear, anxiety, greed and anger at play just before you engage in that rule violation? You felt the fear before you moved the stop; you felt the greed before you chased the trade; or you felt the anger before you exited the trade prematurely. Actually, emotions, just like thoughts, are energy. If you were hooked up to a fMRI, a functional neuroimaging procedure using MRI technology that measures brain activity by detecting changes associated with blood flow, the technicians would be looking at colored pictures of emotions, thoughts and other brain functions in real time. So, a big part of the trading process is emotional management or energy management.
Now let’s look a little closer at curiosity. It is one of the more potent and positive emotions. I would argue that next to love, joy and happiness, curiosity will serve you longer and in more situations. The satisfaction of quenching your thirst for curiosity can add greatly to your joy and happiness.

One of the maxims of the universe as we now know it is the ubiquity of information or intelligence or data. Data are at the quantum and classical levels of physics; from the sharing of information as in cellular communication throughout the body and brain to actions like photosynthesis (the conversion of light energy into chemical energy used as fuel by vegetation and other organisms). In other words, information and data are at the heart of everything…and that includes trading.
So, curiosity will help you tolerate the discomfort of both physical pain and emotional turmoil associated with fear, anxiety, greed, anger and the like. With curiosity you will yearn to see what happens if you allow the plan to implement as written, thereby increasing the information, the data. Through curiosity you will be open to the scientific method of trial and error to learn how various indicators and/or moving averages work. As you create consistency in cultivating and using curiosity you will develop the capacity for greater emotional strength and endurance to sit with the discomfort in whatever form it takes and remain there for the sake of achieving your highest and best goals. Once that happens you truly are on your way to becoming a highly successful and consistently successful trader.

Developing and using curiosity as a tool will allow you to learn more as you are intent upon finding out the why something will or won’t work. If you are learning more about both the trading process and yourself, you will put yourself in a position to do more as you are increasing your capacity to perform at ever higher levels of effectiveness and efficiency. In other words, you become more productive. Furthermore, it follows that if your productivity is increasing and you are more effective overall, then you are also in a position to be more. So, it is safe to say that you are expanding not only as a trader but as a human being.

At this point, you are no longer held hostage by the tyranny of certainty; that is, the phenomenon that takes place when an individual only has a hammer and everything looks like a nail, or when someone has a restricted number of alternatives that seem plausible to work then they are necessarily closed-off and limited in the ways that they can respond to that situation…they then have become tyrannized by the certainty of what to do. They have lost their ability to be flexible given that set of circumstances in that instance.

There are reasons why profitable traders achieve the way that they do. Here are ten characteristics that they share.
1. Clarity: They know what they want and they have a hunger for it.
Everyone makes mistakes, including market wizards and highly successful traders. The difference is that they “learn” from each mistake and rarely repeat them. That’s because they have a clear idea of what they want; and they want it very much. Once they make a mistake, especially if it results in a loss, they double down not on the trade but on their efforts to follow-through with what-matters-most. When you want something with an intense desire, the true nature of your potential is realized through the fire in your passion. This emotional fixation tunes the body, mind and spirit to work singularly for anything it focuses on. As the saying goes, you become “hungry.” You “want it so bad you can taste it.”
2. A strong sense of purpose…the Big Why
Profitable traders develop a strong sense of purpose. This is the real reason for making the effort, and it is well defined. The undisciplined person doesn’t know what they want; they often have no direction, can’t make a decision, are consistently changing, constantly looking outside themselves for the answer and are forever starting projects they never finish.
3. Goal setting and visioning
Another characteristic these traders share relates to goal setting and creating a sensory-rich vision. The undisciplined have vague goals that they might, maybe, someday achieve. They are capable of sensory-rich images but apply it to doom-and-gloom scenarios. Achievers visualize their outcomes clearly and creatively using all their senses to taste, see, hear, touch and smell the goal. They create the emotion of winning, which takes the spark of purpose and turns it into a flame.
4. A positive sensory orientation
Achievers have a positive sensory orientation. They expect to succeed. They see past accomplishments, no matter how small, as proof of the pudding—they did it before and can do it again. Profitable traders are not afraid of risks and trying new approaches. They never lose site of the goal. Each failure is a new and valued lesson that takes them closer to their goal. The undisciplined waste their time dwelling on past failures, and this often turns into reinforcement to stop trying.
5. A role model or mentor
Self-disciplined traders have a role model and/or a mentor, someone whose advice they trust. Throughout history, great men and women have looked to a role model for inspiration and as an example of how to do it. The achiever studies the patterns of the successful trader, someone who is already achieving what they desire. The undisciplined look for the quick-fix models; they think it’s a gimmick, that it’s luck or who you know. These people resent the truly successful. They blame their lack of success on excuses; bad breaks, bad luck and/or bad parents, and see themselves as victims.
6. Self-assuredness
The previous five characteristics help develop this one – self-assuredness. Heavy hitters are fueled by self-confidence. They have a strong belief in self and their ability. They know that they can do it. The undisciplined are hampered by self-doubt. Failure haunts them and fills their mind with fear and stifles their ability to take risks.
7. The ability to plan and organize
The undisciplined have no clear game plan. The skill of prioritizing eludes them as they make endless lists they never get done. They are disorganized and waste time and energy chasing illusions. Achievers break goals into pieces and work with one job at a time. They prioritize their time and accomplish first things first.
8. The necessary education
Heavy-hitting wizards get the knowledge required to make the game plan work. The undisciplined look for short cuts instead of dedicating time and effort on a proper education. They take a weekend course and become experts. To them, it is too much trouble to get it right; they lack patience. Winners identify the necessary knowledge and they acquire it, going back to school if necessary. They recognize the critical importance of learning how to do it right.
9. Patience
The ninth characteristic of the peak performance wizard is patience. The undisciplined want everything now and can’t wait. They view time as the enemy and think it will be wasted if they don’t get on it right now, without the proper preparation, like starting a trading business without a business plan or entering a trade without a trading plan. All real achievers possess patience. They understand that true accomplishment takes time. Time does not intimidate this trader; in fact time becomes a tool. They know, as they are working on the goal, that each passing minute takes them closer to its achievement.
10. Persistence and perseverance
Persistence and perseverance rank as tenth on the characteristic list. The undisciplined are driven by quick fixes, impulsive schemes and are at the mercy of greed and fear. As soon as the tick goes against them they panic, and their minds are no longer focused on what the charts are giving. They see only what the distortion will allow. They are easy quitters when the going gets tough. Big time achievers stick to their vision despite setbacks. They don’t give up when met with hardships or the negative opinions of others. Successful achievers are relentless and stubborn. They succeed against all odds, and when they are discouraged they draw inspiration and motivation from their sensory-rich vision.