Must Read Advise for New Traders

1. ALWAYS stay in control
• Winners are always in control; both mentally and emotionally.
• Losers aren’t. Losers are sometimes guided by emotions – This will lead to you making bad decisions!
• “Plan the trade, trade the plan”. Always stick to the original plan. Deviations will invariably lead to an error.

3. Be in tune with the markets
• Winners: are always in tune with what’s going on. They read, do RESEARCH (boring, but necessary!) and top-up their knowledge regularly.
• Losers: are not always in tune. They don’t do proper research and often rely on luck or tips
• Being in tune = Know the bigger picture
Examples of not being in tune =
- Going long in a bear market. i.e. Buying when the market is in decline
- Going short in a bull market. i.e. Selling when the market is on-the-up

2.Take responsibility for results
• Winners are can sometimes lose! But most of the time they win and when they do lose they accept it, learn from it and move on
• Losers tend not to fully accept that they are losers and tend to blame other factors for their own mistakes. At the end of the day, you know it’s down to you
Examples of NOT taking responsibity for results
• Assigning blame for outcome on external things. E.g. tips, books, articles, the market, “them” and luck. On that ‘luck’ bit – never rely on luck. That is a major downfall for many. Luck should never be a factor
Examples of taking responsibility for results
• The results I get are down to me
• The power to succeed or fail rests entirely with me
Advice is available and there are many resources to aid your success, but the final responsibility rests with you!

4. Have an EDGE
• Winners do have an edge
• Losers don’t have an edge
Having an edge in spread betting means having a system [for betting] which can be expected to be profitable in the long run
Examples of NOT having an edge =
- Having no system
- Having a losing system but sticking with it
- Not realizing the need for a system
Examples of HAVING an edge =
Having a system which, at a minimum, defines rules for:
- how to enter
- how to exit at a loss
- how to exit at a profit
- how to determine bet size
- can follow, a trend, counter trend or intraday
5. Use methods which suit YOU
• Winners use a method best suited to them
• Losers either don’t have a system, or they use one that they can’t work with
• You need to consider many things including:
- the type of character you are
- your account size
- your beliefs
- your attitude to risk (this is very important – know what you’re comfortable with)

6. Understand the ‘risk to reward’ and the odds of your methods
• Winners work everything out and know what to expect
• Losers don’t evaluate properly and are often surprised at a certain result (profit or loss)
• Know the key numbers to understand for each strategy used:
- know the percentage of winners to losers
- know the ratio of average win to average loss
If you know everything inside out you won’t ever have any nasty surprises.

7. Have an appropriate bet size
• Winners have an appropriate bet size for their strategy and objectives
• Losers don’t have the right bet (and this is one of the most common causes of failure)
For the correct bet size ALWAYS know the following:
1) How much are you prepared to lose if the bet goes wrong?
2) Know the distance from entry to initial stop
Example – short (go short or sell) entry at 150p, initial stop at 170p, prepared to lose £100 on the bet. The bet size would therefore be £5 per point
How much are you prepared to lose on each bet? This is usually calculated as a percentage of funds available for spread betting
Examples from winning traders include 0.5%, 0.75%, 1%

8. Keep a strong focus on exits
Winners spend as much time designing exit strategies as they do desigining entry strategies. Knowing when to exit is a very important part of spread betting. Plan a time to exit and stick to it.
Losers don’t do this and make ad-hoc decisions as to when they should exit. This could lead to you not making the right choice.
Examples of exit strategy design

1. 1. Where to place initial stop
   2. Whether to move stop once in trade
   3. Whether to use technical analysis to place stops e.g. support and resistance, trend lines, moving averages
   4. Whether to exit at targets
   5. Whether to use time based stops techniques

9. Keep written plans
• Winners have thorough written plans which outline their actions
• Losers don’t have plans and act on impulse
• Examples of planning and things to include:
- Annual plans / budgets / targets
- Documented trading strategies
- General trading rules
- Psychological rules
- Contingency plans
- Weekly reviews and shortlists
- Daily shortlists and trading plans
10. ALWAYS monitor performance
• Winners do this so they can spot if something isn’t working QUICKLY
• Losers don’t do this and are often unaware that they are losing
• Monitoring examples:
- General record keeping
- Daily review; what went well, any mistakes made?
- Periodic review of overall markets e.g. weekly
- Periodic review of performance e.g. monthly
- Psychological / emotional diary
You should act upon as many of these tips as possible in order to give yourself the best possible chance of success. Stick to your planning and do proper research on everything you do.

One last thing to remember: You don’t have to bet! If there’s nothing you fancy or you’re not in the right mood -- stay away. There’s always another day.

To succeed in this market requires a few essential qualities:

1. A thorough understanding of this market and what drives price
2. You must develop and maintain the integrity of your psychological profile
3. You must become an “Independent Thinker”
4. Be absolutely clear in your trading plan and know exactly what defines your decisions and why, from the beginning to the end of a position
5. Firm and disciplined equity management protocol tailored to your method
6. Don’t think you know what’s going to happen next
7. Think in terms of probabilities, not affirmatives

Work Hard

1. Commitment & Focus
2. Develop scenarios, re-evaluate scenarios,
3. Collect information, re-evaluate information
4. Where are the support and resistance levels?
5. How does price react at these levels?
6. What happened during the last 30mins?
7. How long does each intraday price move last?

Fear & Greed

1. Never fear the markets.
2. Never fear making a mistake.
3. Stay actively involved in the market.
4. Fear will keep you from making correct decisions.
5. Never be greedy. It’s ok to leave money at the table.
6. If you can’t get in a favourable price, let the trade go and start looking for the next trade.

Constantly Ask

1. What am I doing?
2. What am I doing right?
3. What I am doing wrong?
4. How can I do what I am doing better?
5. How can I get more information?

Confidence

1. Unwavering confidence in ability to win
2. Believe you have won the game before you start
3. Losing part of the game. Win over the long run. If you can’t stand taking losses, you will either end up taking large losses or missing great trading opportunities.

1. Trade only when you feel confident and optimistic. Get back into trading slowly.

Calm state of a trader

1. Remain calm and detached regardless of what markets are doing
2. Eliminate the cause of stress
3. Differentiate between what you want to happen and what you know will happen
4. By staying calm, traders get necessary feedback to determine whether or not their approach needs to be revised.

Emotional Control

1. Stand up to anything.
2. Instead of getting emotional when things don’t go their way, remain calm and act in accordance with your approach.
3. In trading, whenever there is effort, force, straining, struggling, or trying, it’s wrong. You’re out of sync; out of harmony with the market. The perfect trade is one that requires no effort.

Patience

1. Waiting for right opportunity increases the probability of success
2. Guard particularly against being overeager to trade in order to win back prior losses. Vengeance trading is sure recipe of failure.
3. Stay with a winning trade.

Independence

1. Making your own trading decisions
2. Never listen to other opinions – ends up confusing your market view
3. Make sure you have the edge and know what it is

Trading Plan - Strategy

1. First, it will be automatic force discipline.
2. Given a specific situation, you will know what to do without second guessing yourself.
3. A good strategy doesn’t create any internal conflict
4. Specific risk plan plans
5. Imagining the trade from perspective of already being in the position & considering what might be wrong with the trade before putting it on
6. Provide specific evidence that will allow the trader to evaluate the merits of the trade
7. Trade infrequently and only when you have a good idea.

Entry and Exit

1. Good entry price is critical because it buys you time to see how the market will react.
2. If you buy because you think the market will bounce, but it only goes sideways, you’d better get out.
3. If your entry timing is good enough, you won’t lose much even if you’re wrong.
4. Don’t try and make a profit on a bad trade, just look to get out.
5. Usually get better price if you have a little patience.
6. Predetermine your exit point before entry
7. Trade the opposite side of the predominant news stories.
8. Time your trade to coincide with an event that has the potential to lead to a panic climax.

Developing a low risk idea

1. Combination of patience and risk-control
2. Taking the time to think through low risk strategies useful exercise
3. Vary bet size to conviction level. High conviction high bet.
4. Try and scale in and scale out of trades
5. Sometimes action better than cautiousness
6. Pick trades on merit of risk/reward, not tops and bottoms
7. Waiting for corrections to enter is wrong, try and enter on strength
8. Catching part of the trend move is fine
9. Learn to be disloyal to a losing trade/idea and reverse if required.
10. What is the potential loss I could suffer?

Losing streaks

1. When trading poorly you start to wish and hope. Instead of getting into trades you think will work you end up getting into trades you hope will work.

1. Cut back on size.
2. Read learn something new, improve self esteem.
3. The key is to do something positive.
4. When you’re in a slump try to be patient and wait for a trade that you feel very confident about and keep the bet size small.
5. Your goal should not to be make lots of money but rather to get confidence back by making correct decisions.

Money management & Risk control

§If you lose more than 10-20% of capital, take breather, analyze what went wrong, and wait until you feel confident and have a high probability idea before you start trading again.
§Risk reward ratio of 2.1 or greater.


Key to trading success

 

1. emotional discipline
2. the ability to keep emotions removed from your trading decisions
3. admit to mistakes and take losses faster than winners.
4. self reliance in developing trading ideas and making trading decision
5. the willingness to take risk
6. the ability to correct mistakes immediately
7. and Patience, Patience, Patience
8. Developing your own approach requires research, observation, and thought.

Fundamentals

1. Do not try and gauge if are bearish/bullish
2. Instead focus on markets response to fundamental news.
3. E.g. if market shrugs off a lot of bearish news promotes evidence of an impending bull move.

Retracements

1. Buy when the market is strong.
2. Buying on a retracement is psychologically seductive because you feel your getting a bargain vs. the price you saw.
3. POISON. Not as nearly as good trade as it was. The trade may still work but the trend maybe changing.
4. Often results in missing the trade entirely or being forced to buy an even higher price.
5. Gives psychological satisfaction rather than increased profits.
6. Major trends are now preceded by a sharp price change in opposite direction. Buy on breaks and sell rallies.

Markets

1. Behaves like an opponent who is trying to teach you to trade poorly.
2. Since most small/moderate profits tend to vanish, the market teaches you to cash them.
3. Since the market spends more time in consolidations than in trends, it teaches you to buy dips and sell rallies.
4. The market does behave very much like a tutor who is trying to instil poor trading techniques.

As a General Rule o not do the comfortable thing

1. When all the criteria are in balance, do the thing you least want to do.
2. If it feels good don’t do it.
3. Natural human traits lead to poor trading decisions.
4. I.e. gambling with losses, locking in sure winners, selling on strength, and buying on weakness.
5. Do what is right, not what feels good and comfortable.

1. Avoid those things that give you comfort, false comfort.

Why most win?

§Persistence
§Patience
§Willingness to take risks


Why most lose?

§Lack of confidence
§No trading plan
§Execution
§Fear of loss

The Right Mind-Set is Necessary to Rebound from a Substantial Loss

In the high stakes of trading, both creativity and the desire to take risks increase exponentially when you are financially ahead of the game.
This usually isn't the case when time invested and your hard work is not reaping the expected profits. Stress and taking uncalculated risks are often the unfortunate side effects when funds are not forthcoming.
How do you return to profitability when the financial well has run dry? First, it is crucial not to let your emotions dictate your actions. Rationally weigh the pros and cons of each trade before making an investment of your time and money.
This is a tried and true formula to turn your fortunes around and gain back what you have lost.
Reactions to Significant Losses
Seasoned professionals know that downturns are expected in their business. No trade is a "sure thing". With this knowledge at their disposal, they often take losses in stride. They know if they continue to take calculated risks, their fortune will eventually turn around.
New traders may take losses personally. Instead of acknowledging that losses are expected in their line of work, they see themselves as a failure. It must be a lack of knowledge or possibly a character flaw that caused their misfortune.
Unfortunately, if these thoughts and feelings persist, they will evolve into a self-fulfilling prophecy. Negativity can cause inaction and deplete an individual of the needed drive and diligence to turn loss into gain.
Don't fall into this trap. Remain optimistic, seek additional information about trading and believe in your unique talents and skills. Knowledge, combined with the right mindset, can reverse your fortunes. Witnessing this turn around will lend to heightened confidence and a renewed drive to continue the fight.
Revenge is another negative mindset that often occurs when you are hit with a trading loss. What are the outcomes of a revenge mentality? Acting impulsively and feeling that you are all-powerful often reign supreme. Instead of helping you out of your financial pit, it does just the opposite. If you believe that you are omnipotent, you begin to take uncalculated risks and trade impulsively. This will only lend to your financial decline.
Fear is usually the impetus to revenge. Recovering from a huge loss can be a fear-producing event. Due to this fear you may take large risks in order to recoup. This is often detrimental. When recovering from a financial downturn, it is more important than ever to take only calculated and realistically thought out risks.
How can you safely recover from a financial downturn? Thoroughly research various avenues and methods to recoup your losses.
It takes time to recover from a substantial setback. Don't make several large trades in a moment of panic. Working at a steady pace and making a trade only after thinking it through thoroughly is best. Utilizing this method of trading will aid in earning enough profits to regain your losses.
Bottom line, remain optimistic while taking cautious, well thought out, calculated risks.

The Recipe for Long-Term Success
You may feel a surge of confidence when making a trade. "This one is a sure thing", you tell yourself. You have looked at it from every possible angle and every indicator suggests that there will be a substantial payoff if you "play your cards right". However, that confidence can be shattered in an instant. Some unforeseen event can turn the tide and a trade that was once considered a "sure thing" is now precarious at best.
Should you panic? Seasoned professionals have learned, and often the hard way, not to count on any one trade to amass their fortune or to simply put bread on the table. The true measure of success is profits garnered from successive trades. There will always remain that element of chance. The secret is making a series of calculated, well thought out risks. There will be both gains and losses, but if you weigh each trade carefully, you should amass more profits then losses over time.
Thinking rationally and looking at the overall picture, instead of focusing on the outcome of one trade, will relieve unnecessary stress. You, like many others in the business, may thrive on the initial adrenaline rush when placing a trade. Of course you are "in it to win it". This mentality is needed to stay ahead of the game, but don't place all your energies on the outcome of each trade. Keep a balanced perspective. This is necessary if you want to stay on the playing field. Fight to win!
David McCullough, in his book "1776", described a winning strategy used by those who fought gallantly in the Revolutionary War. The Founding Fathers of the United States did not focus all their mental energy on winning the war. They knew they held only so much control over situations and events. The final outcome of the war was ultimately out of their hands. God (a higher power), destiny or fate, would have the last "say so".
Did that mean they threw down their muskets and gave up without a fight; feeling helpless because they had no control over the outcome? Absolutely not! So, what was their winning strategy? They gave 100% and fought with grace and persistence to the point that they deserved the ultimate victory. Regardless, if they won or lost the war, they would have been at peace with the outcome; knowing they did everything in their power to secure the victory.
Like the Founding Fathers of the United States, you should want to win. However, it cannot be your primary focus if you want long-term success. It is just as crucial to know "how to play the game" as it is to win.
The strategy for success on the trading field is to learn discipline and to be resolute. You must be disciplined and acknowledge that asserting your will on the trading markets is a fruitless endeavor. The markets should be respected and no matter how hard you fight against it, you cannot control them. They pretty much do as they want and can be quite fickle. What you do have control over, is viewing the market as an intellectual challenge. Use your creativity to solve difficult trading problems and then rest in the knowledge that you did everything possible to insure success and obtain profits.
It is inevitable, sometimes you will win, but on many other occasions you will lose. Regardless, if you win or lose, each trade can be a learning experience. Every trading opportunity can teach you something about the markets, trading in general, or yourself. On one trade you may learn how a "sure thing" can turn into a loss due to an unexpected downturn in a particular business sector. Maybe another trade opportunity will teach you about your unique limitations. Viewing the trade markets in this light will help you to stay focused on the overall picture and not solely on winning. Your long-term success is not dependent on winning alone, but on "how you play the game".
As with any successful business endeavor, you must love what you do. If you truly enjoy trading, it will keep you plugging away and learning new methods to insure your success. By being "in it only to win it", you may "throw in the towel" when you are hit with a loss, or worse yet, a string of losses. If you focus solely on winning and not the joys and challenges of trading, you may react emotionally. To stay in the trading game for the long haul you must think rationally about what can be done to recoup losses.

How to Stay on "Top of the Game"
We live in a society that is driven to win at all costs. However, seasoned traders know that this is not the secret of success. They do not focus only on the dollar signs. It is also important that they love what they do, take calculated risks, and become knowledgeable about new trading trends and methods. Basically, this is how they stay on top of their game. This will ultimately insure their long-term success in the trade market. With this mindset, whether they win or lose, they are at peace knowing that they gave 100%.
Evolving your State of Mind Insures Long-Term Trading Success
It has been theorized that your state of mind will dictate your trading methods. Experts in the field of trading psychology have pinpointed three main states of mind and how each has a direct effect on a trader's profitability.
These three mind states are "having", "doing" and "being". Psychologists have noted that those new to trading start with a "having" state of mind. As they gain more experience, they move on to a "doing" state of mind. The pinnacle of profitability occurs when a trader moves into the last and final "being" frame of mind.


The "Having" Mind Set
A novice trader may focus primarily on profits. In this "having" state of mind, they are out of sync with the markets. They are blinded by their obsession to obtain the all mighty dollar and what it can afford them. Trading is not viewed as a job that must be mastered, but as a vehicle to escape from a world of mediocrity.
Many traders are in the business to make money, as well as they should be. However, if they are blinded by greed, they tend to take uncalculated risks. Looking at the potential payoff without carefully calculating market trends and other factors is a recipe for disaster.
It is impossible to graduate to a high performance level when you concentrate on "having" instead of how the game is won. If you trade in a "having" frame of mind, you may become frustrated when profits are not immediately forthcoming. With frustration comes a lack of focus. Without the ability to focus, you cannot gain knowledge from your experience on the trading field.
Other negative consequences of this mindset are feelings of frustration and anger. Frustration stemming from a lack of expected profits and anger directed at oneself or the market in general. These adverse emotions will only cause further decline in profitability. Without witnessing gains from one's efforts, an individual may not give their best and may be tempted to "throw in the towel".

The "Doing" State of Mind
If an individual continues on to trade another day, they will eventually move from a "having" to a "doing" state of mind. Learning that there is more to trading than the amassing of money, a trader will turn their focus on learning new methods of trading and what does and doesn’t work.
This state of mind is still primarily centered on how to turn a profit. Although a "doing" mind state is essential to becoming a seasoned adept trader, the main focus is still short of the mark. It is crucial to know what works and what doesn't. However, a skilled trader will tell you there is more to the business then choosing one method and using it arbitrarily to make trades across the board.
Becoming a trader of means requires not only a winning attitude, but also a fine honing of trading skills. To develop these skills, you must make trades using various methods under a wide spectrum of market conditions. Only then can you develop the needed intuition to master the art of trading.

Pinnacle of Profitability: The "Being" State of Mind
A successful trader almost instinctively knows how to make a trade using the best method available for the current market trend and/or condition. This ability does not occur overnight. It is only accomplished through perseverance, knowledge of various trading methods and learning which one works given a particular market condition.
No trade is ever a "sure thing". However, a profitable synchronicity almost naturally occurs when you are faced with a potential trade, have a feel for the current market trends and conditions, and utilize the method best suited for a potential payoff. This "being" state of mind ultimately lends itself to long-term success in the high stakes of trading.

Coming Back Stronger than Ever After a Trading Loss

It can be difficult to continue the fight after a string of trading losses. When your ego is bruised and your self-confidence trampled under the proverbial foot, waking up to face another trading day can appear like an insurmountable task.
However, it is more important than ever to have a positive outlook after a setback. Only with the right mindset can you recoup your losses. Here are a few sure fire ways to turn negativity into optimism. First, revel in a bit of healthy, old-fashioned denial. Second, don't allow a downturn to have personal significance. Lastly, build up your self-confidence.

A Little Self-Denial Does the Body Good
You might be asking yourself how denial can possibly be healthy. Of course, denial on a grand scale, regarding a significant problem is never recommended. In fact, denial of this magnitude can be downright detrimental. What I'm referring to is a small dose of denial to relieve unrelenting stress. If you can forget your problems for one day, you may find that you have the mental and physical stamina to not only enjoy life, but also to get something accomplished.
Stress in known to be both physically and psychologically draining. If you are zapped of energy, how can you expect to drag yourself from the mat after a TKO (technical knock out)? Denial or a little bit of self-induced forgetfulness may help to calm your nerves, if only for the short-term.

Don't Be Overly Critical: Losses Occur to the "Best of Them"
It is at times when you would benefit the most from a little extra kindness and understanding (after a trading loss) that you are likely to be extra critical of yourself. Why people do not extend to themselves that which they freely give to others will probably remain a mystery.
When faced with a downturn in trades, we may take the loss to heart and view it as a personal affront. You may tell yourself, "Something must be wrong with me for this to have happened." Instead of viewing a loss as an expected, however unfortunate, part of the business, it takes on personal significance. You may find that a pessimistic outlook is taking hold. Thoughts such as: "I will never be able to master the art of trading" or "I'm just a loser in the game of life. I should not expect to succeed" may be racing through your mind like a record that is permanently stuck.
Take a moment to step back and think realistically. Replace your "stinkin' thinkin'" and negative thoughts with self-affirming statements. Even if they are a little over the top and not entirely true, they can motivate you toward positive action instead of negative inaction. Instead of telling yourself "I'll never become adept at trading", say to yourself, "A seasoned, successful trader is made not born. They took their bumps and bruises in stride, learned from their mistakes, and weighed each trade carefully to insure the best possibility of a win/profit. With time and by obtaining additional knowledge about various tried and true trading methods, I too can rise to the top."
It never hurts to boost your own self-confidence. If you keep it in perspective and don't trade recklessly or above your talents and skill level, a little positive "self-talk" wouldn't hurt.

Focus On Past Successes
You can also build your self-confidence by focusing on your past successes instead of failures. Think back on a trading success and how it made you feel; possibly confident, self-assured and on top of your game. As long as you don't view yourself as a "Market Guru" and start making outlandish trades and taking uncalculated risks, a little ego boost can be both healthy and set you back on a more optimistic path.

Take Smaller Risks
Another way to pick yourself up when you are feeling especially down, is to lower your sights just a bit. Instead of making a large trade, make smaller ones with the potential for a small payoff. This will help to boost your confidence as you witness gains instead of losses.
Regardless of how inadequate you may feel after a trading loss, remember that even the most confident, successful traders have experienced downturns. It is human nature to compare yourself with others, especially those in the same profession as yourself. Remaining focused on these comparisons will not help you out of your financial crisis. Learning from your mistakes and taking informed action is a sure cure for your monetary woes.
If your reserve of self-confidence is running low, there are certain strategies you can use to bring yourself up. Try a little old fashioned denial. It is not a long-term cure for what ails you, but is can relieve stress, which has a way of zapping you of the needed emotional and physical stamina to get things done. Extend to yourself that which you would freely give to others if they needed an ego boost. That is, don't be too critical on yourself. Even if you have experienced a string of trading losses, it does not automatically spell your future demise as a trader. It may only mean that you have more to learn, but in any line of business, this is how you stay ahead of the game. This is by no means a character flaw and should not be viewed as such. Lastly, remain optimistic regardless the circumstances. If you wake up to face another day, it is another opportunity to turn losses into gains.
Regret, a Trader's Friend or Foe ?
It is well known that fear and greed are both powerful stimuli in the trade markets. When a large profit appears assured, many dash at the speed of light to make a trade. At the other end of the trading spectrum, when a downturn is inevitable, for one's own safety, they best step aside quickly, to avoid the stampede that is certain to ensue as traders assemble to "sell, sell, sell"!
Behavioral economists have identified another powerful impetus that drives the actions, or inactions, of those in the trades market, regret. These feelings can impede traders from taking necessary calculated risks in order to "stay in the game". This emotion is so powerful, that an individual may not place a trade due to the possibility of making a mistake and "beating themselves up" about it later. However, it is essential to take risks in order to profit in the trades market. To become a trader of means, it is imperative to bridle unhealthy feelings of regret in order to succeed.

Feelings of Regret: A "Catch 22"
Feelings of regret are often a "catch 22". Regardless, if you make a particular trade and don't profit, or you allow an opportunity to make a trade pass, in both instances, feelings of regret are bound to surface. One imagines various outcomes of each decision. "If only I had made the trade, I would be out of my financial hole," or "If I had weighed the risk more carefully, then I wouldn't be in this situation". The problem lies in believing that if we had made a different decision, the outcome would have been better. Regret leaves us second-guessing our every move. This leaves us paralyzed from taking further action, afraid that we will somehow make a mistake.

Regret: A Powerful Motivator
Although regret is known to cause inaction, it can be a powerful motivator as well. For instance, if you regret saying hurtful words to a friend or another individual, you may be motivated by your regret to apologize. As gas prices hover around $3 a gallon, you may regret purchasing a vehicle that gets low gas mileage. This regret may motivate you to take alternative forms of transportation or trade in your vehicle for one that is more economically, not to mention more environmentally, efficient. When viewing the trades market, one’s regret at making a losing trade can motivate them to take calculated trade risks in order to recoup their losses. Dr. Keith Markman, an Ohio University psychology professor, and his associates, performed a study that demonstrates how regret can spur people to action if they feel their efforts will bring about positive change.
In the study, the researchers had participants play a computer game of blackjack. They controlled whether each individual would win or lose. It is not surprising that the results showed that those who lost had the strongest feelings of regret. However, the study went one step further. Some participants were given the option to place an additional bet to win back their losses. It was discovered that those who were able to make an additional bet displayed more regret than those who could only place one bet and lost. What would be the reason for this phenomenon? It is postulated that when we are faced with a win/loss situation and we lose, we take it in stride. We take our licks and go on with our lives. We have no other choice, correct? When given the opportunity to fix a situation or problem, we may experience increased feelings of regret, but we are, nonetheless, spurred into action.

Regret: A Powerful Motivator or Paralyzing Agent? Which is it?
This may appear contradictory when viewing the theory by behavioral economists that regret is one of the biggest roadblocks experienced by those in the trades market. How is this explained when regret is shown to incite action if it may bring about positive change? For example, if a trader is hit with a loss, they are often motivated by their regret to take calculated risks to regain some if not all their losses.
Behavioral economists believe that the problem or roadblock is not the regret experienced after a trade loss has occurred but feelings of regret that surface before there is an action or trade made to regret! This is the "type" of regret that brings about inaction instead of needed action. As a trader, it is imperative that you not fall into this rut of inactivity. Instead of focusing on the negative, try to encourage yourself instead. Even if you are hit with a loss, that does not spell the end of your trading career. There is always the opportunity to recoup your losses by making future well-informed, calculated trades. All those in the trades market experience losses. You are in good company. Seasoned, successful traders are made not born. The only way to develop the necessary skills is to learn from your mistakes, keep informed of various trading methods, and learn, by trial and error, which ones work best under different market conditions. This cannot be accomplished by allowing your emotions to dictate your actions, or in the case of paralysing regret, inaction. You have to be "in it to win it".
Creativity and Personal Intuitiveness are Qualities of a Successful Trader

If you study the markets, it would behove you to review instances of mass psychology in everyday life. Of all the creatures that have ever walked upon the face of the Earth, Homo Sapiens (humans) are by far the most intelligent. In spite of our intelligence, there are instances where we mere mortals put aside all individual reason and creativity in lieu of the effortless alternative, following the group.

Don't Follow the Masses
Either due to not thinking of a reasonable alternative or believing that since everyone is doing it, it must be the correct course of action, we often "do as the others do" instead of investing our energies into developing our unique intuitions derived from our personal experiences. However, when we view ourselves as just another face in the crowd, we often act irrationally or impulsively.
A fitting example would be to view how some people behave when stuck in a traffic jam. Instead of patiently waiting for the speed to pick up, they become somewhat unglued and zip into one lane and then the other trying to make up for lost time. Knowing that their efforts are fruitless, they continue in their vain and unreasonable attempt to get nowhere fast! This phenomenon is also demonstrated by the actions of those driving on a busy intersection. Knowing there is no possibility to complete the turn after the light turns green; there is always that individual who will irrationally go forward anyway; further adding to everyone’s misery by blocking traffic going in the opposite direction as well.
This mass psychology phenomenon is witnessed not only in everyday life, but also in the trade arena. Many will be driven by an internal urge to sell when the majority of others sell and buy when most buy. This is a closed minded, rigid and inflexible way of both thinking and conducting one’s life. To become an intuitive, successful trader of means, it is crucial to remain flexible and open-minded. Resist the urge to follow the masses!

Trying to Bring Order to Chaos; an Impossible Feat
Many fear the unknown and following the crowd is a "safe" option to striking out on their own. The world can be a pretty frightening place and it is human nature to want to bring order to chaos. In our quest for order, we often close off our minds to our own innate creativity and intuition. This rigid inflexible way of thinking is a hindrance to those in the trades market. These qualities are crucial for a trader to advance from novice to a successful, intuitive professional.

Take Managed Risks
What is one recipe for success? How can you become relaxed and unafraid of your creativity? First, learn how to manage and take carefully calculated risks. Fear brings about rigidity and if you make a trade with money that you don't have (and cannot lose) you will become stressed and inflexible. Take smaller risks at the beginning to feel at ease in the markets.

Relax, Don't Take Losses Personally
Second, develop a relaxed, laid back attitude. Remember, that regardless the outcome of any one trade, do not take it personally. This does not dictate your self worth or your future success as a trader. Personally detach yourself from the market as much as possible. This will free up your emotional reserves to both learn about and enjoy the trading process. When you are wrapped up in your emotions, it is difficult to spot trading opportunities as you are focused inward instead of outward. Relax, as stress inhibits creativity. You may also find that you are able to trade intuitively because you are at ease.


Acknowledge Your Limitations
Finally, you must acknowledge that you have limitations. Do not set your standards too high as the fall would be swifter and the damage greater than starting out slowly and working your way up the trades' ladder. You cannot "force" yourself onto the market as it does as it wishes and it cannot be controlled. Feeling the need to control often leads to rigidity. Being rigid inhibits your overall creativity, which is an essential quality needed to become a successful trader. By accepting that you have only so much control over situations and circumstances along with realizing your personal limitations, would enable you to trade more creatively and intuitively. This will ultimately lead to increased profitability.
Money, Self-Actualization, and a "Higher Purpose": Reasons Why People Trade the Markets

Trading in the markets can be a mentally challenging profession. It can leave you drained. There are probably days you wish that you could remain in your warm comfortable bed and avoid work altogether. If you have been hit with a trading loss, or worse yet, a string of trading losses, you may feel beaten down. The easy route would be to feel sorry for yourself and lick your proverbial wounds. However, this negative mindset would be detrimental if you are trying to get back on your feet after a trading loss. Emotional and physical stamina are necessary to insure that you are able to face the trading markets with enthusiasm!

A Little R&R are Needed to Retain Your Physical Stamina
Rest and relaxation are essential to retain your physical stamina. Many traders are adrenaline junkies. However, it takes a serene mindset and psychological fortitude to make a profitable trade and to stick to your plan to insure success! However, no one has an endless reserve of psychological energy. It has a way of depleting itself and it is your responsibility to make sure it does not run on empty. To stay on top of your game, you must be able to concentrate. This helps to guard against making senseless, avoidable trading errors. Bottom line, you must rest and eat healthy to maintain the needed stamina to succeed.

Why are You in the Trades Market?
Harvesting your psychological energy is not an easy endeavor. To do this, you must know why you do, what you do. Only when you enjoy your life, or line of business, can you increase your psychological energy when it is running low. You need to ask yourself why you decided to work in the trades market. On a daily basis, take the time to remind yourself of these reasons to build up your reserves of psychological energy to face another trading day.


Trading for the Sake of Money
There is no "right" reason to become a trader. However, your number one reason shouldn't be for the money. This may be an extremely motivating force, but as the saying goes "it can't buy you happiness". Being a successful trader can buy you the finer things in life like a home on Rodeo Drive, a Ferrari and an impeccable designer wardrobe. Some traders may be motivated to continue on in the markets, even if they do not find their profession particularly fulfilling, if they are successful and able to amass a small fortune. The downside to the money for money's sake mentality is that it does not fulfil one's sense of accomplishment. As time progresses, your fine home and sports car will lose its luster. Everything that glitters is not gold, and although having money is necessary (and the more the better), it should not be considered a "means to an end".

Self-Actualization: Working at Heightened Performance Levels
You should enjoy the"job" of trading. This can include the mental and psychological challenges, learning new trading methods, or the sense of fulfilment you derive by seeing your hard work come to fruition. By loving what you do, you are less apt to "throw in the towel" when the going gets rough. During a downturn or a loss, you pick yourself up and keep going onward, because at the end of the day, you can think of no other job you would love more. Seasoned professionals have talents and skills cultivated from hard work and continually seeking knowledge regarding the trades market. This is due to their love of the sport, per se. In this self-actualization, inherently fulfilling emotional state, traders work at heightened performance levels, as they know they are right where they should be, doing what they enjoy.

Achieving a "Higher Purpose"
For some, neither the pursuit of money or self-actualization is enough. It is important for them to believe that they are somehow achieving a "higher purpose". This could be providing for their family or contributing to their community or society at large. Others may have a higher calling to train those interested in the trades' arena. Whatever your reason may be for being in the trades market, you need to remind yourself of them daily.
There are as many reasons to trade, as there are people in the "business". Whatever your motivation, you need to remind yourself of these reasons daily. Write them on a post-it note and stick it on your computer. This way it will always be in front of you. These daily reminders will keep you motivated to overcome obstacles and continue on in a business that is often fickle and ultimately out of your control.




The Ability to Look on the Bright Side May Determine How Quickly You Rebound from a Loss

A trader of means will tell you that the secret of their success is trading scientifically. First, they must form a hypothesis. From there, they formulate a trading plan and execute it. After that, they have to patiently wait to view the outcome. Once they receive the outcome they can then determine if the theory and trading plan worked (or didn’t work) given a certain market condition. If the hypothesis and plan did not produce a profitable outcome, it is back to the drawing board to test yet another hypothesis. This must be performed scientifically, which means that one must remain emotionally detached.

Remain Personally Detached
Remaining personally detached can be difficult when tearing each strategy apart one-by-one. It is at times like these where a pessimistic outlook may take hold. You may find yourself thinking, "The situation isn't looking very good. If I had worked the plan this way, it would have turned out differently". This outlook can make even the most laid back, optimistic individual feel despairing. Denial is often used as a coping mechanism when dealing with feelings of despair and hopelessness. These emotions often cloud one’s vision and lead to trading impulsively and irrationally. Losses usually result.

Looking on the Bright Side: Countering Feelings of Hopelessness
How can you counter the unfortunate feelings of hopelessness after a trading loss? This may sound like a cliché, but looking on the bright side has been scientifically shown to have a positive affect! Although it does not turn losses into gains, it can help to "lighten the load" when feeling particularly defeated after a loss, or possibly a string of losses.
Dr. Chris Davis, a psychology professor at Carleton University, and his colleagues performed a study on the usefulness of thinking on the positives instead of the negatives after a trading loss. They had subjects/participants imagine that they just experienced a loss in the trade arena. Some of the participants were encouraged to imagine how this situation could have been worse. Others were instructed to think on how the situation could have been better. The mood of each group of subjects was then measured. It is not surprising that the mood of those who were asked to "look on the bright side" was considerably more positive than those who were instructed to do just the opposite. If you have experienced a setback, think on the positives or how the situation could have been far worse. This may hinder a pessimistic outlook from taking hold after a trading loss.


How You View a Setback Can Determine How Quickly You Recover From It
The way that you view a setback is strongly correlated to how quickly you will rebound from it. It is imperative that you not take a loss personally. This often leads to denial and avoidance as you cope with your negative emotions. Negativity does not lend itself to positive change or decisive action, which is absolutely necessary to recoup your losses after a setback. How do you recover? Realize that losses occur to even the most successful and seasoned professionals. Take the loss in stride and carefully think out each trade. However, without taking action, you cannot move forward.
When you scrutinize each trade to see where it went wrong, it is easy to have it take on personal significance. It was something you did that caused the mishap. Therefore, something is wrong with you. If you step back and take the time to view the situation realistically, you may find that the loss was due to an unexpected downturn in a particular business sector. This would be a situation that you have no control over.
Losses happen, period. It is not an indicator of a character flaw or does it mean that you will not see profits on your next trade. Negativity detracts from the needed ability to focus and think scientifically. These abilities are what will help you to succeed in the trading arena. Take a moment to look on the bright side and optimistically search out winning alternatives to turn losses into gains.

all you need to do is change "advise" to "advice" in the title, and you might really have something there...


by the way, with this mantra you've assembled.... how many pips have you actually made? thanks.

so much of an article. great compilation.

Agreed, there are some good points (cliches we've all read many times before, but nonetheless valid) in the articles.

If anybody wants to read the articles, and see who the original authors were:
http://www.trade2win.com/knowledge/a...top-10-tips/?r
http://atrader.com/psychology-article1.html etc.

David

helped my build my whole approach to trading, mindset and trading plan...

complied from various diff articles

thanks

thanks.........

Several threads involve this:
"A novice trader may focus primarily on profits. "

Thanks.

Wow. It's quite long but I like it. Forex phsychological booster package.lol