Competitive Malaysia: Winning Psychology – What Separates Winning Traders from Losing Traders (Advertorial 6)

Monday, November 07, 2005

Winning Psychology – What Separates Winning Traders from Losing Traders (Advertorial 6)

When trading goes well, you feel great. When trading goes poorly, it feels like a disaster. Most traders who are successfully initially end up losing all their gains – and more. To be successful, you have to acknowledge this pattern… and then break it.

The following are key ways successful traders differ from losing traders:

1)Losing traders lack proper preparation and a solid game plan. Most losing traders are short-term and day traders. Their lack of success is due less to the time frame they trade within, and more to their lack of preparation and discipline.

2)Losing traders tend to be under-capitalized. There are two reasons for this. The first is that traders who take excessive risks while operating with small amounts of capital are more likely to lose their stake more quickly, and also to react emotionally to any loss. The second is that all traders will experience loss; the greater the capital reserves, the more likely a trader can accept small losses and capitalize on winning trades.

3)Losing traders use complex systems or rely on outside recommendations. Winning traders tend to use simple techniques; techniques that they have developed on their own, from experience, that fit their own style and personality. Successful traders understand that the only important outcome is to make money – the complexity of the system used is irrelevant. What matters is what works.

4)Losing traders often rely heavily on computer-generated trading systems. Software tools can be extremely useful, but only if you understand the way data is analyzed and how conclusions are reached by the software. Successful traders use any tools that are helpful, but they also understand precisely how and why those tools work.

5)Losing traders try to forecast market trends. Successful traders follow the market in real-time, and create appropriate strategies. By responding to irrational buying or selling with a rational and disciplined strategy, winning traders increase their chances of success. Losing traders try to predict the market; successful traders follow the market wherever it goes.

6)Losing traders focus on winning trades, and maintaining a high percentage of winning to losing trades. One losing trade can wipe out a number of winning trades. Successful traders focus on minimizing the loss from losing trades, from getting solid returns from winning trades, and maintaining good risk to reward ratios. Successful traders track returns and profits, not “wins” and “losses.”

7)Losing traders sometimes execute trades based on emotion alone. Winning traders accept their emotions, put them aside, and assess current market conditions.

8)Losing traders want to be “right.” Successful traders see trading as a business, and focus on making money. Losing traders enjoy the feeling that a good trade can create; successful traders enjoy growth in equity.

9)Losing traders constantly adopt new or “hot” strategies, especially after bad trades. Successful traders evaluate bad trades, attempt to learn from them, and adjust their current strategies and trading styles accordingly. The most successful traders use a consistent system they have learned to rely on and they fully understand.

10)Successful traders assess all aspects of profitability. Losing traders ignore costs like commissions, systems, or data acquisition. Successful traders seek to maximize profits by increasing their gains and reducing their costs. Successful traders focus on profit.

"What Takes Some Successful Traders A Lifetime To Achieve Could Take You Just A Few Days... Or Less!"

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