toke
Start Learning Forex with the School of PipDaddys
MAKING MONEY IN FOREX
Labels
KNOW WHEN TO TAKE A BREAK
Finally, the last mistake I see traders make on a regular basis is refusing
to take a break when their trading is really suffering. I think this applies to
discretionary traders more often than system traders. If you are a system
trader, you probably understand your trading system’s average drawdown
and might not feel personally attached to each trading decision. Discretionary
traders, on the other hand, often select trades without the aid of
system-based rules and might feel personally invested in each trading decision
they make, whether they should or not.
Regardless of your trading style, every trader will go through a period
of time when his trading really suffers. Losing multiple trades in a row is
a tough blow to overcome and can shake the confidence of many traders.
Sometimes all that is needed is a short break from trading to clear your
mind; take a walk and come back in a better mood. Trading when you are
angry can lead to taking trades simply because you want to get back at
the market. You might feel cheated, and you might be looking for revenge.
This is a bad mental state to be in when you are planning a trade, because
the market doesn’t care about you or whether you win or lose. Trading
when you are stressed, angry, or looking for revenge against the market
will only cloud your judgment and lead to more bad decisions. I’ve even
seen traders become so angry with losing money that they mentally give
up and open positions for no reason other than gambling and continue to
trade until their account is margin called.
Include some guidelines in the risk management section of your trading
plan to remind yourself to take a break from trading when things are
not going well. Perhaps it is a limit of 10 losing trades in a row; perhaps itis a certain percentage loss of your capital. Some managed funds use a rule
stating that if the client account loses more than 20 percent, trading must
halt and the client must be consulted before trading continues; 20 percent
seems like a decent number to me. Know when to take a break, and never
try to trade when you feel like the market owes you a win. It doesn’t.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment