“The novice trader does make money once in a while, but be assured that in trading, money always ends up in the hands of its rightful owners” – Sam Seiden
Hello:
Trading concepts are easy in theory but difficult in practice. While you may be satisfied with your own market analyses, you may be seeing only a small part of the whole picture. The markets would only become more and more efficient; plus traders would find it more and more difficult to predict the markets. Predicting the markets is something very difficult already, but the good news is that money would continue to be made by those who do the right things in the markets. Positive thinking is ineffectual if your trading style is wrong. Trading success isn’t made by dreams that you dream but by the choices that you make. The only purpose for possessing a trading system or doing market analyses is simply to have reasons for entering a trade; it has nothing to do with your survival. However, one of the first things we need to understand about consistent survival in the markets is that it’s explicitly for traders who apply sound risk management. Unguarded strength is double weakness. No trading methodology or system on earth can survive without effective risk management, plus our long-term success has nothing to do with the accuracy of our entries, it lies in our exits. However, this goes against what the majority of traders would prefer to do.
Medical studies have shown that even though people who’ve had heart-bypass surgery are told that they must change their lifestyle or die, about 90% don’t change. Typically, 2 years after surgery the patients haven’t altered their lifestyle. It seems that most would rather die than change. Many traders won’t humbly accept time-tested risk management that successful traders recommend, which can save their accounts. In one of my last articles, titled: Resist the Lure of High Risk, I mentioned that the threat of margin calls and financial catastrophe wouldn’t make many people change their trading styles. I’ve seen traders who blew themselves several times – only to revert to the same high risk methods that led to earlier margin calls. Risk management techniques aren’t trying to keep us from making huge profits: they’re trying to protect us from margin calls. How much easier it’s to tear accounts down than to build up profits! It’s high risk that leads to margin calls, not trading strategies.
Experts agree that a common problem for retail and professional traders alike may be that they are looking for a Holy Grail in technical analysis. If you want to be among the successful few, you need to work on yourself and embrace safe position sizing methodologies. The Holy Grail is within you, and a safe position sizing methodology is key in achieving your trading objectives.
There’s also a need for you to be dispassionate while trading. The pros have perfected a way to insulate themselves mentally from the trades they make, and this means not taking the ups and downs of the markets personally. In a letter to his son Eduard, Albert Einstein gave his advice: “Life is like riding a bicycle. To keep your balance you must keep moving.” Whether we seem to win or lose, we must just keep pressing forward.
Those who wish to achieve long-term success in the markets would go on doing the right things no matter what.
This article is ended with quotes from 2 proficient traders:
“If the risk is too great, we can’t make the best trade because risk control is the number one issue. If you look at yourself and your rules objectively from the outside, that state of affairs will be perfectly clear but our emotions may thwart our efforts, which is something that simply must not be allowed to happen.” – Will de Lucy
“Once you manage to avoid big losses, you’re already half-way through to lasting trading success. On the other hand, that obviously means being humble – since excessive position sizes with astronomical profits is impossible in the first place. However, that’s exactly what most people want.” – Piers Curran
Your questions and opinions are highly welcome.
Thank you.
With best regards,
Azeez Mustapha
Forex Signals Strategist, Funds Manager &Coach
Senior Analyst
FX Instructor, LLC
Email: amustapha@fxinstructor.com
Yahoo! Messenger ID: saazalmu
Are you facing any challenges in trading? You might want to explore the secrets of markets wizards and duplicate their success. Get the secrets from my past articles at:
www.fxinstructor.com/blog/author/amustapha
Get my Forex trading signals at: http://www.fxinstructor.com/en/analytics/ituglobal
And my past articles are also available at: www.ituglobalforex.blogspot.com
NB: There is risk of loss in trading, but it is possible to be a successful trader.
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