A guy just emailed me asking about 'nerves of steel' and where he could get some. I was going to reply by email but thought it might be ok to post it here and maybe it could help (confuse!) someone else too. To the guy who mailed me, why not join in the discussions on here, we all started somewhere and there are no questions too stupid to ask (and I should know, I've asked most of them!)
So anyway...it's a bit long and you might get bored half way through but as the market's like watching grass grow.......
Hi xxxx, thanks for your email, it's always nice to speak with other traders.
Are you trading at the moment? Live or
demo?
Forex trading is a lot easier than some people would have us believe, but it requires discipline. If you have a workable strategy, and the discipline to only trade that strategy, you will make money, guaranteed. Where a lot of traders go wrong and lose vast amounts of money is by making trades that do not meet the criteria required by their strategy. They start to listen to other people's ideas and follow trades, they trade on a whim when they
think a currency will move a certain way, they trade data, they let losses run out of control hoping the market will turn, they take the first profit available...none of that comes within their trading strategy and they ultimately lose. It's human nature unfortunately, we are impulsive. Retailers spend millions of dollars a year finding ways to exploit that impulsive urge in us. To be a successful trader we need to control our impulsive urges and discipline ourselves to obey our strategy without exception, we know it works, and we must stick to it in order to be successful.
With absolute discipline comes control. We will have total control over ourselves and only trade exactly what our strategy says we should trade and in a way it says we should trade it, no exceptions, none.
So now we have discipline and control we can trade our strategy without hesitation or deviation. Once our strategy has signalled a trade and even before we have entered the market we already know what the outcome will be. We will either gain, break even, or lose, there are no other choices. Our gains can be either a set amount that we decided to make each trade, or trailed with stops. Break even speaks for itself. Losses will be the amount of pips our strategy dictates we should risk. There are no unknowns, we know without any doubt what can happen because we have disciplined ourselves to trade our strategy and not deviate from it.
A classic example of losing control....you enter a trade and set a stop in your mind of 30 pips. You are confident the trade will come good, everyone on MoneyTec said it would, even your Auntie Freda said it would. The price goes the wrong way by 10....15....20....25.....30 pips, it's time to close, but instead you wait because it may come back. The price moves away further....35....40....45, oh no, this wasn't the plan. Ok, I'll close at what I said I would for -30 when it comes back....the price moves further....50....55....60, oh no, I cannot afford to lose that much, it is bound to come back, it has to, I'll close at -40 when it retraces.....65.....70.....75...no way! I'm not closing now and losing all that money, no way!.....80.....85...., ok ok I'll close for -50 when it comes, damn I knew I should have taken -50, please, ok -60 then, please?...90......95.....100, oh shit I better close, it could go anywhere...closed for -100. Shit and xxxx and xxxxx's, that's all this weeks gains down the crapper!
Now desperate to get back your losses you'll trade anything that moves, roll on more losses....and more losses, and maybe the odd profit pip grabbed here and there.
We've all been there, we've had reccuring nightmares about it!
Discipline = control = nerves of steel
Take no prisoners, you're in this game to make a killing not get killed
Plan the trade, and trade the plan....no exceptions.
Hope that helps!
Pete
Licensed Brokers
Good to hear Pete!!!
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