Controlling Your Emotions
There are some basics that apply to any type of trading, not just currency traders but to all traders. If you want to be successful you would do well to heed to a few basic principles.
One basic concept regarding trading that you hear often is cut your losses and let your winners run. You must have the discipline to accept your losses by closing out the trade when you reach your pre-determined set point. This requires you to HAVE A PLAN. Before you enter any trade, have an exact plan of what you want to accomplish with the trade and what you will do at any price point. If the position moves against my by 1% I will exit the trade. You must have the discipline to do so.
Traders often think that trading is a test of their mental acuity and ability to "figure out the markets". That is definitely true, but it is only half the game in my opinion, you must also posses the emotional maturity to trade as well. When a position is going against you and you get mad, as many or maybe almost all traders do, what are you going to do? Are you going to act like a child and get stubborn and say "No!, this sucks, I am not going to accept this crap!" and therefore lose all your discipline all your rational thinking, ignore all of your reasoning that you laid out before you got into the trade (oops, I may not have stressed enough here that you must have a plan, to me it is so basic to trading success that I assume everyone does it)
Some characterize by saying don't hope, they say that when a trade goes against you and you hope it comes back, that's hoping. I think the issue is more emotional maturity which puts you in a position of having to hope. If you were adult enough to take your loss, admit you were wrong, admit you sucked today, admit the markets have a random aspect to them, and not take it personally, you would exit the trade, instead of making a last minute decision to stay with your loser and hope for the best.
Next article we'll talk about how to handle some winners
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