Today's invited guest blogger is "Forex" Joe Atkins the Chief Strategist of OU Forex Trading. Joe is mainly focusing on forex in this article, but the principals can be applied to all markets. Please check out the article today. Feel free to comment below, and see a preview of the Forex project Joe's been working on for the past three months.
Our self-esteem, or self-worth, is often based on our failures and successes in life. I challenge each of you to generate an honest appraisal of yourself before making a commitment to take back full responsibility of your financial affairs.
Some people have faced a few key failures in life and have never recovered, while it seems that people with high self-esteem take pride in how they have faced adversity and lived through adversity.
How did you fare in 2008 both financially and personally?
How have you faced adversity in 2009 both financially and personally?
Do you have a plan of attack to replenish funds that were hit past two years?
How much specific training have you had concerning these vital principles that every trader needs to enhance success?
Psychologically Aware and Financially Successful
The quality of one's life depends on the quality of attention. Whatever you pay attention to will grow more important in your life. There is no limit to the kinds of changes that awareness can produce. It keeps you focused on the task at hand you face during life’s journey.
Those developing quality of attention and awareness in live forex market conditions will recognized superb situations after gaining vast experience to understand confluence of events providing confidence to push the button to execute trades.
Trading is one of the few human enterprises where you can do everything right in advance and still that trade fails for myriad of reasons. You don’t quit just because of losses. You continue the process to maintain overall long term success. Practice my friends becomes your best friend as repetition is the mother of skill.
In fact, you could have all the chart reading skills in the world and unless you have a detachment from money along with patience and discipline, it is only a matter of time before you fail. That is an absolute.
Extreme world market volatility and major headlines have made Forex trading more popular than ever, but the lightning-quick influx of new traders has been matched by a similarly dramatic outflow of existing traders.
Market conditions remain as challenging as ever, and many novice forex speculators have found it very difficult to preserve capital - much less turn profits. But why do many strategies fail in current markets?
Why Does The Average Forex Trading Strategy Lose Money?
Many new forex traders are unable to profit due to poor money management techniques.
Many speculators come from other traded markets, and their technical and fundamental analysis skills are quite good. Yet, the most common reason for failure comes down to one simple point: poor money management.
New traders are under capitalized from the start and never realize the power of trusting proven money management techniques that protect accounts from emotional decisions.
The most successful traders do not necessarily have an analytical edge. Many unprofitable traders have excellent analytic and forecasting skills, but going from analysis to live trades is often a limiting factor.
What is Good Money Management?
Good money management is letting your profits run and cutting your losses short. A countless number of trading books advise traders to do exactly this. Yet, my research has found that it is most difficult for novice traders to overcome. The simple exercise of generating profits and cutting losses short goes directly against current mindset of most humans.
In theory, this is a simple exercise. In practice, however, we see clear evidence that most traders do a poor job of putting these strategies into action. Having confidence using a proven trading plan promoting predetermined strategies enhances calm during LIVE market conditions.
The prepared trader is waiting for specific situations knowing in advance what to do if markets go with or against the trade he places. One main focus during 2010 will be to enhance growth in this area for all students willing to learn specific techniques.
Conquering fear and controlling emotion in forex trading is an ongoing battle all humans face.
Back at the beginning of this decade when I decided to learn everything possible about trading, I noticed a stunning correlation to becoming a proficient trader and being a successful athlete in sports.
Both areas demand quality attention with focus and those with superb practice regimens develop successful skills before going to battle. You must learn how to become mentally tough understanding the losses in trading, much like the major league baseball player who fails 70% of his at bats.
Developing a winner’s mentality is possible; but maintaining during adversity takes vast experience. You must develop emotional control and self-discipline that keeps you taking the most prudent investment choices instead of the emotionally satisfying ones.
Accomplishing this is not impossible, but it does take time and effort.
Those of you with a better understanding on mindset are taking time to challenge and feed the brain. This is vital part to continued success over long haul. A successful trader is confident and decisive.
Although many traders know exactly what they want to do in critical situations, very few actually follow through and do it consistently. The rest don't, mostly because they freeze. You have heard the old sayings paralysis by analysis or jack of all trades and master of none.
With the pressure and the high stakes involved with trading the markets, even the most well adjusted trader can fall prey to emotional decisions. Those willing to keep on practicing, and not quit, will be rewarded. The key to sustain success is locating the correct outlet that provides quality training /coaching during your journey.
When you are struggling in forex or any trading markets, the struggle becomes all consuming. You don't realize that you are struggling in the market. Instead, you find yourself always looking for some solution to overcome the struggle.
The struggle obscures the obvious solution: letting go.
The disciplined approach is to consider your alternatives in advance so you know what to do, without having to think on your feet, in response to every market eventuality. Remember the old Chinese saying, "When the student is ready, the teacher will arrive." Make sure you are ready.
Practice regimens are rehearsing trading under realistic conditions to assemble needed skills into superior performance. Gaining vast experience in any endeavor takes some time.
Maintaining success is not always easy, yet it is for the most part simple. The way to accomplishment is not hidden. It is in plain sight.
None of us are ever completely free of conflict, fear, or self-doubt. We are humans. I want to help all wanting to succeed by providing enough indictor tools to enhance growth following a practice regimen allowing you to locate your specific trading personality.
Trading the markets is stressful and uncertain. The natural human response is to wonder if you can perform at peak performance after a few positive trades. Conflict, fear and self-doubt are always there, lurking below your awareness.
Professionals master their emotions using a trading plan gained through vast experience to overcome adversity. They have experienced adversity and understood the rules of engagement for building a trading account. Every turtle crosses the finish line; it isn’t a race for the fastest.
When a fireman runs into a burning building I assume he is afraid but he does it anyway to achieve the desired result. Unless you can overcome or accept your fear and do it anyway, you will not be a successful trader.
I am sharing something of substance in advance and ask that you fully grasp and understand that fear and self-doubt along with emotion controls the trader not fully trained. These inexperienced traders succumb to strong emotions that overpower their rational mind.
The possible psychological ailments that prevent trading success seem endless. If we survive in the markets long enough, though, we eventually come to understand the importance of personal psychology or the power of our mindset.
Psychological ailments are powerful, but most of us can beat them. It isn't always easy. Just know in advance every human has a damaged psyche from the beginning. The key is finding out how much damage one has had during their lifetime and moving quickly to overcome.
It requires a desire to improve and a long-term effort to let the change sink in and have lasting effect. It is vital for you to be aware of the psychological ailments that may plague you, and work steadily to overcome them.
Winning traders are logical rather than emotional, for example. Sounds simple, but remaining calm under fire separates the pretenders and the professionals.
Professional traders focus on limiting risk and protecting capital. Amateur traders focus on how much money they can make on each trade. Professionals always take money away from amateurs. The trader who controls his or her risk takes money from the trader whose head is in the clouds.
Happiness is multiplied when prosperity is shared by giving to others. Of course, you ultimately will decide your fate. Good Luck and happy trading till next time.
'Forex' Joe Atkins
Chief Strategist of OU Forex Trader
---*The content posted above was written by a third party. The comments, claims, or opinions expressed therein are not necessarily those of INO or MarketClub and we are not responsible for the information provided in the post or on the author’s site.