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The Greatest Trading Loss

  
  Education
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The Greatest Trading Loss

 Trading-loss

What is the greatest risk you face in trading?

 

Is it loss of money?

 

Certainly, that’s what most traders believe. I tend to disagree though. In my opinion we have something much greater at risk, that very few of us consider during the ‘learning phase’.

 

The American political journalist and author, Norman Cousins, is quoted as saying, ‘Death is not the greatest loss in life. The greatest loss is what dies inside us while we live.’

 

Along similar lines, I would argue that loss of capital is not the greatest loss in trading. The greatest loss is what we lose from within. (more…)

Simple Formula For Performance.

  
  Education
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Potential is what everyone has inside them, it is the education, learning, development, support and time put in that enables one to continually develop their capabilities. This can increase, at least until either physical or mental limitations constrain further growth. 
Interference is what detracts from potential to reduce performance. This can be down to any number of reasons, perhaps environmental or external factors, physical or mental hurdles or limitations, poor execution of process, inadequate self-management. Many of these can be deatlt with in some way; however, the greatest threat in most cases is from attitude and mindset. Perhaps it could be something as simple as seeing yourself failing and recalling the look of an angry parent, a doubting physical education teacher or a school bully from your younger years who always told you that you did not have what it takes. – This creates that painful memory which instils that moment of hesitation or self-doubt just when you least need it. – Who hasn’t at some time during their trading had that pang of self-doubt, or lacked the self-belief or confidence just at a crucial moment, and then looked back with regret and heartache, in some cases leading to a whole cycle of self-doubt and poor decisions, execution and position sizing.

The 'Self-Factors' of Successful traders

  
  Education
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  •  – Knowledge of oneself and how one acts and behaves in situations and environments.
  • Self-Belief; – Self-Confidence – assuredness in one’s actions, judgments and abilities.
  • Self-Trust; -The ability to have faith in oneself under duress and pressure.
  • Self-Reliance; – Ability to depend on one’s own capabilities, judgment, and resources , and acceptance that nobody else is responsible for profits and losses.
  • Self-discipline; – A structured approach that keeps a person focused and grounded against negative forces and pressures.
  • Self-Control; – Is the ability of exert mind muscle and will-power to overcome the negative effects which can so easily distract and distort perceptions and judgments.
  • Self-Motivation; – Describes the initiative to undertake risks and activities when the mood and environment have been counterproductive.
  • Self-Esteem; – High regard, respect or value for one’s self, but not to the level of being conceited, or having an over-inflated opinion of their worth.
  • Self-efficacy; – Belief in one’s own competency and ability.

In summary, successful traders take responsibility for their own actions, but rarely beat themselves up. – If I was to sum it up succinctly, they know themselves, they like themselves, they believe in themselves, and above all – ‘they are comfortable in their own skin’.  (more…)

Build Your Trading Confidence

  
  Education
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What is the definition of confidence? I define confidence as positive thoughts, feelings and actions reflecting your self-belief and expectations of your ultimate success. Success is never guaranteed, but self-doubt and negativity can ensure failure. When you believe in yourself, you move away from harmful distractions such as anxiety and fear, and you move toward a more effective performance focus. Today, we’ll take a look at how to make sure you’re confident enough to survive the trading game.

Aside from the obvious benefits, confidence also bolsters your internal security during trading slumps and gives you additional fuel to persevere through challenging periods. Self-belief promotes traders to create more ambitious performance targets, allowing for greater accomplishment. Traders who display low confidence tend to worry excessively about mistakes, lose focus on what’s driving results, quit trading at the wrong times and get overly worked up about each new trade. Excess confidence can also be dangerous in causing a trader to overcommit capital and be subjected to too much risk when a position goes bad. So your goal should be to promote the internal confidence while still showing the external disciplines to prevent the ego from taking over the consistent execution of a trading method.

Here are seven tips to encourage greater confidence:

1. Frequently visualize a successful trading process. What goes into good trading for you? Make sure you see the preparation required, the focus you have during the trading day, and the continous learning from both winning and losing trades to keep getting more effective.

2. Increase your level of physical fitness, as this will enhance both your trading alertness and give a boost to your self-image simultaneously. Both of these elements make you a more confidence trader.

3. Make a list of your strengths. Review this list regularly to remind yourself of how successful you really are.

4. Eliminate negative thoughts and memories. When they occur, replace them with positive self-statements (for example, “I create my own luck” or “I have a good written plan of how I will execute my trades”).

5. Have a general strategy going into each trading day. When you prepare the day before, you position yourself to be proactive and gain confidence as you implement your plan. How aware are you of what you’re experiencing in your mind, body and soul at any moment?  You need to set up a monitoring system at the end of each trading day, to summarize what you executed according to your rules and what you did not.  Look for patterns in your behavior, that you can copy if they work for you, or minimize if they are costing you.

6. Create positive body language regardless of the gain or loss on that trading day. The way you act will often influence the way you feel for future trades. The more confident you feel, the more confidence you will show in your trading.

7. Improve on areas of weakness during preparation time and you’ll create more confidence and belief during the trading day. 

Focus on one of these seven tips at a time, until you can build that area as a habit in your routine.  This will service to greatly improve your trading confidence over time.

Self-Beleif – Inspiration Poem. – 'The Man Who Thinks He Can'.

  
  Education
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In the constant battle for success in trading, there are many qualities needed to overcome the many hurdles put up by both the market and ourselves. People may possess these qualities in varying measures and differing degrees, however there is one quality which all people need to possess: ‘Self belief’. – Without this, you are almost certainly beaten already, and when you lose this, the perils are many. 
‘Self-Belief’ is a quality shared by winners across all fields, from sports, to business, to trading. There is a wonderful poem, written about 100 years ago, which nicely captures and summaries this point. – I advise many of my trading clients to print this poem off and keep it close to hand:
_________________________________________________________________________________

The Man Who Thinks He Can.
By Walter D.Wintle.  
If you think you are beaten, you are
If you think you dare not, you don’t,
If you like to win, but you think you can’t
It is almost certain you won’t. 
If you think you’ll lose, you’re lost
For out of the world we find,
Success begins with a fellow’s will
It’s all in the state of mind. 
If you think you are outclassed, you are
You’ve got to think high to rise,
You’ve got to be sure of yourself before
You can ever win a prize. 
Life’s battles don’t always go
To the stronger or faster man,
But soon or late the man who wins
Is the man WHO THINKS HE CAN!

Self-Factors' of Successful traders

  
  Education
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  • Self-awareness; – Knowledge of oneself and how one acts and behaves in situations and environments.
  • Self-Belief; – Self-Confidence – assuredness in one’s actions, judgments and abilities.
  • Self-Trust; -The ability to have faith in oneself under duress and pressure.
  • Self-Reliance; – Ability to depend on one’s own capabilities, judgment, and resources , and acceptance that nobody else is responsible for profits and losses.
  • Self-discipline; – A structured approach that keeps a person focused and grounded against negative forces and pressures.
  • Self-Control; – Is the ability of exert mind muscle and will-power to overcome the negative effects which can so easily distract and distort perceptions and judgments.
  • Self-Motivation; – Describes the initiative to undertake risks and activities when the mood and environment have been counterproductive.
  • Self-Esteem; – High regard, respect or value for one’s self, but not to the level of being conceited, or having an over-inflated opinion of their worth.
  • Self-efficacy; – Belief in one’s own competency and ability.

In summary, successful traders take responsibility for their own actions, but rarely beat themselves up. – If I was to sum it up succinctly, they know themselves, they like themselves, they believe in themselves, and above all – ‘they are comfortable in their own skin’.  (more…)

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