The importance of identifying our trading mistakes and how to correct them

Oct 23 • Forex Trading Articles • 1412 Views • Comments Off on The importance of identifying our trading mistakes and how to correct them

From an early age we’re conditioned to believe that hard work equals results, that the more effort we put into an activity then the chances are we’ll experience greater success, to paraphrase the famous golfer Gary Player; “the harder I practice, the luckier I get.” The notion that dedication, application, practice and overall “hard work” equals results, can’t be reasonably argued against. Unless you’re extremely lucky, or born into wealth, then you’re highly unlikely to achieve your ‘money’ ambitions without hard work. We have to presume in our developed world that meritocracy ‘works’, if not then we’re faced with a depressing personal outlook and our ambition will be severely hampered.

However, there’s working hard and working smart and there’s also working a combination of both, in trading that relationship is vital. As an example, if any of us who could run well, were coached by a world class coach on how to sprint, we would witness immediate improvements. As a crash course in sports science, we’d be astounded by what’s involved beyond quite simply; trying to run as fast as we can.

In short that expert opinion would dramatically effect, not only our immediate performance, but drastically alter our perceptions regarding what’s physically involved in becoming a highly proficient sprinter. What’s more, we’d never achieve the improvement, without that coaching intervention. No matter how hard we tried, in simple terms if we’re doing it wrong, we’ll never really improve, as natural ability can only take you so far.

 

Forex Demo Account Forex Live Account Fund Your Account

 

This may come as a shock to many novice traders but there’s very little natural skill involved in learning how to trade successfully, it’s all learned. It’s either learned, by acquiring certain skills earlier in life; the ability to learn, to accept that others know more than us, to humbly accept our limitations, or we repeal and rebel against advice and teaching. Similar to our sprinting analogy; if we’re tutored by experts, or make it our business to seek out valuable opinion on forums and through email subscriptions, then we’ll make massive strides in a relatively short period of time.

To extend our sprinting example a bit further, we also neglect to concentrate on the simple basics were trading is concerned, we look for complications that don’t exist. We over complicate what should be a simple process. We can alter our stride pattern and breathing for sprinting and would see immediate effects. Inside minutes/hours we’d be sprinting in a far more relaxed and natural fashion. Similarly we need to find a relaxed and calm approach to our trading.

Firstly, we have to identify why we’re making trading difficult for ourselves and then, in a calm and detached manner, recognize the fault and remedy it. For example, are we overtrading? Then the simple correction is to trade less. Are we trading using an over complicated strategy? Then simplify it, reduce the strategy to one you feel: comfortable with, trust and fully understand. Are we losing too much per trade when we lose? Then reduce the risk per trade by way of our position size calculator.

These are simple minor adjustments that begin with identifying the problem and finding a simple solution. This process can be repeated to simplify every aspect of our trading. They involve taking a step back from our trading to identify where it’s gone wrong and how we can put it right.

Comments are closed.

« »