Is Not Rocket Science!
by Dr. Jeffrey Wilde
Despite what some people may lead you to
believe trading is not anywhere as difficult as they would
like you to think. It really boils down to two key components.
First, you have to have an approach that helps you identify
trades that have a consistently high probability of making
money. Once you have this you must exploit this "edge"
over and over again.
The only way
to do this is to use the necessary discipline to never
deviate from your system. The minute you start tinkering
or tweaking things is when you will lose your edge!!!
You will most likely be tempted to do this after you
have had a few losers. This is the time however to keep
your focus and remind yourself that your system has a
statistical advantage that has held up over time.
Think about this for a moment? If you go gambling in
Las Vegas and can even gain a 1% advantage over the house
you can make a literal fortune by exploiting this edge.
That little one percent advantage can make the casino
lose a whole lot of money over time. As a matter of fact
the minute they notice that you have a viable system they
will label you a cheat and ban you from the playing. It
sure is a good thing that can't happen to traders!
Now consider what happens if you have a trading strategy
that produces trades that go into the money over 90% of
the time as we have had at Stock Picks 4 Free.com??
Now the second
step to success is to manage your emotions. Two
of the biggest indicators of a trader who is not managing
their emotions are FEAR & GREED. These two emotions
will wipe out every trader over time, both experienced
and inexperienced alike.
Let's talk about them for a minute...
Fear of losing money or fear of being wrong is what causes
traders to have this emotion.
"Trading with scared money" often causes the
fear of losing money. This is when a trader is risking
money that should be used for the rent, food, children's
education etc. If this is the case the only solution is
to find additional funds that you are willing to put at
risk. This helps to put the mind at ease and reduces the
Fear of being wrong is simply the part in all of us that
just doesn't like to be wrong. The cure for this is to
simply realize and accept that losses are part of this
game. Think about this? A baseball player only needs to
hit the ball once for every three times at the plate and
this will get him into the Hall of Fame.
I feel this every once in a while and remind myself that...
My approach for trading has consistently both historically
and real-time produced over 90% winning trades. This gives
me the confidence to step up to the plate and keep swinging.
Also I tell myself that the only way to earn the big money
is to get into the game.
Traders who are greedy are often the exact opposite of
the ones who are fearful. They have no fear and this can
get them into trouble. They will tend to over trade, not
follow the rules and basically "wing it". Sometimes
this will work, but it always ends up back firing.
One of the biggest problems when greed sets in is the
inability to know when to take profits. These traders
are so bent on making a killing that they are never happy.
If they are up 10,20 or 30% they don't even think about
cashing out, as they want more. This often leads to the
inability to see the trade turning against then and they
will allow winning trades to turn into big losing ones.
One solution for this is to realize that making 5, 10
or 15% on a regular short time basis adds up really quick.
I know for me personally, once I was confident in my methodology,
I no longer felt the occasional feelings of greed. Now
I don't worry about "going for broke" as I know
that there is always another good trade waiting for me.
This article is courtesy of Dr. Jeffrey
Wilde author of "TRADE MASTER". He is a 14 year
trading veteran with extensive experience trading all markets.