Learn the secrets to Profitable Trading

Being able to deal with the losing trades is what separates successful traders from ex-traders. As a matter of fact, it has been shown many times that it’s not so much the system as it is the trader’s ability to maintain the proper mental discipline and emotional understanding that gives the seasoned trader the ability to take the higher ground. One of the intangible benefits of learning to become a successful trader is the fact that you usually become a much more honest and introspective person. You learn to honestly appraise your performance and probe your weaknesses. You learn to stay humble, focused and accepting of things you can’t control. All of these things do more than make just successful traders; they can make for success in life.

Not being able to pull the trigger and get out of a trade is a clear signal of problems either with the trader or the trading system. Consider the typical problems which involve the trader. As with most of us in a modern society, you are raised with the idea that losing is bad. It reflects directly on you. Losing equals shame, which equals pain. A natural response to pain is to avoid the situation that causes it and losing trades and the pain that causes is probably the main reason that most novice traders return to the safe haven of passive investing like mutual funds and long investment horizons. The fact is, to some, losing motivates and triggers a reaction to fight back and conquer. But for most, it is just plain easier to deny responsibility and avoid the situation and the risk of pain. To most of us frail human beings, mental and psychological pain is worse than physical pain.

Another form of not pulling the trigger is when a trader has a problem entering into a trade. This happens mainly because traders don’t feel confident enough in their analysis. Maybe the trade doesn’t exactly fit the system criteria and there is a subtle push to just jump in, which is offset by the emotional fear of not being fully informed and this causes an emotional gridlock and stifles decisive action. In the world of the “random walk”, X doesn’t necessarily equal Y. As the trade nears the planned entry point, the trader feels the pull of the subconscious emotional fears of being wrong and losing money. The usual decision is to follow the anecdotal wisdom: “If it doesn’t feel right, don’t do it” and the trader holds off on the entry. No problem. Live to fight another day, right? But when the trade takes-off and becomes a stellar winner, the trader is left standing at the station as the train pulls out. It’s not as painful as actually losing money, but this being left at the station syndrome may force the trader to plunge into the next trade with reckless abandon and get hammered, which multiplies the frustration of missing the opportunity on the first trade. If this whipsaw effect happens several times, it can bring a novice trader to their knees. Several back-to-back losses can indeed force the novice trader to throw in the towel. Consider the “fact” that only about 10-20% of traders become successful traders. The rest usually drop out of the trading arena altogether.

Secret No.1 Develop the skill to becoming a disciplined Trader.

That one little word means so much, in fact it makes all the difference.
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