From The Trading Desk of Seth Gregory
Nice to be with you this week and filling in for Peter. I think it is important to take a look at price action over the last session. Take a good hard look at the indicators, were you able to find a nice confluence events in order to have the confidence to place a profitable trade? Or were the indicators kind of all over the place? We must know when our indicators are working and when they are not. That is something we help you see in the PM Preview. When you become aware of these factors you know when you are at a disadvantage in the market and the probabilities are stacked against you.Knowing that information empowers you to have the patience to wait for the probabilities to be in our favor. That is the goal of the PM Preview for 2007, to help you seize success by having the confidence to exercise our only advantage in the market. Please take a few moments are read the article below. I sincerely hope it inspires you to use the greatest advantage you as the retail trader have.
Self-Control: How Well Do You Fight Impulses?
The winning trader is the disciplined trader. Discipline means controlling impulses and controlling emotions. As many novice traders will tell you, however, maintaining discipline is often easier said than done. Not anyone can just open a trading account and trade profitably and consistently. It takes practice, hard work, and determination. Discipline is key, and it is vital to take whatever steps are necessary to maintain discipline. How well do you control your impulses? How do you compare to other traders?
We asked a group of Innerworth subscribers to take the following true-false quiz. If the item is true for you, give yourself a score of 1 for the item. If you think it is false, give yourself a score of 0. Answer true or false for each of the following items, and see what score you get:
1. Once I develop a trading strategy, I stick to it and live with the consequences.
2. I can endure pain and discomfort in the here-and-now in order to achieve a long-term goal in the future.
3. I try not to do anything on impulse.
4. I've learned to resist my cravings.
5. I can resist temptation.
What score did you get? If you received a score of 0, 1 or 2, you scored in the lower quartile, which means that less than 25% of the Innerworth subscribers who took this quiz obtained a score as low as yours. In an analysis of our database, we found that individuals who scored in this range were stressed out while trading, experienced unpleasant emotions, tended to have trouble with risk management, and had low self-esteem. In contrast, if your score was 4 or 5, you scored in the upper quartile, which means that 75% of the Innerworth subscribers who took this test obtained a lower score than yours. We found that individuals who scored in this range tended to feel more carefree and confident while trading, and tended to successfully control risk.
Some people have no trouble with discipline. They like rules and enjoy following them. Discipline and structure makes them feel good. Other people, in contrast, dislike rules and structure. They are independent minded and live by their own rules. Traders tend to be in the latter group. They aren't afraid of taking risks or going their own way. These traits are conducive for trading profitably, but are contrary to staying in complete control. At times, those attracted to trading may have trouble maintaining discipline.
If you have trouble with discipline and are a little impulsive, you can learn to develop more self-control and discipline. First, keep in mind that you don't have to be disciplined all the time. You only need to be disciplined when you are putting on a trade. It sometimes helps to remember this fact. It eases some of the pressure to think that you only need to be focused when you make specific trades, rather than during all waking hours.
Second, it is essential to outline a very detailed trading plan. You should specify exactly what signals tell you to enter a trade, and what signals tell you to exit. Some traders make the mistake of leaving some of these factors unspecified, figuring they can just extemporize when the time comes. But this approach presents problems for discipline. When you don't know what to do specifically, you will be sloppy and less likely to maintain self-control.
Third, it is important to make sure your energy level is high, yet your stress level is low. Psychological resources are required to maintain self-control and discipline. When you are tired and worn out, you have little energy left over to focus on managing your trade. To keep your peak performance edge, it's vital to make sure you are relaxed, rested, and energized. If you aren't, you'll tend to make careless mistakes. Discipline is vital for trading success. It is essential that you develop a sense of discipline. The more disciplined you can trade, the more profits you'll realize. -- Innerworth
Good Hunting,
Seth Gregory
http://www.forexmentor.com/
