{"id":35538,"date":"2013-01-21T09:33:34","date_gmt":"2013-01-21T14:33:34","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=35538"},"modified":"2013-01-21T12:57:34","modified_gmt":"2013-01-21T17:57:34","slug":"self-confidence-is-a-derivative-of-knowledge-know-more-worry-less","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/01\/21\/self-confidence-is-a-derivative-of-knowledge-know-more-worry-less\/","title":{"rendered":"Self Confidence is a derivative of Knowledge; know more worry less."},"content":{"rendered":"

I\u2019ve been trading the spot fx markets for more than half a decade, and running charting today for a few years. During this time I\u2019ve mentored\/provided signals to a lot of traders in real time through webinars and also over voice, and I get all sorts of emails enquiries from all levels of traders. Only\u00a0<\/span><\/strong>a small minority of traders with good money management skills, patience, and a market niche go on to be successful.\u00a0Here is my insight based on my personal experience as to why most people are unable to succeed at this business.<\/span><\/strong><\/span>

<\/span><\/span><\/p>\n

Intolerance<\/span><\/span><\/strong>\u00a0\u2013 Just because the spot fx market moves 24 hours a day, 5 days a week; traders think that there is always an opportunity to trade and be profitable. Since most traders start as part time traders, hence less time to trade, this everyone wants to make quick bucks, they don\u2019t want to wait and just jump in the train blindly.\u00a0<\/span>Impatience in trading is like an epidemic and hardly any cure for it<\/span><\/strong>. No one wants to wait. When I used to give signals in a live chat room, I used to get this question umpteenth times a day \u201cwhat should we trade right now\u201d? This is a personality problem, and my suggestion to traders is to focus on profitability rather than just being trigger happy. Trade a plan, and learn to be patient.<\/span><\/strong><\/span><\/span><\/div>\n

“Who moves first often loses” – Andrei Knight.<\/p><\/blockquote>\n

Obsession with EUR\/USD<\/span>–\u00a0<\/span><\/strong>This is another thing I have observed with traders. All they want to trade is EUR\/USD. My question is \u201cWHY\u201d? Is it spread? Is it volatility? Is it because it\u2019s the most traded currency pair in the world? Is it because the mentor also trades only EUR\/USD? What is the reason that a trader wants to limit his trading potential by only wanting to trade EUR\/USD? I personally love EUR\/USD too, but there are so many times, when you don\u2019t have any trading set up in that particular pair, but the other ones have gorgeous opportunities. What happens is that a trader \u201cforces\u201d a trade without any trading set up, and eventually loses. Don\u2019t create an opportunity, rather than wait for the trade to come to you. Apart from EUR\/USD, I very often trade AUD\/USD and EUR\/GBP and GBP\/USD\/<\/span><\/strong><\/span>

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\nNo Education, No Plan and No Rules<\/span><\/span><\/strong>– When anyone plans a trading career, he needs to be educated, he needs to understand the DO\u2019s and DONT\u2019s and he needs to be matured to start a business. When you start any other business, don\u2019t you get properly well-informed? Trading is absolutely similar. A lot of traders think that by simply learning a few indicators, and seeing their demo account go to astronomical heights (they so conveniently ignore the emotional factor), and starting with $200 is enough to take their trading career to unbelievable heights. This is massive under capitalization. They have no idea about money management, but all they want is to \u201cdouble\u201d their account as soon as possible, and then plan to keep doing it.\u00a0<\/span><\/strong>Traders should be flexible in dropping their position size whenever the market is not giving clear signals. For example, if you take an average position of 100,000 units in AUD\/USD, you should be ready to reduce it to 30,000 units. This can happen either when trading counter trend or when the market is not displaying a strong trend. Your exposure to the market should depend on the market’s mood at any given point in the market.\u00a0All what happens with traders who ignore the planning part is that they fail miserably in a short time. One should focus on obtaining knowledge and gradually experience the market and become profitable.<\/span><\/strong><\/span><\/span><\/span><\/div>\n

\u00a0<\/span><\/span><\/p>\n


\nGreediness and Fascination with # of pips<\/span>–\u00a0<\/span><\/strong>So many times I get this email, as to why I took profits only for 40 pips in a trade, and did not go for 100 pips or more. I reply to them, that the set up allowed for 40 pips, so why should I go for 100? Then they start searching for signal providers who make +100, +200 or more. Crazy fascination with the numbers, but unfortunately true. I am not suggesting becoming fearful or too conservative or only becoming a scalper, but is greed good? Definitely not.<\/span><\/strong><\/span><\/span><\/div>\n

\u00a0<\/span><\/span><\/p>\n


\nEmotions<\/span>–\u00a0<\/span><\/strong>Trading is an expensive place to get emotional enthusiasm or to be treated as an adventure sport. Traders need to keep a high degree of emotional equilibrium to trade profitably. If you are worried because of some unrelated events, there is no need to add trading stress to it. Trading should be avoided in periods of high emotional stress. Don\u2019t trade just for the sake of it.<\/span><\/span><\/span><\/div>\n


Trading the news<\/span><\/span><\/b>– The news trading is driven by emotion and panic. It\u2019s a rush. Also, this is the period used by the market to entice novice traders into taking a position which might be contrary to the real trend which emerges only later in the day. Most experienced traders simply watch the markets for the first half of the news (unless already positioned for a day trade) to understand the patterns and trade any subsequent trading breakouts.\u00a0<\/span>

Overcomplicated Technical Systems<\/span><\/span><\/b>\u00a0\u2013 Over the past few years, I\u2019ve often met traders who regularly ask me, do you really use just pivots, fibs, trendlines and SMA? How about all other indicators? Is that it? I said yes, and they find it hard to believe. You might be amazed by just how few indicators banks and other expert traders use.\u00a0 It is not unusual to find a big trader with only one indicator on their charts.\u00a0 Don\u2019t over complicate your trading by placing multiple indicators on your charts.\u00a0 Keep it simple silly.<\/span>

Unrealistic expectations<\/span>–\u00a0<\/span><\/b>In the end, one thing that is unquestionably frequent to all traders who are losing money in the markets is that they have impractical expectations. If you have $300 to trade with, there is no way you are going to be able to live off your trading. You have to take into consideration what you can pragmatically expect to make each week, given the amount of money you have to trade with.<\/span>

This doesn\u2019t mean you can\u2019t be a winning trader however. Being a successful trader means you are time and again making money in the markets. If you have a small trading account but are making consistent profits that are in-line with your small account, then you are a winner. The same habits that make a trader successful on a small account are the same habits of successful traders of large accounts. Bear in mind that trading success is not calculated by whether or not you get rich quick, instead it is measured by your consistency, and the only way you can become consistent is if your outlook is inline with the reality of your current financial situation and the reality of the markets. To boost your odds of success to near certainty requires understanding; acquiring knowledge takes hard work, study, perseverance and focus. Accumulate your knowledge without taking any shortcuts, thereby assuring a rock-solid establishment to build upon.<\/span>

Tanmay<\/span><\/span>
Founder\/Chief Market Strategist<\/span><\/span>
www.chartingtoday.com<\/a><\/span><\/span><\/span><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

I\u2019ve been trading the spot fx markets for more than half a decade, and running charting today for a few years. During this time I\u2019ve mentored\/provided signals to a lot of traders in real time through webinars and also over voice, and I get all sorts of emails enquiries from all levels of traders. Only\u00a0a … <\/p>\n

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