STAGE VI – HOW
How to trade is the most important factor that needs to be
understood by once a perception of the external factors of trading
has been made. The real job for a trader is to know his own mind.
Working according to the external elements is a comparatively easy
job, as they generally are quiet objective, accurate, reliable,
But same cannot be said about the trader's mind, which is firm at
one minute, and soft in the other.
While trading and being a part of the ongoing fluctuations in the
market, an investor undergoes an enormous range of thoughts and
emotions. While some might turn out to be good like feeling lucky,
or victorious, the others might turn out to be bad like fear of
failure or anxiety. But going through all this turmoil, it is
highly exceptional to come across a trader who constantly sticks
by his initial trading plan.
When it comes to trading Forex, or any business for that matter,
sentiments or emotions are the biggest hitch. This is because all
these emotions tend to make a trader go weak when it comes to
maintaining discipline and balance and adhering to the predefined
What needs to be understood here is that discipline, control or
restraint is far more important while trading Forex than the real
currency traders are here to trade. This is because any kind of
capital can only be sustained by anyone with correct management
techniques and discipline.
A trader in this Forex trading business has a lot of value to the
market. When a trader trades equipped with a thoroughly studied
trading background and past trends and comprehensible goal study,
he has the ability to build on a superb trading system.
This said, no guarantee can be taken of any trading system or
approach, as it can rise to success in 1 second and go down into
losses in the other.
And what’s more, the basic reason for this downfall is that a
trader while going by his predefined trading plan must have at
some point tried to mix it with his gut feelings or emotions. One
thing should always be made clear that emotions have absolutely no
place in trading.
These emotions generally come into play when a trader either
encounters a large loss or a huge win. Emotions in such cases then
tend to cause a trader to act in a different way, making him act
illogically and foolishly at times just to go ahead and mess up
his planned strategy and play the large moves by his gut feelings.
Emotion causes the trader to apply his trading system in patches,
with emotions taking over now and then.
Using simple trading strategies can get you to make big wins in
the market, provided you stick to them through out. Professional
or experienced traders always trade using conventional, carefully
planned money management strategies which would enable them to
trade with complete stability.
When it comes to large financial firms and institutions, complete
stability is never an issue with them, as they have not one, but
many human resources and assets at their side.
But when we talk about an individual investor, we can easily
divide them into three different groups.
The ones who trade with inconsistency,
The investors who trade with manual constancy
And the traders who trade with programmed reliability.
While a new trader would always hop from one trading strategy to
another, an experienced trader will work smoothly with constant
restraint and discipline making it the basis of his trading
actions which will help him increase his level of refinement.