milkymo Posted December 27, 2010 Share Posted December 27, 2010 In the trading surroundings, when you lose a trade, what is the first idea that pops up in your mind? It would probably be, “There must be something wrong with my system”, or “I knew it, I shouldn’t have taken this trade” (even when your technique signaled it). But sometimes we must dig a small deeper in order to see the nature of our mistake, and then work on it accordingly. When it comes to trading, one of the most neglected subjects are those dealing with trading psychology. Most traders spend days, months and even years looking for the right technique. But having a technique is part of the game. Don’t get us wrong, it is important to have a technique that perfectly suits the trader, but it is as important as having a money management plan, or to comprehend all psychology barriers that may affect the trader decisions and other issues. In order to succeed in this business, there has to be equilibrium between all important aspects of trading. When it comes to trading the foreign exchange market as well as other markets, only 5% of traders accomplish the ultimate objective: to be consistent in profits. what is interesting though is that there is a small difference between this 5% of traders and the remainder of them. The top 5% grow from mistakes; mistakes are a learning experience, they learn an invaluable lesson on every single mistake made. Deep in their minds, a mistake is one more chance to try it harder and do it better the next time, because they know they might not get a chance the next time. and at the finish, this small difference becomes the large difference. Mistakes in the trading environment Most of us relate a trading mistake to the result (in terms of money) of any given trade. The truth is, a mistake has nothing to do with it, mistakes are made when sure guidelines are not followed. When the rules you trade by are violated. Take for instance the following scenarios: First scenario: The technique signals a trade. 1. Signal taken and trade turns out to be a profitable trade. Outcome of the trade: Positive, made money. Experience gained: Its lovely to follow the technique, if I do this consistently the odds will turn in my favor. Confidence is gained in both the trader and the technique. Mistake made: None. 3. Signal not taken and trade turns out to be a profitable trade. Outcome of the trade: Neutral. Experience gained: Frustration, the trader always seems to get in trades that turned out to be loosing trades and let the profitable trades go away. Confidence is lost in the trader self. Mistake made: Not taking a trade when the technique signaled it. 2. Signal taken and trade turns out to be a loosing trade. Outcome of the trade: Negative, lost money. Experience gained: it is impossible to win every single trade, a loosing trade is part of the business; our raw material, we know we can’t get all of them right. Even with this lost trade, the trader is proud about himself for following the technique. Confidence in the trader is gained. Mistake made: None. 4. Signal not taken and trade turns out to be a loosing trade. Outcome of the trade: Neutral. Experience gained: The trader will start to think “hey, I’m better than my system”. Even if the trader doesn't think on it consciously, the trader will rationalize on every signal given by the technique because deep in his or her mind, his or her “feeling” is more smart than the technique itself. From this point on, the trader will try to outguess the technique. this error has catastrophic effects on our confidence to the technique. The confidence on the trader turns in to overconfidence. Mistake made: Not taking a trade when technique signaled it Second Scenario: technique does not signal a trade. 1. No trade is taken Outcome of the trade: Neutral Experience gained: lovely discipline, we only require to take trades when the odds are in our favor, when the technique signals it. Confidence gained in both the trader self and the technique. Mistake made: None 2. A trade is taken, turns out to be a profitable trade. Outcome of the trade: Positive, made money. Experience gained: this error has the most catastrophic effects in the trader self, the technique and most importantly in the trader’s trading career. You will start to think you require no technique, you know better from all of them. From this point on, you will start to trade based on what you think. Confidence in the technique is lost. Confidence in the trader self turns in to overconfidence. Mistake made: Take a trade when there was no signal from the technique. 3. A trade is taken, turned out to be a loosing trade. Outcome of the trade: negative, lost money. Experience gained: The trader will rethink his strategy. The next time, the trader will think it once before getting in a trade when the technique does not signal it. The trader will go “Ok, it is better to get in the market when my technique signals it, only those trade have a higher probability of success”. Confidence is gained in the technique. Mistake made: Take a trade when there was no signal from the system As you can see, there is absolutely no correlation between the result of the trade and a mistake. The most catastrophic mistake even has a positive trade outcome, made money, but this might be the beginning of the finish of the trader’s career. As we have already said, mistakes must only be related to the violation of rules a trader trades by. All these mistakes were directly related to the signals given by a technique, but the same is applied when getting out of a trade. there's also mistakes related to following a trading plan. For example, risking extra money on a given trade than the amount the trader ought to have risked and lots of more. Most mistakes can be avoided by first having a trading plan. A trading plan includes the technique: the criteria we use to get in and out the market, the money management plan: how much we will risk on any given trade, and lots of other points. Secondly, and most important, we must have the discipline to follow strictly our plan. We created our plan when no trade was placed on, thus no psychology barriers were up front. So, the only thing we are sure about is that if we follow our plan, the decision taken is on our best interests, and in the long run, these decisions will help us have better results. We don’t must worry about isolated events, or trades that could had give us better results at first, but then they could have catastrophic ends in our trading career. How to deal with mistakes there's lots of feasible ways to properly manage mistakes. We will recommend the one that works better for us. Step one: Belief change. Every mistake is a learning experience. all of them have something valuable to offer. Try to counteract the natural tendency of feeling frustrated and approach mistakes in a positive manner. in lieu of yelling to everyone around and feeling disappointed, say to yourself “ok, I did something wrong, what happened? what is it? Step three: Measure the consequences of the error. List the consequences of making that particular mistake, both lovely and bad. lovely consequences are those that make us better traders after dealing with the error. think on all feasible reasons you can learn from what happened. For the same example above, what are the consequences of making that mistake? Well, in the event you don’t follow the technique, you will gradually loose confidence in it, and this at the finish will put you in to trades you don’t require to be, and out of trades you ought to be in. Step two: Identify the error made. Define the error, find out what caused the error, and try as hard as you can to effectively see the nature of that mistake. Finding the error nature will prevent you from making the same mistake again. over often you will find the answer where you less expected. Take for instance a trader that doesn’t follow the technique. The reason behind this might be that the trader is afraid of loosing. But then, why's they or they afraid? It could be that the trader is using a technique that does not fit him or her, and finds difficult to follow every signal. In this case, as you can see, the nature of the error is not in the surface. You require to try as hard as you can to find the actual reason of the given mistake. Step five: Take action. Taking proper action is the last and most important step. In order to learn, you require to change your behavior. Make sure that whatever you do, you become “this-mistake-proof”. By taking action we turn every single mistake in to a small part of success in our trading career. Continuing with the same example, redefining the technique would be the trader’s final step. The trader would put a technique that perfectly fits him or her, so the trader doesn’t find any trouble following it in future signals. Understanding the fact that the result of any trade has nothing to do with a mistake will open your mind to other possibilities, where it is possible for you to to comprehend the nature of every mistake made. This at the same time will open the doors for your trading career as you work and take proper action on every mistake made. The routine of success is slow, and lots of times it is attributed to repeated mistakes made and the constant struggle to get past these mistakes, working on them accordingly. How we deal with them will shape our future as a trader, and most importantly as a person. Quote Link to comment Share on other sites More sharing options...
boniez Posted January 4, 2011 Share Posted January 4, 2011 too complicated to read that much, although you're right that it is highly recommended as a reference of learning, but the outline is actually the real enemy is ourselves who are unable to regulate emotions during trading Quote Link to comment Share on other sites More sharing options...
indieover Posted January 6, 2011 Share Posted January 6, 2011 there are many mistakes we should learn to avoid before getting into live trading. like choosing big lot, big leverage and not using SL and TP and etc. and if you are aware of those thing we can avoid those mistakes. Quote Link to comment Share on other sites More sharing options...
mundi Posted January 11, 2011 Share Posted January 11, 2011 there are many mistakes that can happen in forex .. This article is very good. This of course makes me more careful if you want to do business in forex ... Quote Link to comment Share on other sites More sharing options...
boniez Posted January 21, 2011 Share Posted January 21, 2011 one of the things that to be consider is when you enter the market, so as not to make mistakes is to pay attention to market movements and not too motivated on one thing Quote Link to comment Share on other sites More sharing options...
t2t Posted January 23, 2011 Share Posted January 23, 2011 Yes you have to be careful when you enter the market to start trading, but the write up is too complicated for me to read or undertand. It should have been summarise in a few words and straight to the point. Quote Link to comment Share on other sites More sharing options...
standart Posted February 19, 2011 Share Posted February 19, 2011 thanks for sharing good article. market situation is always change and there is no perfect trading system that can make us always take profit. trading with careful and cut loss early is important thing to avoid greater loss. Quote Link to comment Share on other sites More sharing options...
sirwilly Posted February 20, 2011 Share Posted February 20, 2011 Helpful thread. Even when we get free signal, it is important to cross-check to be sure there aren't loopholes to be seen. Though we may even work according to the signal, it may turn out that the signal is wrong and the trader loses out on that position. Quote Link to comment Share on other sites More sharing options...
matiskater Posted February 24, 2011 Share Posted February 24, 2011 it is true that some times the techniques dont show a good signal of trade, id like to thank you for the thread since its another diferent way of looking at it from what ive been studying so far. There really isnt a true way for what ive seen, read and practiced that brings in profits to you 100% of the time, thanks again mate;) regards, matiskater Quote Link to comment Share on other sites More sharing options...
Nikhil Posted February 27, 2011 Share Posted February 27, 2011 Helpful thread. Even when we get free signal, it is important to cross-check to be sure there aren't loopholes to be seen. Though we may even work according to the signal, it may turn out that the signal is wrong and the trader loses out on that position. yes i also agree with you . before depend on free signal we need some conformation by ourself before enter the market . actually i also follow some free signal but it only help me to take strong decission and when it become same to my thought i take more risk to increase my volume. Quote Link to comment Share on other sites More sharing options...
andry777 Posted March 1, 2011 Share Posted March 1, 2011 Many traders are depending on charts, indicators, and another will depend on robot forex. I think that was bad if you made decision only depend on indicators although it's good to use indicators as your references before you made decision. It wil be better if you take a look to condition of market too. Sometimes, the signal of indicator is not suitable in few conditions. Quote Link to comment Share on other sites More sharing options...
senger Posted December 6, 2011 Share Posted December 6, 2011 Mistakes committed by Almtdaulen in Forex are too many and I think that the most important of these errors are not to risk management experience in the trading Quote Link to comment Share on other sites More sharing options...
stezz Posted February 12, 2012 Share Posted February 12, 2012 thx for your advice since i'm newbie in forex think i really need this advice Quote Link to comment Share on other sites More sharing options...
pinoycity Posted February 13, 2012 Share Posted February 13, 2012 I think, mistakes come from many factors. One, from being unprepared or trading without a plan or strategy. Second is trading without keeping in check our emotions, especially, our being impatient. Quote Link to comment Share on other sites More sharing options...
stezz Posted February 13, 2012 Share Posted February 13, 2012 I think, mistakes come from many factors. One, from being unprepared or trading without a plan or strategy. Second is trading without keeping in check our emotions, especially, our being impatient. impatient i'm totally agree with you thats impatient make me loss 90$ in my first 2 week of trading Quote Link to comment Share on other sites More sharing options...
pinoycity Posted February 14, 2012 Share Posted February 14, 2012 impatient i'm totally agree with you thats impatient make me loss 90$ in my first 2 week of trading Wow, that's a big loss already, as far as I am concerned. To some, this may just be a small amount, but for a beginner trader like me, it can get me depressed to lose such an amount. Quote Link to comment Share on other sites More sharing options...
stezz Posted February 14, 2012 Share Posted February 14, 2012 Wow, that's a big loss already, as far as I am concerned. To some, this may just be a small amount, but for a beginner trader like me, it can get me depressed to lose such an amount. it make me depressed too dude i'm just high school boy who try make my own money but now i will learn from my own mistakes Quote Link to comment Share on other sites More sharing options...
pinoycity Posted February 24, 2012 Share Posted February 24, 2012 it make me depressed too dude i'm just high school boy who try make my own money but now i will learn from my own mistakes That's the right thing to do - learn from the mistakes of the past. And now, you are getting a lot of experience which can teach you a lot. And for me, its a good thing that you are exposed to this trade in your early age. When you get older, you will get more skilled. Quote Link to comment Share on other sites More sharing options...
flybiz08 Posted March 29, 2012 Share Posted March 29, 2012 There are a lot of mistakes that forex traders should avoid if they want to be successful. Forex traders should avoid picking the wrong type of leverage without first considering the account balance and the experience level. This can be a very costly mistake that can cause huge losses. Quote Link to comment Share on other sites More sharing options...
Bonnie Berry Posted January 2, 2015 Share Posted January 2, 2015 There are many mistakes that we must avoid and plenty of them are something that we could avoid just by seeing others since Forex trading is not just about learning from our own mistakes but it is also about doing it with seeing others mistake as well. We will only be professional if we build this habit of picking good from everyone. The biggest mistake I made in my career early was to select wrong broker but thanks to my friends I corrected it by selecting OctaFX broker, they are the reason behind my success due to their famous swap free account which anyone can use without restrictions and we don’t need to be Religious person to use it but anyone can take it. Quote Link to comment Share on other sites More sharing options...
standart Posted January 3, 2015 Share Posted January 3, 2015 when we are has knowledge and experience, we are has ability to gain good and even consistent result. majority traders does not know how to perform well analysis. and thus, they are suffering losses and margin call. if we are make mistakes, or no proven strategy still, better if we are remain stick with training and learning. Quote Link to comment Share on other sites More sharing options...
mcliffi Posted January 7, 2015 Share Posted January 7, 2015 I completely agree that all mistakes results when the plan is forfeited.This is the beggining point for forex mistakes.Mistakes can be many but they have a starting point.If the plan is strategic and followed to the latter,then mistakes will be avoided. Quote Link to comment Share on other sites More sharing options...
budado Posted January 12, 2015 Share Posted January 12, 2015 Over confidence is the main reason why some end up losing in forex trading. They do analysis and making profit most of the time that they feel relax when they trade and they end up losing money in forex trading. So far I am happy that some how I achieve something good in forex trading and some how I want to maintain it also. Quote Link to comment Share on other sites More sharing options...
rizwanramzan Posted February 8, 2015 Share Posted February 8, 2015 Thanks for you amazing post, It has helped me understanding various mistakes. I can now avoid them and become a successful trader. I have faced some of these mistakes in my strategy. Now I can optimize my strategy and avoid them, this will also help me to gain experience. Quote Link to comment Share on other sites More sharing options...
myregister Posted February 9, 2015 Share Posted February 9, 2015 Overconfidence and also others bad emotion such as Revenging are something you should avoid, the bigger loss will await you if you cannot do that. Also too much believe of some scamming strategy isn't good for you. A proven strategy that has been using by many traders and still bring profit is better rather than those "holy grails". Quote Link to comment Share on other sites More sharing options...
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