2 Areas That Can Destroy Your Trading Dreams

Posted in: Basic Trading Strategies, Trading Article

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At Netpicks, every trading strategy we develop and the training that goes with it ensures that three important variables for trading success are covered.

  • Psychology
  • Trading method
  • Risk management

You need all three in line to reach any long term trading success and without one, your dreams will fall apart much like the game Jenga.

But we don’t live our lives in a bubble.

There are things we all go through that can have a profound influence on your trading success regardless of having the three variables mentioned above.

 

We Can’t Control Everything

Over the years, I have found that there are actually two things that are front of the line when speaking to other traders.  These two things have made trading a struggle even though these people were:

  1. Trading with a strategy that had an edge over time
  2. Didn’t fall into common trading traps such as taking trades outside the trading plan because they just went through a string of losing trades
  3. Didn’t take risks that were outside the scope of the risk protocols

External conflicts are much harder to control because our influence can meet opposing influence that makes change more of a struggle.

 

Financial Pressure

This is one of the reasons many people look to trading and oddly enough, this same pressure is the one that causes them to break their trading rules.

The desire to make money causes people to be lured into bad trades, larger position sizing, and even over trade so as to not miss any opportunity.

They have more bills than cash at the end of the month and since trading “seems easy”, they give it a shot. The issue is if you are pressured to make a certain amount per month, can you imagine the stress that can put you under?

You may have certain psychological biases under control such as the “sunk cost fallacy” but if you are trading because you need to make a bill payment, you are in trouble.

The issue becomes worse when people put money into their trading account that if lost, would be difficult to make back up.

Even with a positive expectancy trading system, remember that you can have a losing streak where you are not increasing your bottom line.  Add in the pressure of bill payments and the inability to regain any funds lost, this is a trifecta of pressure.

You must have enough money set aside to handle the monthly expenses we all have.  Your trading funds should not come with any attachment to it because as you can see in this graphic, your losing streaks will come.

Be able to lose the money in your trading account without any affect on your day to day living.

 

Relationship Success For Your Trading

The other one that I like to look at probably has more intensity than the others and that is relationship issues.

When you start trading, it is a long road you are beginning to travel and regardless of the latest marketing hype, trading is not something you will “get” in a week.  You can understand your trading method, the rules, and the important money management,  but being able to implement all of those without hesitation is another matter.

No matter what we attempt to do in life, goals we set, nothing makes it easier to handle than having the support of your family. The down times are real and it is amazing to have that lighthouse in the storm to pick you up and make you believe in yourself.

Far too many people who have no experience in what you are attempting to do, will be the first to give their opinions.

Have you heard:

  • Trading is gambling
  • Everyone loses at trading
  • You have to be really smart to trade

The hardest part of those words is when spoken by someone close to you.  It’s hard to remain positive when all you hear is every reason why you can’t succeed.

Maybe it is human nature to speak the negative but the best thing to do is ignore the negative and go about your training. Every trader has losing sessions and you will be no exception (just keep them to a small percentage of your trading account).

At the end of the road, although there is no end in trading unless you drain your account, you will reach a certain goal you set, or you won’t. There is no in-between. You will either be the person that hears from your family how you changed “our lives” or you will hear “I told you so”.

You do not want to head to your office for your trading session with your partner yapping in your ear to “get serious”. You want support. Ever hear those that succeed at sports, the arts or anything actually…..always thanking their partner?

You hear that because the support of those close to you is crucial to your success. Without it, your journey will be made more difficult in a career that already is difficult to succeed at.

How to fix that?

Nobody can tell you as every relationship dynamic is different. I have no suggestions except to be selfish and do it for yourself.  Think of trading not as making money, but as something you are trying to be good at – focus on the process – and success can come.  Think of it as no different than learning a musical instrument or a new sport.

If you already have the support, great!

If not, you must find a way to get your partner on your team.

Sometimes success is the only way to get them on board but the flip side is, without their support, trading success may never materialize.

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CoachShane

Trader at Netpicks
Shane his trading journey in 2005, became a Netpicks customer in 2008 needing structure in his trading approach. His focus is on the technical side of trading filtering in a macro overview and credits a handful of traders that have heavily influenced his relaxed approach to trading. Shane started day trading Forex but has since transitioned to a swing/position focus in most markets including commodities and futures. This has allowed less time in front of the computer without an adverse affect on returns.

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