 04-01-2006, 11:52 AM
|
asimon
Joined on 03-07-2006
Posts 140
|
Rapid Forex e-Course Day 15
|
|
|
|
|
===================================
"The Rapid Forex e-Course"
--> a 20-part mini-course series
Published by:
Abundant Freedom, LLC
http://RapidForex.com
===================================
To DOWNLOAD the "Insight Trader Package":
follow the instructions on the page below:
http://rapidforex.com/dlInsightV100.shtml
To See the e-Course Table of Contents:
http://rapidforex.com/ecourse.shtml
LESSON #15:
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Discipline, Mental Skills and the
Psychology of Trading.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
There is a common belief that only 10% of people who set out
to become traders actually achieve their initial desire for
consistent high returns over the long haul. Objective data
to verify this belief would be extremely difficult to obtain
in practical terms. In fact, we haven't seen any hard data
on it, but an application of the Pareto Principle: 20% of
the traders take 80% of the money seems to confirm the
belief.
Then the question arises, "why a few win and most don't?"
First, think about this. Every trader has access to the same
tools, the same research, the same charts, the same quotes,
the same proven trading methods, etc. So, just like the Real
Estate broker who has 20% of his agents bringing in 80% of
the income for the office (yep, The Pareto Principle again),
why is it that, with everybody having access to the same
stuff, only a few make consistent profits over time?
Well, it is clear that the common denominator is the PERSON.
Yes, YOU!
So, if somebody asked us to list the BIG THREE mental /
emmotional characteristics that define the majority of
successful FOREX traders, we'd list:
- Discipline & Passion
- Confidence & Courage
- Patience & Persistence
And, yes, being the currency-pair traders that we are, we
have to list these attributes together in PAIRS ! You
wouldn't expect anything different, would you ? :-)
DISCIPLINE & PASSION:
We realize most people hate hearing the word "discipline"
(it conjures up visions of either a Marine Drill Sergeant or
a well-meaning Basketball Coach, doesn't it?). As Jack
Schwager points out in his second famous book, 'The New
Market Wizards', "Discipline was probably the most frequent
word used by the exceptional traders that I interviewed.
Often it was mentioned in an almost apologetic tone: 'I know
you've heard this a million times before, but believe me,
it's really important'."
So why is this mental skill set so very, very important to
get a hold of?
Well, because proper trading discipline basically goes
against human nature. We all want to be right. We all want
to hang on to something that didn't work out for us...to
vindicate our beliefs and our ego, and when we ARE "right",
and a position goes our way, we want to get out of it -- to
make sure we stay right, to hold onto our power, our pride,
and our security.
In short, Discipline allows you to more effectively plan
your work (trades) and work (trade) your plan. NOTE: always
be sure that you have a plan in place BEFORE you start to
trade. The plan must include stop and limit levels for the
trade, as your analysis should encompass the expected
downside as well as the expected upside.
"Okay guys," you say, "I understand the whole Discipline
thing ... but passion? What's that all about?"
Well, in short, how can you be naturally successful at
something, continue to fine-tune your trading skills (be
willing to purchase courses, like ours, from experienced
traders who can get you up and running quicker than if you
didn't have our info), and stomach the ups and downs of the
business if you don't know WHY you're doing it? As Michael
Jordan once said, "If you have a love for the game, your
talent will eventually catch up to you."
But don't mistake the "passion" for what you do - or will
be doing - as a career Currency Trader for the "emmotion"
that will be generated when trying to pick a trade without
using entry/exit indicators/rules. The former feeling is
good. The latter bad. As some traders say, "What feels good
is often the wrong thing to do." So, with the business of
currency trading, have fun, learn, grow / develop and love
what you do but, when it comes to actually getting in and
out of a trade, remain as emmotionally indifferent as
possible! If you do asc, you'll go far!
>>> To sum-up this Mental skill set PAIR (Discipline /
Passion): You must be disciplined AND remain emmotionally
detached from the market.
===========================
CONFIDENCE & COURAGE:
One of the basic traits of successful traders is that they
believe in themselves first. They have the confidence and
courage to stick with their plan, not stray from their
rules, go against the crowd if need be, and see the end
result (the Big Picture) in their mind.
As one of the wealthiest traders in the country said on a
conference call once:
"Your perception is your reality folks. You see, it's what
you EXPECT in your life to happen *for you* or to you. Well,
get rid of the 'to you' crap so it will start happening for
you."
Or, to say it another way:
"What you hold in your mind with energy and focus will tend
to be created in your reality."
***** Interesting Story *****
Joe Girard was once asked how he sells more automobiles than
anyone else in the world. His reply: "I simply sell the
world's best product, that's all. I sell Joe Girard!"
Joe's objective was to make every customer *want to* do
business with him. He obviously did a good job at it. For
eleven consecutive years, he sold more automobiles and
trucks than any other retail automotive salesman anywhere.
WOW ... But, here's the rub ...
They were ALL Chevrolets - certainly a good make
representing a good value - but certainly not a product that
couldn't be purchased somewhere else.
Bottom-line. Joe certainly had a good product line that he
believed in; however, his posture and attitude towards
himself and his ability to be liked is really what won over
each customer.
An Ultimate TRUTH: you will never convince anybody
(including your opponents in the market) to believe in you
until you FIRST believe in YOU. Think about it. Twice if you
have too.
So, how does ALL this apply to ensuring success in the FOREX
market?
It's this: when focusing your search for commonalities in
the market don't forget to look for what every successful
TRADER has in common. From the book, 'Poker, Sex and Dying':
"Poker is an explosive game combining money, ego, and
emmotions. It is not enough to know, have information, and
insight regarding your opponent (the markets), you must know
of yourself."
We can't begin to tell you how many times, in the beginning,
that we faced a situation where we "knew" exactly where a
currency pair was going, had a trading plan, but failed to
follow it. Of course, greed, fear, and our other emotions
stood in our way. When you let this happen to you...all your
knowledge, planning and information quickly becomes useless.
In other words, no matter how good you are at analyzing the
market, if you don't have confidence, all you're really
doing is repeatedly creating experiences to which you will
respond with similar frustration and anxiety.
How do you achieve confidence? You gather knowledge,
practice discipline, and grow as a person. The more you
learn about the markets, your approach to trading the
markets and, more importantly, yourself...the more effective
you become as a trader. The more effective you become, the
less fearful you are. Confidence is the lack of fear. That's
it. Lack of fear. When you are confident, you can win.
Ask yourself:
- How do you handle your emmotions? Is there a process? -
What is your perception of the world? How did you arrive
there? Is it accurate? - Are you able to have the same
emmotion whether you win or lose? - Do past mistakes make
you hesitant to pull the trigger today? - Do you have the
belief system of a winner or loser? - Do think in terms of
probabilities? - Is the way you attach meaning to things too
wrapped up in personal emmotion?
========================
PATIENCE & PERSISTENCE:
In this day and age of instant gratification and
vicariousness, people want thrills without risks, wine
without alcohol, more money without effort, beer without
calories and, yes, a profitable currency trade as soon as
they can get it.
Look, if we could give you one QUICK piece of advice, in
regards to this necessary mental skill set, it's this: The
market knows better than you and I when the time is ripe.
Don't rush it.
The successful trader realizes that patience pays! Every
successful trader has a special talent for 'watching and
waiting' and waits until trading behavior has dictated when
to enter the market. The prudent FOREX trader specifically
applies patience to his/her advantage by:
- Listening To The Market
The market is continually donating valuable trading
information, and you must get into the proper frame of mind
where you are in reality taking your orders from the action
of the market itself or the signals your trading system is
sending you. Your judgment will become poorer from the very
time that you decide you know more about the market than the
market itself is telling you, and you throw patience aside
and give in to fear or hope.
- Sitting On The Sidelines While Waiting For a Trend to
Develop
It has often been said that looking at one's screen during
the trading day is like sitting in front of a slot machine
and trying to resist gambling. It's hard. Just as the one
armed bandit tempts recreational gamblers, the constant
stream of quotes on a computer screen tempt seasoned and
novice traders alike to make hasty trading decisions.
Successful traders in the FOREX have learned that they
cannot buck the major price trend of the individual
currency-pair they are trading. Or, even if you're not a
long-term or position/swing trader, but daytrade like we
usually do, you still don't want to let impatience cause you
to trade against the short-term trend -- buy on a micro-
downtrend or sell on a micro-uptrend.
The successful FOREX trader will enter his/her trades in the
direction of the prevailing trend or wait until a new trend
is established. Several hours, or perhaps days/weeks, may
elapse before this trend becomes apparent.
While patience is important not only in waiting for the
right trades, it's also important in staying with the trades
that are working. Although trades are held for much shorter
windows, as a daytrader you must know how to wait patiently
for the optimal time to sell. Selling a winner too early is
not going to allow your account balance to increase
exponentially at an ideal rate. So, this is where the
'persistence' mental factor comes in as well. You can be
'patient' until the cows come home but if you don't
persistently control your impulses and don't persistently
follow your exit rules then your profits won't balance out
losses over time. As a famous trader (William Eckhardt)
once said, "while amateurs go broke by taking large losses,
professionals go broke by taking small profits."
==========================================
"Be patient with winning trades; be
enormously impatient with losing trades.
Remember, it is quite possible to make
large sums trading/investing if we are
"right" only 30% of the time, as long as
our losses are small and our profits are
large." - Dennis Gartman
=========================================
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Stay Tuned for tomorrow's email from us. It will have
the following Subject line:
asc, Lesson 16 - The Rapid Forex e-Course
About About Risk-to-Reward: How to Trade Like an
Insurance Company
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Health, Happiness & Prosperity,
Robert Borowski & Brian Campbell
Abundant Freedom, LLC
http://RapidForex.com
--------------------------
To DOWNLOAD the "Insight Trader Package":
follow the instructions on the page below:
http://rapidforex.com/dlInsightV100.shtml
Inside the "Insight Trader Package" you'll receive:
*Forex Freedom
*10% to 30% Monthly R.O.I.
To See the e-Course Table of Contents:
http://rapidforex.com/ecourse.shtml
-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=
"The Rapid Forex e-Course" is published by:
Abundant Freedom LLC
Visit us at http://RapidForex.com
This publication may be fre_ely redistributed if
copied in its entirety, as long as you do not claim
ownership, or alter the content in any way.
Copyright (c) 2004-5 Abundant Freedom LLC.
The information in this e-Course is provided for
educational purposes only. This information is
offerred as-is, with no warranty of any kind. While
Abundant Freedom LLC, and the author of this e-Course
have taken reasonable measure to assure the accuracy
of this information, the information is not guaranteed
to be accurate, and is subject to change at any time,
without notice.
-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=
Abundant Freedom LLC
758 Kapahulu Ave #335
Honolulu
Hawaii 96816
United States
|
|
|
|
|
Report
|
|
|
|