Do not force yourself to trade, trading rule number 7

27 9 2014 - No comment

One of the most common mistakes that affect young traders, even the most experienced ones, is being overly present or constantly on the market. It drains their energy, they lose lucidity and in the end, they will be much less efficient.

Trading is an addiction (like the others)

We should not deceive ourselves; trading can quickly become an addiction just like the pathological gamblers in the casino, in the PMU … We can easily become addicted to trading, I still see myself trading from 6 pm to 8 pm per day to make myself what I called the “Globe Trotter”: trading European and American futures markets from 8 am to 10 p.m, sleeping for a few hours and continuing on the Kopsi in South Korea. And I did this 5 days out of 7, to then collapse and spend the weekend sleeping and thinking of the re-opening of the markets on Monday.

Like a drug, trading can make us dependent because it gives us very vivid and contrasting emotions; joy, fear, greed and above all adrenaline. We then see “Normal” life as very bland, tasteless compared to what trading makes us feel (and sometimes go through). You feel “alive” when you are positioned. Many traders do not go to these extremes as I did, trading for over 120 hours a week with sometimes more than 1,000 lots per day on futures, but we find in almost all traders this need “to be on the market” to “experience” something. Our lives are sometimes so mundane that trading is a safety valve, a “dream”, the feeling of living fully.

Trading is certainly socially more acceptable than taking drugs, but the cause of addiction is the same in the final analysis; a psychological problem, a narcissistic flaw, an emptiness artificially addressed by the markets. If you are in this situation, psychological work is essential to understand the origin of this problem and thus get to control it. To motivate you to take this step, I think this psychological work was effectively what made me become an own-account trader and live comfortably off my trading. Work more on yourself than on your indicators, the return will be much higher. Invest in yourself and the fall-outs will infinitely exceed your expectations, it will even affect your personality and your relationship with others.

Not being positioned is already taking a position

Many traders who need their shot of adrenaline, unconsciously force themselves to be in the markets. Impulsive trades are taken out of boredom, a lack … and they are generally the most catastrophic which will ruin your profits of the day.

We must accept this fact: not being in position is already an act of trading. We wait for an opportunity, we regain strength, we reflect and analyse the market forces. Deciding not to go back to the market because the trend does not give us a clue is an efficient trading act, which is essential and important for the survival of your earnings. Amateur traders often force their trading and this leads to disaster.

The difference between an amateur trader and an own-account trader

There is a fundamental gap between a “small investor” or amateur trader and an own-account trader. The first can “attempt big shots”, have fun, he usually has a job, a steady salary while the second strives for his material survival every day. Make no mistakes, trading is the only job where you can find yourself in the streets within 24 hours following extremely high leverage positions, poorly protected by guaranteed stops or coverage options. A football player can have a bad game; a baker can bungle a batch of bread … without it ruining their lives. A pro trader can lose everything overnight. It is a feeling of insecurity and at the same time there is an exhilarating side to be a master of your own destiny.

I always feel this gap on my trading blog. I put my daily results and bank statements there every day and an analysis of some trades to provide educational content on actual trading, and not on book-based trading, then there is also a wide gap between the theory and daily practice of trading. In short, most of the readers are amateur traders who trade for a few hours a day at best. They will take many more positions to “make up” for the fact of not being able to be present as much as they want, they will push the machine to the maximum and it will often explode in mid-air.

I am often harassed with the same types of questions: Why do you not take more lots, why do you stop trading on Friday afternoon…? Just because an own account trader is no longer trying to make big “hits”, or even to increase his capital at all costs, he seeks regularity foremost, and deducts his living expenses from his capital every month. I therefore consider my capital in the stock market as a revolving fund, a life annuity. Switching from an amateur trader to an own account trader also greatly changed my view of trading, I now only look for low risk entries for my scalping because I’m perpetually on the markets, I can be there as much as my addiction tells me. The amateur trader will overtrade during the few hours he can devote to trading as compensation and also out of frustration for having missed such a movement in the market because he was visiting customers or was forced to attend a meeting he wasn’t interested in…

Trade less to win more

In the end, the quality of your trading will be measured not only according to the standard of living it will permit to have but also the quality of life it will provide you. I advise amateur traders not to overtrade irrespective of how frustrated they feel to have missed opportunities because of their professional life. I was a teacher for 10 years; I know this frustration … meetings with parents while the Michigan index (which at the time shook the markets) was going to fall … a real torture…

Try to trade as if you were already an own-account trader, take only good positions. If one night you have no entry on the market, it’s not a big deal, there will be other nights. By trading less, less impulsively, with less frustration, you will earn more in the end, if your dream is to become an own account trader, it will come much faster, and your revolving fund will grow steadily and surely.

List of my 10 personal trading rules:

1) Do not lose money, trading rule number 1

2) Trading rule number 2, reread rule number 1

3) Always have a backup solution, trading rule number 3

4) Only trade when in top form, trading rule number 4

5) Think for yourself, trading rule number 5

6) Control your losses, trading rule number 6

7) Do not force yourself to trade, trading rule number 7


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