Sunday, June 9, 2013

The mindset of Abundance

As traders, we watch our equity go up and down with every win and loss. How we perceive these wins and losses greatly affect our overall trading success, even when you are trading a system with great positive expectancy.

Your belief, your thoughts about money and abundance will not support you in your quest to make money from trading if you have relate to risk the wrong way.

In my case, my main problem seems to be the fear of letting a winning day turn into a losing one. So once I have winners I become aggressive in protecting those profits and this makes me take profits sooner than I need to(not following exit parameters) or hesitate taking trades which in my "opinion" may not work out. Truth is, I need not worry about either. have no reason to have to think about "protecting" profits since the trade setups which made me the money initially are the ones I will be repeating.

I've already largely overcome this, so am just writing about it to track my line of thought in this matter.

There's a lot of advantages to following a systematic trading system, it takes away all the discretionary guess work of where to take profits, fighting emotions while waiting to take profits, etc.  A system tells you where to enter, when to get out and where your stop is. Then the only thing to do is focus on your own discipline in following that system. One of the biggest advantages again of following a system is that you will never have a "blow up" trade, because there's no hoping in a system, you get the hell out of a trade if your exit parameters are met. Half the traders I know who have taken large losses are the ones who held on to a trade hoping it would mean revert, so that they can get out for a small loss. Never ever do that.

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