There are many well-known do’s and don’ts in trading, but in my 15 years as a trading coach I have noticed that each aspiring trader has a unique path to trading mastery. Along the way, he/she will encounter very particular challenges that arise from personal blind spots or character weakness. It’s quite possible that your path to Mastery may require you to break some of the standard rules in order to make progress.
For example, if you are naturally risk averse, you may tend to over-focus on setting stops and keeping losses small. This is what you are ‘supposed’ to do, but inadvertently you may actually be limiting your success. To take your trading to the next level may require you to take on more risk than you are comfortable with. In other words, your success may lie just beyond your comfort zone.
Similarly, if you are a natural risk-seeker, you may tend to over-focus on opportunity, on the big score. You may overlook setting stops and pay much more attention to the positive pictures that your imagination streams across your mind’s eye. The downside is that you constantly get rude awakenings when the market does the opposite of what you expected.
Paradoxically, to take your trading to the next level may require you to reduce self-confidence and cultivate some healthy fear. As you learn to respect the market more and acknowledge that you don’t know what’s going to happen next, you might start to focus more on the correct execution of a rational trading method.
In the end, we become better people and lead better lives as we solve the very personal challenges of trading well.
www.daytradingpsychology.com (for individual traders)
www.trader-analytics.com (for hedge funds and banks)
