A Fresh Start

June 22, 2013
Trading Psychology
Its never too late to start over

Its never too late to start over

A Fresh Start

Have you ever been stuck in a rut? All you can think about is how behind you are and how hard it will be to come back: “I haven’t made enough winning trades. What am I going to do? I’ll never make it back.” It’s natural to panic a little when you’re first starting out as a trader. The anxiety and worry can get to you, but winning traders have a trick that you may find helpful: They compartmentalize their trades. They take things one trade at a time, and view each trade as a completely new opportunity. By focusing on their immediate experience, and staying fresh, they stay optimistic and full of energy.

There’s a strong urge to mull over the past and worry about the future. It seems prudent to do so, but looking at your past often gets you nowhere, especially when it comes to trading. And excessive worry about the future often distracts you from what you need to do right now in order to ensure future success. While you’re worrying, you aren’t focusing on current market conditions. You aren’t honing your trading skills in preparation for future market opportunities. Worrying about the future is a complete waste of time.

Seasoned traders compartmentalize. They put each trade into a different mental compartment. With each trade they make, they start fresh. They don’t worry about where they have been or how bad they’ll feel should the trade be a loser. Instead, they focus all their energy on their immediate experience, what they’re doing at the moment, and what they need to do next to implement their trading plan. By focusing solely on the trade in front of them, they stay calm and relaxed. They are focused, and in the zone, the same way an athlete concentrates on making a play, or a rock climber cautiously takes the next step. There’s no time or energy for worry. It is distracting and can lead to a downfall.

Obviously, it’s hard not to worry about the future. Indeed, it’s important to worry about losses and carefully manage risk. And if you are in a serious drawdown, and unsure of how to get out of it, it is vital to go out of your way to make plans for getting yourself out of trouble. But you don’t have to worry about these issues while executing your trading plan. If you have to worry about the future (and you never have to worry if you’re always planning and taking decisive action), do it off-hours, not while you’re trying to execute your trading plan. In addition, don’t psychologically string trades together. Treat each trade as an emotionally independent event. If you tie a string of losses together, for example, you’ll start to feel upset, and your past losses will impact your ability to make future wins. Even when you’re on a roll, and relishing the glory of a winning streak, you will be thrown off track when an unexpected loss crops up. You’ll let it interfere with what you need to do right now in order to continue winning.

There’s no one right way to trade. Some mental strategies work for some traders, but not for others. That said, many seasoned, professional traders find it useful to start each new trade as if it were a new day. They think positively, as if anything is possible. The next trade may be a winner or it may be a loser. Whatever the outcome, they celebrate a victory, or take a loss in stride, and just move on. And, in the end, they are profitable.

Credit: www.innerworth.com

Zerodha

Your friendly neighborhood discount brokerage

5 comments

  1. gowrishankar says:

    hi sir ,

  2. Amateurs want to be right. Professionals want to make money.

    • Purushothaman Gempuraj says:

      Well said! It’s all about managing trades. The winners and losers. We can follow casino model where the house always wins because of the slightest odds in its favour. Focus on high probability winning trades with atleast 1:2 risk reward ratio. Thats enough!

  3. Narendra Seiwal says:

    I Narendra Seiwal open Trade A/C in last week at ZERODHA & Clint ID DN3325 & My most common & useful for other querry for my strategy for hold long position for 6 to 8 months of future is that,
    If i made long position for 6 to 8 months contineu on Buy a future & buy it put of strike price near to future current price also at every 4 to 8 % rise of future price, buy it 2nd put of strike price near to future current price & sell it both put at every 4 to 8 % down of future price & again purchase 3rd put of strike price near to future current price.
    So kindly given suggestion that my above strategy is wrong or right also i observe that in many cases, future price is down but put price rise only ZERO to 50 % only & in some cases put price rise up to 90 %.So please given that why above conditoon comes.
    Also please suggest any safe method for hold long position without possible heavy loss of future if you known.
    Regards
    Narendra Seiwal
    Surat Gujrat
    Mobile 9898083355

  4. Vishal Lad says:

    I has open account & installed kite & pi. Now i feel like tare ….

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