Where does way of trader start from?
The first transaction has been opened and a miracle happened! Profit has been gained, it is so easy. “Why had I open such a small lot”, “I am a genius” and “why does everybody tell that trading is not an easy way to earn” - such thoughts slip over in your mind after the first successes. But euphoria often passes, and in two days you will get that it is not as easy, that studying financial market is what should be done. To get that point, one will need a couple of months, another will need more than a year.
This period of comprehension for a trader is also a period, when first emotional troubles take place:
1. Greed: need to return all that is lost as soon as possible. To do that, a trader spares no expenses refilling account with an incredible speed and depending on material conditions of a trader amounts vary from tiny to big capitals;
2. Gambling passion: opening trades without accounting for risks hoping for a quick profit;
3. Fear of getting loss: Stops are not put or shifted along movement of price;
4. Self-reproach: every loss causes unbearable tortures and pain, trader blames themselves in all “mortal sins”;
5. Fear of opening trade: it is the last psychological frontier for this stage, after which trader understands about the necessity of looking for own trading system.
The second stage is selecting appropriate system among plenty of trading systems simply flooding the Internet space.
After the first failures the verdict is made about a poor performance of this system, and switching to the next system takes place and so long until an understanding comes that you cannot jump from system to system, whereas you need to select the one and adopt it. That is the most favorable point in trader's way, because while search is coming, trader bears all psychological aspects easily. Finally trading system is found and is improved as a trader thinks. Now they are set to work.
In the end of the day third stage comes. Here is a wise in experience trader and not a freshman they used to be. Depending on individual characteristics, a trader is successfully reaping fruits of their experience that were not easy to get and is enjoying gained profit during the period from a couple of months to few years. And by some moment trader relaxes as it was on the first stage. Gradually the same emotional troubles return but already transformed or hidden. If on beginning stage one can cope with them, at this stage it is not easy. Trader does not understand at once, why success turns into series of failures.
At this stage, a malicious jest is made by the skill to get losses: trader easily takes results no matter if it is loss or profit. To avoid a full collapse and returning to the first stage, you need to elaborate a rule code for yourself that must be daily observed. The first sign must make you reconsider trading method without waiting until it is too late and everything has to be started over.
These rules are similar to all traders, but the right formulation is based on individual characteristic. Resilience brings trader 90% of success, whereas vision of market is 10% of it. There are no loss-making trading system there is an “emotion”, at which you enter market. No matter how successful you are in price forecast, but until you manage to get resilience it won't be your profit guarantee. Be ready that time is cyclical and everything will return in a certain period. You must be ready to it.
Having coped with your “self” once, further you will be able to identify the problem.