- What does it mean to be undisciplined in the market?
- What effect does self-confidence have on trading?
- What effect does goal setting have on trading?
- Why should we set a loss limit for ourselves?
The market does not owe you anything
Being disciplined means having the necessary mental techniques to focus on the required issues. In order to achieve your trading goals, you must learn to adapt to the conditions on the way to achieving your goals. In other words, you have to change the way you react to the environment. The more you become an expert in trading, the more you realize that it is a completely psychological task. Over time, you will realize that the market is not against you and you are only against yourself.
Even other people active in the market, with their different and conflicting beliefs about the future, give you the opportunity to make money. If people didn’t have different opinions about the future value of stocks or commodities, you would have to put the thought of price volatility and profit potential out of your head. Each trader shapes his experience of the market based on the information he has collected and the decisions he has made personally, and the market has no role in it. As a result, the trader will never have a valid reason to blame the market.
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The sooner you accept that the market doesn’t owe you anything, the easier it will be for you to learn the skills necessary to make a profit in the market. To become a successful trader, you must trade without fear. When you shy away from certain information and situations out of fear, the exact same thing will happen to you. By doing this, you ignore new opportunities and keep repeating your past. Fear is not what you need in the market, what you need is confidence.
Self-confidence is formed in you when you prepare a series of rules and regulations for yourself and you are sure that you will follow these rules under any circumstances. But what you have to remember is that this skill is formed in you gradually and step by step, so it is better to get rid of the thought of getting rich overnight because this thought will only lead to your anxiety.
In fact, you should always prioritize following the rules over making money because if you break the rules, even if you become rich, you can be sure that you will soon return that money with the market. The next thing you should not forget is that these rules and regulations change as your skill and understanding increase, but the time to change them is when you have learned the previous rules so well that they have become a part of you.
To be successful, focus on your trading goals
First of all, you need to change your goal in trading from “making money” to “learning how to adapt to interact with the market and succeed in it”. Because money, as the end result, has always been and is a byproduct of proper learning and having the necessary skills. Money keeps your mind focused on what the market is giving you or taking away from you.
But learning the skill and how to adapt yourself will allow you to focus on your ability to take money from the market. In the first case, you put part of the responsibility on the shoulders of the market, but in the second case, all the responsibility is with you. You have to learn that whenever things don’t go your way, consider it an experience, not a mistake. For this, you have to try to correct the wrong concept in your mind, which is not an easy task at all.
At this stage, the concept of lost opportunities should also be changed. If we believe that there was an opportunity in front of us but we could not use it, we will suffer the most psychological damage. Of course, there is nothing worse than missing out on a great opportunity, if that opportunity actually exists. That is, we always imagine transactions in our minds as we want, not as they really are.
In order to deal with the issue of missing opportunities, it is enough to consider two points. First, you definitely did not have the necessary skills and knowledge in that position, because if you had, you would not have lost it. On the other hand, markets are always moving. So there is no such thing as a missed opportunity and there are always more opportunities waiting for you. Professional traders are traders who have learned very well the concept of neutrality and fearless trading and know exactly what to do with their trades.
Cope with losses
Before each trade, define the loss limit for yourself. That is, determine to what extent you can bear the loss and in which case the transaction is no longer suitable for you. Many elite traders who managed to change their beliefs about losses after suffering huge losses came to believe that there was nothing to fear all along.
To learn this skill, you must learn two things: first, you must always consider the possibility of losses for your transactions, and second, change the definition of loss in your mind. You have to repeat to yourself that “losses do not detract from me and my identity as a person”. The sooner you come to this belief, the easier it is to identify a losing trade and get out of it.
You should learn to exit the trade as soon as the trade reaches the loss limit you set for yourself. If you come to your senses and see that you are trying hard for this task, you should know that it will not give you good results. The result of this work is not out of two situations. Or what should happen and you lose, or even if the market returns in the meantime and you get out of a losing position, you have developed a bad habit and the possibility that from now on every time you are in a losing position You’re on a date, repeat it again, it’s too much.
Always be neutral in the market
Starting to use analytical skills requires learning to look at events probabilistically and determine the prevailing beliefs about the market and how they might affect price movements. For this, you need an unbiased and independent view of the market. The presence of even two traders can form a market; Therefore, whatever is the ultimate limit of human behavior, may occur in the market.
For example, have you ever said to yourself that the price of a certain stock will not fall below this price floor because it has never happened before? But did this happen? It is enough to find someone to buy or offer that share at a lower price. We never know what traders are going to do, but we can determine what they are likely to do if it happens. Always let the market show itself first and keep in mind that the market is constantly moving.
Therefore, you should always evaluate the amount of risk against the return. Always remember that prices always move in a direction that has a greater force behind it. To maintain neutrality, you must act as if you believe that anything can happen in the market and that you do not impose any constraints on the market’s behavior. If the market acts contrary to your mental assumptions, you will experience stress and anxiety.
On the other hand, it’s clear that you can’t have any belief or expectation about the future, because in this case, you will never enter into a transaction. What you need to do is to transform your “demanding expectations” into an “unbiased assessment of the possibilities”. If you have doubts about doing this, consider that if we have no expectations from the market, is there any reason to be angry with it? What is anger? A natural mechanism that indicates that the environment is somehow attacking us.
Unconditional expectations of the future control the flow of market information to our mental system, and in fact, the market does not have enough access to deliver some critical information to us. To know whether you are impartial or not, look for the following in yourself:
- You don’t feel pressured to do something.
- You do not feel fear and rejection.
- There is no right or wrong and everything is just an experience.
- You listen and do what the market says.
- You can look at the market as if you have no contract.
- Your focus is on market structure rather than money.
To maintain a sense of impartiality, it is enough to consider the maximum number of possible market behaviors and determine the probability of each one, and to give up the right to be biased to reduce the possibility of biasing the received information.
Even after you’ve learned all the skills of the trading environment, you’ll gain the knowledge you need to trust yourself and always do your best to protect your interests. The only thing that remains a significant obstacle in this path is the value you place on yourself. The amount of money you earn is always directly related to the beliefs you have about your worthiness to earn money.
So in order to reward yourself as a trader, you need to identify what is draining your self-esteem and de-energize or change it. You may ask where is the highest level of self-esteem? We suggest that you focus with the passion to learn what you think is necessary, and be sure that this passion for adaptability will automatically determine the desired level of self-esteem and cause it to improve day by day.