You can classify traders by the timeframe they use to trade (swing traders, long term traders, scalpers, etc), by the way they trade (using indicators, chart patterns, price action, etc.)
But there is a much better way to classify traders, the one I like the most:
Disciplined and un-disciplined traders
Read the complete article, it could change the way you trade, for better!
Have a great weekend!
Raul Lopez
Forex Course
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Hello Everyone,
Why do you think trading is dficult? I think there are a number of reasons, but I think the most important one is that it is different than other endeavors. If you approach your trading in the same way you approach other areas of life, you’ll find yourself in a very difficult situation. I wrote an article about this, I think you’ll like it:
http://www.straightforex.com/what-is-the-most-difficult-thing-about-trading-successfully.html
Feel FREE to comment…
Trade Safe!
Raul Lopez
Yesterday I was talking to an old trading pal about the impact of the Aussie unemployment report (real good numbers by the way, jobs gained were +35.2K and the market expected 10.2K and the unemployment rate was 5.5% against 5.8%). Anyway, he traded that report, just a few seconds before the announcement he went long and held the position for a few hours making a quick pip there.
Of course it is always good to get pips here and there, but what I always keep in my mind is the alternative history (in the economic arena this is similar to the opportunity cost). In this case, what if the market went down instead? (You know sometimes the market moves against the fundamentals), even if you use SL orders, the market could gap then your loss will be unbearable to take, you would wait and see if the market recovered but it continues to move against you. The worst scenario here would be to blow up your trading account just for a quick pip: this is the results of your alternative history, are you willing to take this type of risks?
Lets put it this way, if you keep trading the unemployment announcement say for 2 or 3 years, the “unexpected event” (of the market moving against you after that announcement) will arise sometime during that period and the result will be devastating. I ask you again, are you do you have a shield for the “unexpected event”?
Please feel free to comment.
Trade Safe!
Raul Lopez
Fear and greed are the emotions that have the most impact on traders and investors, they make us make irrational trading decisions, Can we get rid of them?
I don’t think so, they are part of the human nature. Think about this: why dot you jump into a lion’s cage? Because you are afraid of what could happen to you, right? So, this fear is keeping you alive, the fact that you are afraid is actually helping you. And know the question is, can we apply this in the trading environment? Can we make our fear to work on our favor? Of course we can.
Let’s put it into the trading perspective: when you developed your system, you defined what seemed to you a low risk trading opportunity (i.e. when the stochastic figure when from overbought to the neutral territory, or you got a candlestick pattern in the direction of the market condition, etc). What happens when you get in to a trade when there is no signal? You don’t have a low risk trading opportunity, aren’t you afraid of losing? We all should.
Now, I know most of the time it’s difficult to get rid of these emotions, even the most experience traders experiment them. The difference between experience and novice traders is that, the first ones don’t make trading decisions when there are in a trade, all trading decisions such as: when to close the trade, when to take partial profits, when to add to the position, were made way before they entered the into market, because they know that in the moment they entered the trade, emotions will kick in and will make them have an “irrational” bias, that most of the time makes them make wrong trading decisions.
So my advice here would be to have a well defined trading plan for everything:
This way you won’t have to make them when you are not likely to think objectively.
Trade Safe!
Raul Lopez