Things funded traders can and can’t control
Traders can’t control the variance in price action
No matter when you started trading or how long you have been trading for the reality is that traders don’t have control over the price action or variance in their trading. A lot of the trader’s work comes down to the mental preparation and the psychology on how they deal with the market moves. Traders can prepare themselves by looking into fundamental and news announcements that may affect the markets but there will always be movement in price that will go against all traders at some point. That’s why it is important to focus on the things that we can control on those traders so that we give ourselves the best possible chances of succeeding in this field.
Trades and stop losses
One thing that we can certainly control as traders is our trading levels and the placement of our stop losses. By placing the stop loss you will be in control of your maximum loss in that situation. If you find yourself adjusting the stop loss into further loss oftentimes this means that you don’t have much control over your accounts and won’t be able to justify why you are increasing the maximum loss on a trade. Trades should always be prepared and planned before the trade is executed that way you don’t have to worry about finding an exit strategy whilst in the trade.
A great concept that we can control as traders are the tools that we look at. As traders we need to try and find the tailored tools that suit ourselves to make the best trading decisions. While some traders may use indicators and technical analysis along with reading the pure price action whilst other traders may look to use other tools that affect more of the news side of trading. It can be beneficial for a trader to learn early on what tools work best for them and how they can use them to create the best performance. Another thing we can control is the timeframes that we look at and how we view the market. All these things should be thought about in depth whilst you’re building your trading plan. When we have a plan we know what to do and when to do it it can be easier to stick to the plan and control ourselves from deviating into bad habits that may lead to loss or long-term negative performance on our trading accounts.
Trading experience and psychology
A lot of negative trading experience of drawdown can usually be linked to a traders’ psychology and their emotions when being in trades. Feelings that may come up are fear and revenge which can have negative impacts and be pivotal when aiming for trading success. What most traders don’t know is that we can control them and have a more relaxed and controlled experience in their trading careers.
Sometimes it may be hard to process a loss because effectively in that decision-making process when trying to identify winning trade the trader was wrong. What we need to understand is that we are all going to lose trades at some point and making sure that our risk management is on point and we’re not losing too much money on certain situations which will help us survive as traders.
On the flipside to that you should also not get overexcited about winning trades. This can also have a negative effect on your trading journey as traders may get overconfident and lose the ability to keep the profits that they’ve made. The best way to control this is by taking a break after each trade decision, documenting the outcome and making sure that you are using that experience to build your trading edge. All our trading experiences whether they are a win or loss should all influence our decision making moving forward and how we are able to trade successfully to the best of our abilities.