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A Discipline Trader

Today I will write about the importance of a discipline approach in trading and as emotions have impact on your performance when you are trading. To 2 month’s ago, I was talking with a friend that had began to trade not in financial market but on betting exchange ( it’s equal to the example) and I said  “if you want to win or trade for living/consistently you need to set some rules before the market open, because if you make decisions when it is open, you go be killed because your emotions go to spoil your perception about the market.” Emotions are the worst enemy than trader can handle, because we are human and it’s normal we feel excitement, happiness, frustration and so on…but we can’t feel these when we are trading. After I said some rules, we asked me: “ok I understand this rules, but with it, how you feel some pleasure or fun in trading? If I set this rules that you said, the game will become so bored”…. I smiled and said: exactly.

One of the problems that I have seen when I am talk about trading or investment with someone, is that major people go to trading to search some fun or excitement like a casino or traditional bets and this is a enormous problem because these emotions go damage your perception and decision process. You must think like a machine, and when game/market/race is on, you already done your analysis and is only a question to execute your idea. As some good traders said, the trading could be the most boring and flat situations in the world, but if you feel these feelings when you are trading, you are trading well…

Other problem that I noticed is that the human being can’t afford a loss, is so difficult to a trader assume a loss.As Mark Douglas said, ” since a kid, that you are educate to a believe that when you lose something or do something wrong, you deserve to punished for that and because this, you built a belief in your mind that you can’t lose.” and this is so real! Loss is natural part of trading, and everyone have losses even the best traders in the world.The important is when you lose, lose less than wins. I know this could sound so easy to understand but is a tricky question, it’s not so simple. To some month’s ago, I read a book about a trader that   always he lose money in trading, we clap his hands and he was in “party”. It sounds very ridiculous, but is a very logical attitude that man done, after some years doing this, this man assumes a loss or a win in the same way and the loss didn’t harm his perception for the next trade….

Being profitable in trading is a 70% psychology skill and the rest is a technically knowledge. Find your edge and execute like a machine, without rationalize.

Frederico Menezes

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