Psychological Preparation Of The Trader: Studying On Your Own Mistakes
Do you study on your errors in trade? If it is not so, you pay too big price for them. One of costs in case you don’t study consists in that you repeat the same error many times. Other costs consist in that you acquire errors and do by their part of your individual trade. You can even start to consider yourselves as lost.
Not each loss is an error and not each error is loss. We should do distinction between loss and error and profit and error. Losses are natural to trading experience, as well as profit. We simply accept them and we go further. Each trader makes mistakes from time to time, but not each trader identifies them and not each trader studies them.
For the acute trader, the error is distinguished. You have made a simple mistake, like purchasing when wanted to sell or have forgotten to cancel the stop warrant when left the market? In this case, your training should concentrate and pay attention to the procedures of check or other protective measures.
Probably, you overload positions. Then, you should develop some base principles to adjust the size of positions. Probably, you incorrectly interpreted signals. Study on it. Probably, your system doesn’t work on some types of the markets. Develop a new rule for those cases when you will use this certain technique. Probably, you have made the transaction having given in an impulse when have read someone’s recommendations or have listened to the broker. Establish a kit of probabilities to which you will exclusively follow.
Pay attention to distinction between new studying and simple reaction. Simple reaction to last transaction will reject probabilities in your trade. For example, if you took profit when the market has reached your purpose, but the price has gone further by your purpose and you will have the temptation to allow the following transaction going further. However, in the following transaction the price can achieve the object and be developed only back to loss. What you need, so it to be always consecutive, closing positions at goal achievement on profit or always to allow the price growing, while the market won’t close you. Studying isn’t simple reaction.
When trade doesn’t go how you planned, very often there is one method to make your trading better. Constantly wonder, “What I can learn in this situation?” Also study this process – wonder, “what I have made, what works well or what not?”
While studying on errors, you should be ready to recognize them. Easier to recognize errors when you adhere to the relation that errors are acceptable and it is a natural part of studying and development. For advantage of enhancement, don’t expect that you will do it all fast. Afford studying process through a method of trial and error. Search for means for each error. As soon as you have taken out a lesson from an error, adhere to this lesson and go further. Leave this error in the past. How you do it? You forgive yourselves.
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