I have friends and family members that ask me if I get nervous when trading. I simply answer that if you’ve done your homework and you’re making educated trade that you have researched, there is no need to be nervous. I hope this article helps you pull the trigger and makes you a better trader.
I have friends and family members that ask me if I get nervous when trading. I simply answer that if you’ve done your homework and you’re making educated trade that you have researched, there is no need to be nervous. I hope this article helps you pull the trigger and makes you a better trader.
Many traders have been face to face with a trade that is difficult to execute because they are afraid to risk their hard earned money on an investment that could turn sour. This generally happens with inexperienced traders who are not comfortable with the system they are trading. My first experience with this was when I was 18 and in my dorm room, and I put my entire account into a tech mutual fund. At the time I placed the trade I was nervous, excited, proud, and later…broke. I don’t have to tell you how this turned out, because as I write this post I am still chuckling. It took a good bit of coverage for me to make that first trade because that was money I had earned with sweat and blood (literally) the summer before college. After that first trade I was on my way towards making hundreds if not thousands of day and swing trades in the stock market during my undergraduate college days.
As I moved into graduate school and discovered forex, I found myself in a position that I was not used to. Once again I was nervous, excited, and very eager to see if I could conquer this liquid of a market. But I had experience on my side, and I was much more mature then I was when I was 18-22 years old. I think college was the biggest maturation period of every aspect of my life, which really helped my trading views and psychology. Trading forex was and still is very humbling. How can a few major pairs to study give me more fits than thousands of stocks to choose from? I decided to swallow my pride and demo and paper trade until I felt comfortable enough to do this day in and day out without fear of how much capital I was risking.
I do not have any set rules that made me a confident trader other than the fact that whether it was stocks or currencies now, I know that I have worked damn hard to get to where I am today in my understanding of world currencies. There really is no substitute for experience, as I will give examples of now.
As a trader who uses technical analysis as my major tool, I can’t stress enough how important it is to study, scour, dissect as many charts and patterns as possible. Even if you don’t use every technical tool, I am a firm believer that understanding what they do and how they work will let you arrive at what indicators and/or chart patterns you will use for you trading. There are hundreds of technical indicators that are used to create thousands of automatic trading systems in my forex world, and each one may have it’s advantages and disadvantages. All of them will make you more confident that you understand what you are trading.
Whether you are trading stocks, options, futures, forex, forex options, it doesn’t matter one bit. Confidence and preparation are the keys to pulling the trigger on all of your trades. And once you have mastered the art of preparation and keeping your cool, then you won’t always be looking over your shoulder after you have made a trade.
If you have practiced trading for an appropriate amount of time, then switching to real money should not make you nervous. Do not mistake the excitement that you feel for nervousness. You should be excited and proud of your accomplishment because you have now earned the right to trade without sweating!
So what happens if you’ve prepared like crazy, you are mentally prepared, and your first real trade goes sour? Should you doubt your system and be nervous for the next trade. There are two answers to this, only one of which you will like. The first answer is yes you should be scared because the reason you are doubting yourself is because you are not ready. The second answer is quite simply, no: You should not worry because you are ready. These are the times you pick yourself up, dust yourself off, and get back into the trenches. The most successful traders in the world will tell you that it’s not how often you win, but how much you win compared to how much you lose. So have I made it clear that you are going to lose? To help you cope, I wrote an article that became rather popular on How to Recover from a Bad Trade. This post should help you post bad trade. And maybe have a stiff drink while reading it.
These markets and a trading life can be very stressful. That’s probably why the rewards are so large for those traders who work the hardest. They earn it because they deserve it, plain and simple. So get to work, and feel confident when you trade. Cheers, and good trading.
