As a trader one of the lessons I learned is how to take losses. Learning how to take losses is one of the most important lessons a trader must learn if he or she wants to remain in the market. Losses are inevitable, no one is 100 percent right all the time. There will be trading streaks where trade can have a number of successful consecutive trades, but sooner or later the streak comes to an end and he or she will take a loss. As that point it’s very important not to lose one’s head, a trader must remain in control of him or herself. After taking a loss, take a break and after regaining clear mind and an ability to think logically only than trader can choose to reenter the market. Don’t hang up on a loss and never carry a prejudice against a loss, the key to handle losses is to cut them quickly before a small loss becomes a large one. Never think that you will escape losses, losses are just like profits, it’s all part of the trader’s universe. LOSSES ARE INAVITABLE, GET OVER THE LOSS AND MOVE ON TO THE NEXT TRADE.
As a trader one of the lessons I learned is how to take losses. Learning how to take losses is one of the most important lessons a trader must learn if he or she wants to remain in the market. Losses are inevitable, no one is 100 percent right all the time. There will be trading streaks where trade can have a number of successful consecutive trades, but sooner or later the streak comes to an end and he or she will take a loss. As that point it’s very important not to lose one’s head, a trader must remain in control of him or herself. After taking a loss, take a break and after regaining clear mind and an ability to think logically only than trader can choose to reenter the market. Don’t hang up on a loss and never carry a prejudice against a loss, the key to handle losses is to cut them quickly before a small loss becomes a large one. Never think that you will escape losses, losses are just like profits, it’s all part of the trader’s universe. LOSSES ARE INAVITABLE, GET OVER THE LOSS AND MOVE ON TO THE NEXT TRADE.
As a trader one of the lessons I learned the hard way never to be eager to enter the market. Eagerness tends to lead to excitement and in turn it tends to cloud rational thinking, which can lead to a loss or a series of losses as trader did not allow him or herself enough time to asses the market for potential trades and just entered the market because it’s moving and the trader does not want to be left behind. Its ok to miss a trade, in order to be successful a trader must learn how to control his or her emotions, never be eager to establish positions and never enter the market on a whim, just because it’s moving. Trader’s strongest asset is patience to wait for a high probability setup to materialize, because if the trader is not patient, he or she will not be trading for very long. If you feel the urge to trade just because you are bored, get a cheaper hobby. Be patient and listen to the market and you will be successful. PATIENCE IS A CORNERSTONE OF SUCCESS FOR A TRADER.
As a trader I learned the hard way that not every trade will be profitable there will be losses, it’s inevitable. One of the most common mistakes made by amateur traders is that profits are easy to come by; WRONG losses are easy to come by, not profits. Every time when I enter a trade I know that I can and will lose on some of my trades and I accept the reality of trading. Key to successful trading is to differentiate what kind of trades dominate your trading, losing trades or wining trades. If my losers exceed my winners I stop trading because its obvious that something is not working or my trading strategy is not in tune with the market. If I’m wrong on high number of my trades I liquidate everything, because if I hold on to the positions in a situation where my losers exceed winners, it’s only a matter of short period of time before my winners will also turn into losers. The best thing to do is to take a break and start with a clean slate. IN THE MARKET LOSSES ARE EASY, PROFITS ARE HARD.
As a trader I learned the hard way that if I want to become a trader I must first unlearn everything I knew about the market. As I began my trading career my first lesson was never assume anything or take anything for granted in the market. Most common mistake made by novice traders is to think that trading is easy and fun, WRONG; trading is hard and grueling task. Yes, I agree with my critics that trading can be extremely rewarding, but it can also be devastating, both financially and emotionally, for both experienced and inexperienced traders. In market only the strong survive, and by strong I mean consistent traders, consistency is one of the pillars of successful traders. By being consistent trader will overtime build up his or her confidence as well as the trading account. It’s important to remember that it’s not how big the profits are its how consistent the trader is. Always remember 3’C of trading: CONFIDENCE, COMPOUNDING AND CONSISTENCY.
As a trader I learned through my experience that there is no bull or bear side of the market, there is only one side, which is the correct side. Most of the novice traders lock themselves into one way thinking, they make the most common mistake of choosing a side. As a trader I’m neither bull nor bear, but a trader, I do not have a favorite side, I trade the side that moves, and it does not matter whether the price is heading up or down, as long as it moves in one direction and has a follow through. As a trader I’m constantly on both sides of the market at the same time, because in order to succeed I always maintain a buy and sell scenario. I do not sell when the market goes up and do not buy when the market goes down; I trade with the market and never against it. In order to become successful a trader must remember, THERE IS NO BULL OR BEAR SIDE IN THE MARKET, BUT THE CORRECT SIDE.
As a trader I learned the hard way that there is no instant gratification in the market. The most common mistakes made by novice traders are that they expect constant price action and instant profits. Market does not always move and there are periods where the price action is almost non-existent, and as a trader I learned to stay out of the dull market or at least not to carry a large position during those periods. But what a novice trader does, he or she instantly sizes up the position in order to maximize the potential return, because the market is not moving and there is a need for gratification, price action and instant profits. That is where the trader becomes a danger to him or herself, because if there is an unexpected move against the trader, he or she will be devastated by the size of the position. A trader must remember that bigger size not only magnifies potential profits, but also magnifies losses; never trade size in a dull market, patience is a key to success because nothing ever happens instantly. THERE IS NO SUCH THING AS INSTANT PROFITS, ONLY INSTANT LOSSES.
As a trader one of the lessons I learned the hard way is never try to trade everything I see and to keep my trading universe limited. Most common mistake made by novice traders is trying to take on too many positions at once. A danger of trading too many positions at one time is losing one’s focus thus increasing a chance of a loss. A trader must understand that he or she is only human and must focus on a limited number of opportunities. A higher number of instruments traded does not necessarily translate into higher profit, instead as trader adds more and more positions while trying to keep track of the previously opened positions and the price action, he or she will eventually burnout and lose focus. A loss of focus for a trader will translate into a loss in the account because if he or she can’t keep track of positions no one else will, remember only you as a trader have vested interest in your own success. Remember KEEP YOUR TRADING UNIVERSE LIMITED AND DON’T LOSE FOCUS.
As a trader one of the lessons I learned is to keep my trading strategy as simple as possible. The most common mistake made by novice traders is to use everything they learn at once and to keep strategies that do not work. Another mistake is to make strategies to complicated, which can be compared to a mechanism that has too many parts. A strategy that has too many rules does not necessarily translates into a profitable strategy, on the contrary the more moving parts the mechanism has the more it’s prone to failure. I personally keep my trading strategies simple; I just don’t deploy them all at once. The key to successful trading is to know which strategy is appropriate in particular market conditions and to discard the strategies that do not work. Never keep a strategy that does not work, if it works use it, if it doesn’t discard it, keep it simple and don’t make things more complicated than they are. Remember KEY TO SUCCESSFUL TRADING IS SIMPLICITY.
As a trader one of the lessons I learned the hard way is to never move my stops against the position. One of the most common mistakes made by the novice traders is to move the stop against the position once the trade start going against him or her. As the trade keeps going against the trader and once again approaches the stop, what do most of traders do, they move the stop again, thus increasing an unrealized loss, but unrealized loss is still a loss and a real one at that. In order to become successful, a trader must learn that the initial stop most of the time is a correct stop, because if the stop is triggered it usually means that the trader is on the wrong side of the market and by moving the stop he or she only increases the loss. The reason why traders move stops is hope that the market turns around and goes in the direction of the trade, but hope has no place in the market, protective stops do. Remember: NEVER MOVE THE STOP AGAINST THE POSITION, BECAUSE BY MOVING STOPS AGAINST YOUR POSITION YOU ONLY INCREASE THE SIZE OF YOUR LOSS.
As a trader one of the lessons I learned the hard way is to never let my emotions and feelings interfere with my trading. Trading can be emotionally draining experience for those who are not prepared for what can happen in the market. A trader is constantly subjected to an avalanche of data, price action, volatility, emotions and feelings of greed, fear, elation, joy and pain. Emotions and feelings are an integral part of human nature, but can be very expensive luxuries a trader can ill afford to hold on to, especially for a novice trader. In order to become successful, a trader must learn self-control, he or she must put aside all of the feelings and prejudices one had before becoming a trader. A successful trader must always be in control of oneself, one’s emotions and feelings. It is always important to remember that it is a trader who runs a position, not the other way around, because when the position begins to run a trader instead, that is where trader is lost to the emotions and feelings and in turn that will lead to a devastating loss. REMEMBER SELF-CONTROL IS KEY TO SUCCESS.
As a trader I have come to understand that trading setups do not always exist in the market and during those periods I stay out of the price action. The most common mistake made by novice traders is to “imagine” a setup that is not there, just because a trader wants to get involved in a price action. Many traders have fallen into a trap of their imaginations, which is further a bolstered by wishful thinking and lack of patience, and lost on trades where they thought was potentially great trading setup, when in fact there was nothing there. Another common mistake that costs dearly is anticipating a potential setup, bad mistake. I personally follow a rule; it is not a trade setup until it becomes one, never anticipate the price action, instead react to it and act upon it. REMEMBER: TRADE WHAT YOU SEE NOT WHAT YOU THINK.
As a trader I have learned to keep hard stops instead of mental stops, because mental stop is not a stop until it’s executed by the trader. Most common mistake made by the novice traders is to keep a mental stop instead of a hard stop, because an inexperienced trader lacks the discipline to follow-through with the original mental stop when facing a possibility of a loss. It’s psychologically hard to take a loss, but an unrealized loss is still a loss and a real one at that. Hard stops take the hard decision of taking a loss out of the trader’s hands, but with mental stop, trader must make his or her own decision to take a loss, and that is where most traders will let their loss run because of the inability to face reality and accept that he or she was wrong and close the trade. In order to become successful a trader must learn to keep hard stop instead of a mental stop. REMEMBER LOSS IS STILL A LOSS EVEN IF IT IS AN UNREALIZED ONE.
As a trader I have learned never to envy anyone’s profits and never to brag about my own. Most common mistake made by novice traders is to pay attention to someone else’s profits instead of his or her own P/L and by doing so a trader becomes a danger to him or herself, because if another trader is doing better, that where greed takes over the trader and he or she feels compelled to catch up. As trader tries to match someone else’s profits, he or she will start taking unnecessary risks with trades, too much size and overtrading as the most common one’s, and as number of mistakes mount due to the loss of self-control and trader simply “blows up” the account due to greed and completion. In order to become successful a trader must understand that the only profit and loss he or she must be concerned with are the one in his or her account, not someone else. Someone else’s profits should not be a source of envy, because that leads to greed and competition, and that in turn leads to ruin, instead pay attention to your own account and P/L and you will be successful. REMEMBER A TRADER WHO PAYS ATTENTION TO SOMEONE ELSE’S PROFITS WILL NEVER RECOVER FROM HIS OR HER OWN LOSSES.
As a trader I learned never to assume anything and to differentiate between the continuation and reversal setups and to never trade continuation during a reversal and to never to trade a reversal when the market calls for a continuation. The most common mistake made by novice traders is to think that the market has to reverse because it has gone to “far” or continue to trade in the same direction just because the trader thinks it will. WRONG. Nothing has to do anything. In order to become successful, a trader must never assume anything and to never anticipate the market, but to react to it. Price does not reverse or continue just because the trader thinks it will and has a position on in anticipation the move. A key to successful trading is understanding that the price will move in a predetermined direction until it stops moving in that direction and reverses, only than trader should enter the market after understanding whether price is going to reverse or continue, and trade after the confirmation, not in anticipation of it. REMEMBER: NEVER ANTICIPATE THE PRICE ACTION, REACT TO IT AND YOU WILL BE SUCCESSFUL.
As a trader one the hardest lessons I have learned is how to get back on my feet after being crushed by market. Most common mistake made by novice traders is misconception that learning to trade is easy and fun. WRONG. Yes learning to trade is certainly rewarding, but it’s a long, hard grueling and emotionally wrecking task. Every successful trader has experienced failures, no one ever escapes it. Every failure brings you one step closer to success, if you are willing to learn from it. After being crushed by the market twice I took a step back and revaluated my strategy, my trading style and myself. I unlearned everything I knew about the market and trading, keeping only the knowledge of what did not work and set about on a quest of self-discovery. I would like to share with you my readers an interesting fact: I have read my first technical analysis book in September of 2004 given to me by my close friend and teacher. After that first book I have learned and unlearned many things since than, but I never forgot that market can crush anyone, its how you pull yourself together separates real traders from amateurs. REMEMBER: MARKET CRUSHES EVERYBODY; IT’S HOW YOU PULL YOURSELF TOGETHER AFTERWARDS, THAT WHAT REALLY COUNTS.
As a trader one the lessons I have learned is to know when stop and take a break from the trading, from the markets and from myself. Most common mistake made by novice traders is to keep trading no matter what, regardless of whether they losing or winning, especially when they are losing. Trader is first and foremost is only human and as human he or she is limited by their own humanity. It is very important for the trader to learn to stop after a big loss or series of losses, but, especially after a big profit. By taking a break after a loss, trader gives him or herself a chance to clear one’s mind and reevaluate the trading strategy and the market conditions. Taking a break from a big win is even more important, because after a successful trade, trader becomes very vulnerable to him or herself due to the fact that when trader takes the next position it will be bigger than the previous one and at the same time the trader becomes a victim of own success. It’s important to know your limits, to take a break and always remember that a trader is only human. REMEMBER: TRADER IS ONLY HUMAN.
As trader I learned that it does not matter which trading strategies trader utilizes for trading whether it’s technical, fundamental or combination of both, that is not very important. Most important strategies every trader must learn are when to enter the market, when to exit the market and most important strategy is when to stay out of the market. Most common mistake made by novice traders is to focus on entry strategies without learning how to exit the market and take either profit or loss. An even bigger mistake made by most traders is never implementing the “stay out of the market” strategy, because of the simple human need for greed and gratification. I have found that in order to remain a trader and remain in the market I have learned that “stay out of the market” strategy is the best strategy any trader can learn; especially when the market has no potential trades or when I find myself not in tune with the market. REMEMBER: KNOW WHEN TO ENTER, WHEN TO EXIT AND WHEN TO STAY OUT AND YOU WILL BE SUCCESSFUL.
As trader I learned that each trader is unique and in order to be successful he or she must adopt to a trading style that the trader feels comfortable with. Most common mistake made by traders is to stick to a trading style that does not suit traders’ personality. Some traders like constant price action and get involved in dozens of trades on the intraday basis, while other traders sit and wait patiently for an opportunity to arise to enter into a long term trade. The key to successful trading is to know yourself, to know what works for you as both the trader and the individual, if a person is a day trader in heart than he or she should remain a day trader, but on the other hand if a person can’t day trade, than he or she should look to become a medium or longer term trader. If anyone wants to succeed as a trader, one must be comfortable with the timeframe and trading style, which in turn always translates into a life style. Learning to trade is extremely hard and challenge and not for everyone, just like any other profession, but there are rewards for those who are not afraid of the path and yes it’s ok to fall while learning to walk, but only if you are willing to get up and continue to walk. Learning to trade is first and foremost is learning about yourself, your true self, who you truly are, because the market is a true equalizer, everyone is equal in the market, EVERYONE, and you only lie and deceive yourself when you are afraid to face reality of the market. REMEMBER: HUMAN NATURE NEVER CHANGES; LEARNING TO TRADE IS TO LEARN WHO YOU TRULY ARE.
Please feel free to write me if you have any questions or comments.
Sincerely
Sam Shenker
