The Biggest Thing Keeping you from Becoming a Successful Trader
It is easy to look behind, recognise a setup and say 'Oh, this was a good trade!'.
However, trading the ‘hard right edge’ of the chart is not easy.
Identifying a trade, and entering it in real-time, is where the real skill of a trader lies.
This is a divergence setup, with entry, stop and targets plotted.
Would you have entered at this stage?
The reason this skill takes time to develop has nothing to do with simply placing a buy or sell order. Successful trading is a combination of various factors, which most traders are not aware of.
I have always maintained that Trading is a business of probabilities & losing trades are a part of the trading process. A trader would have all the technical analysis tools (Method) but the trade could still go wrong.
No matter what form of technical analysis you follow, start by asking yourself a question - does my technique (or any technique) work all the time?
Logically, all traders know this.
However, in reality, when the setup in forming, most will not enter where their analysis says they should. There are a number of reasons for this - unique to each trader - ranging from fear of a loss (and a late entry after waiting for too many confirmations) to fear of missing the move (and jumping the gun too early).
This is where the other two crucial factors come into the picture – Money & Mind.
The principles of Money Management must ensure growth of the account, despite the losing trades. You have to have the right balance of potential risk and reward for each trade, derived based on your personal rate of success.
The Mind factor must include Patience & Discipline. Patience to wait for the market to form the right setup. Discipline to follow the rules of your Trade Plan, always.
Most traders tend to ignore these crucial factors of Money & Mind, while concentrating only on the Method, which leads to unsuccessful trading. And while the Money & Mind sound simple, they are in fact one of the most difficult hurdles for a trader to overcome.
Learning to manage the Money and Mind factors are clearly a necessary requirement for trading success, and there are two ways you can do this.
Take advantage of available knowledge and learn from an experienced trader who has been through the hurdles. This is a smarter, shorter route.
Keep at the markets until you learn it yourself - a longer process, but one that is likely to leave a deeper, longer lasting impact!
Coming to the Method. We at Fibforex123 look at Divergence setups. Even though the Divergence is a high probability setup, we primarily identify this setup with an indicator - which makes it lagging to a certain extent.
Which is why we confirm the setup with other factors. One watching for only the ‘Class A’ divergence, while using Fibonacci levels that are based on price.
And finally, most importantly, we prepare a Trade Plan which includes the rules of Money Management, the Mind factors & Trade Management.
This helps us to eliminate more than half of the unsure trades, thus putting the odds in our favor.