Vital Trait Of A Successful Trader : Detachment
Submitted: 18 Feb 11 17:54
Last Updated: 18 Feb 11 17:56
 

You have done your research, you have tested your strategies and you have seen how your strategies worked during the 3 months of simulated trading. Now you are ready to put real money on the line to make some money for all the work you have put in.

You sit before you computer, the signal comes and you are supposed to execute the trade. But you didn’t. The next thing you know, you see the price moves exactly in the way it is supposed to based on your strategy. Many new traders have this experience. They behave differently when they are doing simulation trading and doing Live trading. In simulation, they are able to execute the trades without fear but once it is Live trading, they suffer from trading paralysis.

There are mainly 2 key reasons why the trader failed to take action.

1.       The reluctance to be ‘wrong’.

2.       The reluctance to lose money.

After months of hard work, the trader do not want to be wrong (by having a losing trade).  He began to cherry pick trades to sieve out trades that ‘does not look good’ and justify with many reasons why he shouldn’t be taking the trade as the signal comes. The other trader did not take the trade because he is thinking in terms of how much money he possibly can lose IF the trade turns out bad. He even think of what he could had bought with that money. In both cases, their months of hard work has just gone down the drain.

The crucial step that the traders must take is to become detached from:

 1.       Result. The testing has been completed, and he had seen the strategies work. He must accept the fact that a single loser does not affect the long term outcome of his trading career.

2.       Money. Money is a by-product of good trading. If one is to focus on the money he is going to lose, it is almost for sure that he will attract what he fears the most.

If a trader can learn to be detached, he is able to execute his trades as signals appears, and let the probability works in his favour. With that, success is guaranteed.