A big part of this rests in your trading psychology and confidence in your trading system, but there’s another part that all of us as traders have slightly different psychology.
I’m a fairly patient person, I don’t want to make lots of decisions every single day and I don’t want a lot of trading activity. (And to be honest, I don’t really like placing trades) It’s okay because I’m far more interested in the research and the learning and the system development and then placing the trades is just where the money comes from.
I just placed the trades, I don’t want losses, I don’t want 15 trades a day. So for me, I need a system that matches that. If I have a system that generates too many trades, my stress levels go up, I make more mistakes and my ability to follow that system consistently suffers. Every trading system varies from person to person, so how about you? What you need to do is look at your personality and make sure that the style of trading that you’ve got actually matches your personality. But it’s not just your personality, it’s also your lifestyle because if you’ve got a full-time job and you’re trying to day trade, then it’s going to be a disaster because I did it before. I had a full-time job and I was working my butt off and I was day trading at the same time taking about 15 trades a day. My job suffered and my trading certainly suffered. I launched this system which was a good and profitable system. It back-tested well and I traded this system and in three weeks I lost $30,000 because I kept making mistakes, the system and my lifestyle were colliding. I had client calls, I had my bosses expecting me to do things, I had to actually do work during the day. Who knew, right? I wasn’t able to give my full attention to that system and made mistakes. I had losses and lost $30,000 in just a couple of weeks. That’s why your trading system has to fit your lifestyle and your objectives as well. If your trading system doesn’t make the returns that you need to keep you focused and interested, then you’re going to lose interest and you’re going to let things slide then make mistakes. If your trading system has draw downs, which are too big for you to be comfortable with when you’re in the middle of a draw down, you’re going to freak out and you’re going to ditch the system at the worst possible moment. That’s why your system needs to match your objectives. When you match a system to your personality, objectives, and lifestyle, it becomes much more relaxed and easier to trade. If you’re finding that you are stressed out and inconsistent, step back from your trading and have a look at where the pin points are and what’s causing you that stress and not to be relaxed in taking the trades. Then you’ll see that part of your system doesn’t actually fit you, your personality, your objectives, or your lifestyle.
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