Table of Contents
How familiar does the following scenario sound?
You wake up in the morning feeling a little off. When you boot up your computer, your brain is just a little bit out of sync.
Maybe you couldn’t sleep well, or maybe you’re just having “one of those days.” Thoughts creep into your head, and you start to question whether you’re really good enough to make it as a trader.
Your confidence starts to slip and on your very first trade of the day you hesitate and pull the trigger later than your trading plan told you to. You tell yourself “better late than never.”
If you’ve been trading for a while, the above scenario, while not exact, might sound somewhat familiar. And while the lack of confidence present early on in the day is problematic and something to always be vigilant about, the ability to rationalize entering into a sub-optimal trade is the real boogeyman of the morning.
When we jump into a trade at a late, or otherwise subprime time, all of the variables that we carefully mapped out in our trading plan get shifted and skewed. A risk especially changes and in such a situation might become inflated since it has not been prepared to account for this late entry.
We’ve said it before, and we’ll say it again: when you don’t follow your trading and make unplanned, rash moves, you expose yourself to unnecessary risk and threaten your entire portfolio.
The best traders are traders who stick to their trading plan and don’t rationalize bad trades in hindsight. Any action that doesn’t follow your trading plan has no room at the table of your trading career.
Traders who pull in consistent profits have found their ideal system and they follow it to a T, over and over again. They don’t engage in random, spur of the moment behavior, like entering a trade late or early.
You’re Not Good Enough to Not Have a Plan.
Hubris has been the downfall of many traders. This is especially true of newish traders who come to the desk believing they don’t need a preset system in which to guide their trades.
An ego that convinces a trader that they need not follow a plan, but rather rely on their instinct and wit, will lead to a very short career in the industry.
Don’t Get Caught Up in a Bullish or Bearish Market
Disclaimer: this doesn’t mean there isn’t profit to be made in either of these types of markets.
The rationalization we’re trying to convey here is when you wake up and see prices soaring and think to yourself “I gotta get a piece of that!”
If it doesn’t follow your trading plan, settle down immediately. Don’t let yourself catch a case of FOMO (fear of missing out).
On the other hand, let’s say you’re having a boring day and want to pick things up a bit. Again, if it’s in accordance with your trading plan, no problem. But if it’s just an impulse and something you feel like doing whimsically, don’t do it.
Here’s an answer for you, do what your trading plan predetermined you would do.
Every trade you enter must have a clear exit point charted out ahead of time. This is to avoid scenarios in which you might rationalize staying in a losing trade or rationalize getting out of a winning trade early.
If you start to think like this, guided by in the moment, impulses, it may work for a short period of time, but in the long run, it will unravel and take your profits with it.
Say it with us: “follow your trading plan!”
Sadly, there’s no simple solution for beating rationalizations. They can come and go as they like and it’s up to us to fight them when we sense they are coming. The best defense against them is a well thought out and thorough trading plan. If you put yourself in a position where you know all of your available moves ahead of time, you will be less likely to resort to quick, shoot by the hip decisions in crunch time.
If you want to receive an invitation to our weekly forex analysis live webinars, trading ideas, trading strategy, and high-quality forex articles, sign up for our Newsletter.
Subscribe to our youtube channel.
Click here to check how to get qualified.
Click here to check our funding programs.
You must be logged in to post a comment.
The5%ers let you trade the company’s capital, You get to take 50% of the profit, we cover the losses. Get your trading evaluated and become a Forex funded account trader.
Get Your Forex Funded Trading AccountOffice Hours:
Sunday – Thursday
07:00 – 15:00 GMT
Fridays
07:00 – 12:00 GMT
Email:
[email protected]
Office:
Headquarters
14 Haharoshet st, Raanana, Israel
Website Disclaimers
Five Percent Online Ltd. (“We”, “Our”, “Us”, or “Company”) operates as a proprietary trading firm. The Company is not a custodian, exchange, financial institution, trading platform, fiduciary or insurance business outside the purview of financial regulatory authorities. “The5%ers” is a brand name operated by the Company.
All trading activities conducted through the Company Hub are executed in a simulated environment. Users should be aware that the trading results in this environment do not reflect real trading outcomes. The simulated trading environment in the Hub is designed for educational and evaluation purposes only. The “funds” provided to you for the evaluation are fictitious, do not represent any currency, and that you have no right to possess those fictitious funds beyond the scope of their use within the Hub and for the sole purpose of the evaluation, and in particular that they may not and cannot be used for any actual trading and that you are not entitled to any payment or other right in or of those funds.
Becoming a funded user is not guaranteed. The eligibility for becoming a funded user is contingent upon meeting specific performance criteria and compliance with the Company’s evaluation processes. Not all users will qualify for funded accounts, and past performance in the simulated environment is not indicative of future success.
All content published and distributed by Us and Our affiliates is to be treated as general information only. None of the information provided contained herein is intended as (a) investment advice, (b) an offer or solicitation of an offer to buy or sell, or (c) a recommendation, endorsement, or sponsorship of any security, company, or fund. Testimonials appearing on the website may not be representative of other clients or customers and is not a guarantee of future performance or success. Use of the information contained on the website is at your own risk and the Company and its partners, representatives, agents, employees, and contractors assume no responsibility or liability for any use or misuse of such information.
Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, because the trades have not actually been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs, in general, are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown.
Five Percent Online LTD – Copyright © 2024.
A much needed reminder. Thanks for such an insightful article.