Embrace The Reality Of Successful Trading
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Many traders forget the reality and fail in the business of trading. A proper realistic expectation is an integral part of trading. Be it a trade or management of your account, you should tread with realistic expectation and analyze the situations by keeping the reality in mind. Don't Expect Emotionally When you start the trading, keep the realistic expectations. Many novice traders take up trading with a dream of turning few thousand dollars into a million dollars and that too in few days or weeks. Lack of realistic expectations will entice you into over trading in order to achieve your expectations. As you might know, overtrading will guarantee the complete wipe out of your account. So what is the realistic expectation of growing your account? Let's assume that you trade conservatively and put only 2% of your account on the table on every trade. With 5 trades a month, you are risking 10% of your account every month. If you achieve 70% of the winning percentage, with a conservative expectation of risk reward ratio of 1, you can expect to grow your account 7% each month. Now this is just the guideline to give the realistic expectations. Expect and Take Realistic Profits You should determine the both ends- maximum profit and maximum loss from a trade before entering it. Target and stops should be predefined before entering a trade. Realstic assessment creeps in at this juncture of trading process. There are many trading strategies available to follow. The profit targets should be decided logically and not by emotionally with unrealistic expectations. One should not aim hundreds of pips with a very tight stop loss. Various exit strategies should be looked into. Always Trade with Realistic Stops Every trader should take the stop loss seriously. Trading without stop loss is suicidal. Stops should be determined based on the trading strategy. You should not call a losing trade a positional trade and keep it without any logical explanation to it. On the other hand keeping a small stop loss without any logic is also bad trading practice. Please keep in mind that there are trading strategies with a tight stop loss. Mistakes Are Part of Journey Every trader should embrace the fact that he is not going to be right all the time. But it is a human nature not to accept the mistake too easily. But if you understand this human behavior and accept it, you will also accept your trading mistakes. When you ride over a losing trade and you keep it because of your inability to accept the mistake rather than logical analysis, you will soon wipe out your account. It is your responsibility to judge the situation objectively. Reality check is a simple phenomenon of believing what you see. When you are emotionally detached from the decision making process, you see the things the way they are and make better trading decisions. With practice you can achieve that. Embrace the reality and trade profitably. Learn More Here!