In this short series of articles I will look to explain what you need to do before you buy any trading system and avoid the black hole of trading. This series will cover a step by step approach to using the markets to achieve your goals by highlighting 13 key areas that traders must address.
5. You have never bothered to list your resources
Some of this will seem repetitive from previous points,
but for the benefit of now, it’s important you understand what your resources are.
Capital; and how much of that can you afford to lose?
Time; how much can you allocate to trading, learning, back-testing, managing etc?
Skills; these are resources too. Are you good at certain things but need help with others such as using a computer?
Strengths; when you are strong at something such as being disciplined this will become one of your edges in trading. Know what you’re strengths are.
Software; do you know how to use your trading platform?
Hardware; is your internet speed and your computers processing power sufficient for your method of trading?
When you list your resources, and everything you can think of that may contribute to and affect your trading business, you’ll find choosing the right style and method of trading that is going to help you achieve your goals that much easier.
You won’t spend good hard earned money on trading systems that can not possibly function with your list of resources. It is better you know yourself, your resources and what you can bring to the markets than trying to fit into something created by somebody else who has a completely different list of resources.
6. You don’t even know yourself or you refuse to accept who you are
If you are bad with money, then guess what, trading wont fix that. I’ve seen first hand my parents win $500,000 and lose it all in less than 4 years. What they never did was assess their bad habits.
Bad habits are addictions which are fueled by our minds chemical pharmacy. We’re all the same, and it is nature’s way of allowing us to evolve and stay alive. Habits are automatic programs that start with a memory which then creates an emotion, which in turn creates a chemical which then feeds the body and all its cells. This is a habit; our body’s addiction to naturally produced chemicals.
If you keep doing the same thing over and over again, but expect different results, you’re fighting a system that has been in creation for millions of years. However, change what you are doing and you break the cycle.
Traders who continuously make the same mistakes are doing it by habit. The problem is that they are unaware they are doing it, or they choose not to accept who they are or what they are doing. Those who become aware and those who become humble will open new exciting doors to much more than just successful trading.
7. You haven’t prepared yourself for trading success
A lot of what occurs soon after beginning a trading career is based on pie in the sky thinking, and very little planning. Apart from needing to construct a business plan to achieve your goals (as mentioned in point 3), you need to see yourself as already there.
When you were younger and you were deciding what it is you wanted to become you had mental pictures in your mind. This is what helped you to see what interested you the most. If you saw yourself being an engineer and it felt good seeing that in your minds eye, then pursuing that career felt like the right thing to do. Using the markets to achieve your goals is no different.
There are many things you can use your minds eye to imagine, such as your online trading account balance being very large, your transactions being very large, placing less and less trades over time, becoming more accurate in your forecasts or improving your win rate, being emotionally in control as your trades close whether in the black or the red, seeing yourself allowing the really big trades to run for as long as your system permits and so on.
Of course, it only becomes apparent once you begin trading for a while that you need to see yourself doing the opposite of something undesirable (such as cursing at the computer screen), however even when starting out trading for the first time, envisioning your long term goals as being achieved is very necessary.
If you think this is hocus pocus then there’s not much I can say other than, I know enough about how our mind functions, and the systems our brain has in place to be able to say, if you’re not prepared to imagine yourself as a success on a consistent basis, then you don’t want it bad enough, because your brain simply wont allow it.
