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Thread: Wrong thinking and trading losses.

  1. #1
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    Wrong thinking and trading losses.

    Excerpt from The disciplined Trader by Mark Douglas
    --------------------------------------------------

    1. Refusing to define a loss.

    2. Not exiting a losing trade, even after you acknowledge the trade’s potential is greatly diminished.

    3. Getting locked into a specific opinion or belief about the market or stock direction.

    4. Focusing on price and monetary value of a trade instead of the potential for the market to move based on its behavior and structure.

    5. Revenge trading to take back from the market what you have lost.

    6. Not reversing your position even when you clearly sense a change in the market direction.

    7. Planning for a move or feel one building, but then finding yourself immobilized to execute the trade, thus denying yourself the opportunity to profit.

    8. Not acting on your instincts or intuition.

    9. Establishing a consistent pattern of trading success over a period of time, and then giving your winnings back to the market in one or two trades and
    starting the cycle all over again.


    *******


    How to over come wrong thinking and trading patterns.
    -----------------------------------------------------

    1. Define and enter a stop loss at the time of entry.

    2. Define a maximum amount of loss after which no matter what, you will exit the trade.

    3. Be flexible and open to change your opinion on the market and stock direction.

    4. Have a well defined system of trading and follow it.

    5. After a loss or a trading setback, do not impulse trade. Study what went wrong. Also trade small position size or take a break from trading till feeling confident.

    6. Accept that stock can change direction at any moment, and that all trades cannot be profitable. A successful trader has to keep losses small, and should not let a profitable trade turn into a loss.

    7. To overcome uncertainty and to enter trade with confidence, It gets easier when a long or short entry is made and the stop loss is defined beforehand at the time of entry.

    8. Successful trading involves the ability to pull the trigger. The confidence to pull the trigger come from trading with rules.

    9. Discipline and risk management is a must to ensure that trading is consistently profitable, while at the same time not risking more when on a profitable run.

    10. Finally, it is important to keep a record or a dairy of all the trades executed each day and to review the trigger points for the entry and exit and if they are as per the defined rules. Lessons learnt from wrong execution to be codified into rules.
    __________________
    Trade with an edge. Be Disciplined. Manage Risk.


  2. The Following 2 Users Say Thank You to angelnish For This Useful Post:

    Korg (11-20-2012), theMoney (10-22-2012)

  3. #2
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    Great, very useful... I'm still the beginner, so it's very good to get the first-hand experiences from an expert


  4. #3
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    Quote Originally Posted by shere1779 View Post
    Excellent thread and information which is very important for a trader.
    There are many things what we do not know , for this reasons we fall in loss.
    Besides, sometimes we do not try to know our wrong and what is the matter of losses?
    We should to learn before start our business. Thanks a lot.
    What the biggest tip you could give me in trading?

    I am The Money

  5. #4
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    I'm always grateful to people who willingly impart their knowledge. Thank you.


  6. #5
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    One of the key differentiators between hedge funds and other investment vehicles is the use of leverage. Leverage can be your best friend one day, and your worst enemy the next. Everyone knows that leverage will accentuate both gains and losses. My current brokers Tickmill offer 1:500 max leverage, trade from 0.01 lot; I respect them for not offering an extreme leverage such 1000 or even 2000 leverage ratio, which obviously dangerous for any new traders, and none of any expert traders suggested such leverage ratio.


  7. #6
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    Never think that if you read foreign exchange theories and you have tried free demo trading, then you will get your instant millions of dollars in two days. Keep learning by doing and welcome your success through your high efforts. Forex emotion is very bad for trade.Because emotion can harm our capital.So every traders should be avoid emotion. there's many way to encounter such obstacle. many traders would suggest to refine our psychological trading state before start analyze the market. but these may too hard to implement for any new traders. I took suggestion from some expert trader, and use risk management to minimize emotional aspect during trading. Still use 2% risk per-trade based on my tickmill account margin. good execution condition (ECN) with low spread and also high leverage offered (1:500) makes any trade only need small amount margin required.


  8. #7
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    I don't be sad If I loss few times because I believe I will rise again and recover my losses. Thus, trading with CTOption I barely loss while trading binary market. Following their FREE Signals I can make easy profits in financial industry.


  9. #8
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    I know how one feel when he/she losses money in trading because I have passed that moment too. However, now I don't scare of losing because my broker CToption offers 20% cashback on my losing trades


  10. #9
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    Quote Originally Posted by ForexGrandeur View Post
    I don't be sad If I loss few times because I believe I will rise again and recover my losses. Thus, trading with CTOption I barely loss while trading binary market. Following their FREE Signals I can make easy profits in financial industry.
    Its very important to be confident and try to learn from your mistakes as quickly as possible.


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