Sunday, January 29, 2017

Trading Psychology: The 5 Keys To Success

To be successful in trading learn forex trading there are two fundamental factors that depend directly on you: The first factor is the knowledge and experience that is achieved with dedication and lots of practice. The second factor, which will focus on this article, is in your mind with your attitude and the proper control of your emotions.

The path to success in trading is not different in many other facets of your life, for example if you practice a sport, in addition to many hours of practice is necessary a good psychological and mental preparation to deal with opportunities, sacrifices, obstacles , Victories, failures, ...

The psychology of trading is vital for any beginner, who must develop his own investment strategy while learning to deal with these emotional factors. But it is also for professional traders who must remain psychologically strong and not lose the discipline to be consistent and profitable for years.

What are the main emotions we face when doing trading?
THE FEAR

The fear will make you not want to take any risk in your operation. It acts in two senses:

- You may see an opportunity to negotiate but fear does not let you dare to open any position and therefore you will lose.

- You may have an open position and fear makes you close it prematurely: If the position is in losses the fear will push you to close it to not lose more money when you keep it could turn around and generate benefits. If the position is in profits the fear will also push you to close it already so as not to lose your profits in the event that it turns around when, if you keep it open, these benefits could be much higher.

You will also be a victim of fear and impatience if you trade by risking money that you can not afford to lose.

AVARICE

Greed is a very common emotion. Virtually everyone wants to win more and more, with the minimum possible effort and if it is sooner rather than better.

Greed will cause you to trade excessively and take too many risks so that, instead of helping you make a profit, you will end up with your trading account. It pushes you to enter the market, to open positions without control, not to be patient waiting for the right opportunities. Also keep open positions in profits longer than necessary with the idea of ​​winning even more.

You are not controlling your greed if you are identified in some of these cases:

- If you push yourself to open positions every day or if when you do not find them you feel pissed, frustrated or uncomfortable.

- If you feel furious to realize that you have missed a good trading opportunity.

- If you are taking a high risk to get more profits.

- If your goals are to double or triple your account in the shortest time possible instead of moving slowly but surely.

- If you try to change your system or try new strategies often because you think you are not opening enough positions every day and this limits your benefits.


What are the keys to success?

1. To adequately deal with losing operations

When most traders fall into a streak of losing trades they tend to blame themselves and try to change strategy. They believe that these losses occur because there is something they have done wrong or that their system is not good.

If you are constantly changing systems it is impossible to know what works and what does not. It is not a matter of never changing anything but of doing it with discretion. Losing is part of trading. It is totally normal and even the most experienced traders with winning strategies lose a significant percentage of their trades.

You must develop your tolerance for error, avoid fear and accept losses as part of learning and the road to becoming a profitable trader.

2. Suitably face the winning operations

A few winning positions can come to your head and self-convince that your trading system is infallible, that you are a crack at trading, that you have a knack for this or that you are immune to losses.

No one likes to lose, but when you start you can even become positive so you realize that trading involves risks and that it is very easy to lose. Overconfidence can be your worst enemy. You will put more money into play and take more risks than the convenient ones. You will believe that the market will meet your forecasts and you will be unable to react to the mistakes you make.

3. Think positively

Positive thinking works. When you think positive and follow your trading strategy you will get more successful trades.

But if your thoughts are negative they will drag you to make many more mistakes. You will fall prey to fear or anger and can hardly learn, analyze or act objectively in that state.

Think of any sport: You think that a basketball player will bring something positive to be thinking to himself that he will not be able to score, in a footballer who enter doubts when he is going to throw a penalty, a cyclist on the rise He does not trust that his strength will come to him, an athlete who is not convinced that he will be able to improve his marks, This is the best recipe to fail for that reason in any sport it is very important a positive interior language to generate self-confidence. The same thing happens in trading.

4. Be aware of the ones you can and can not control

No matter how hard you try, you can not control how the market will react and whether an operation will be a winner or a loser. The market is made up of millions of people and automatic systems that make decisions and execute their operations without you being able to influence them.

What you can control is yourself and your way of acting: how you look for investment opportunities, what you rely on to make your trading decisions, how you limit the risks per operation, how you set your profit targets, how you open positions , When you close them

Focus on these aspects that you can control and do not obsess about the results. You can not control the results. What is valuable in trading is not the individual results of each operation but the having a cost-effective and consistent system. You should always try to relativize the result and focus on your system. Neither the losses mean that your system is bad and that it is better that you dedicate yourself to something else nor the benefits make you a master of the markets possessing an infallible system.

5. Controlling emotions

Feelings like fear and avarice will always be there and you can not eliminate them altogether. What you can do is control them, keep them at bay and try to attack the factors that generate those feelings.

Fear often comes when you do not yet have adequate knowledge of the market. You have no experience and you lack confidence in yourself and your trading system.

The main solution is practice. beginners Open a demo account so you do not risk your real money until you are not prepared, test, develop and optimize your trading system until you become profitable, have patience and maintain a positive attitude focused on learning. The first few months are the most complicated: do not get discouraged or give up on losing trades or become confident in winning trades.

Another frequent cause of fear in many traders is that they operate with the aim of getting the solution to a complicated economic situation. If this is your case and you open a real account, risking a money that you can not afford to lose you will be easy prey to impatience and fear. I advise you not to resort to trading for this, try to look for another source of income and go back to trading when you can act calmly and without pressure.

Consider how a trading robot operates: Automatic trading systems act according to a predefined strategy when the necessary variables are given. If the variables are given then enters the market but is waiting for as long as necessary. You should do the same to avoid self-congratulating yourself on good opportunities that are not or thinking if you have many or few open positions and what has been the result of the previous ones.

Tuesday, January 3, 2017

How to apply mathematical hope to evaluate sistem trading forex?

When you sistem trading forex sederhana in the markets, how did you evaluate your results? If he was like most beginner traders who probably had little understanding of the concept of mathematical hope, he surely focused almost entirely on his rate of profit in the early days. You were probably trying to win 80 or even 90 percent of the time, which became a constant struggle. He may have been able to do so for a short period of time, but his small victories could not cover the big losses and once he suffered an "unfortunate" chain of missed deals he reached a point where he simply could not recover.

Although a high rate of winning trades can be achieved by experienced traders or operators with sistem trading forex profit konsisten that allow for large drawdowns, it is extremely difficult for most beginning traders to maintain these percentages because their various errors as traders and impatience often charge A high price in most cases.


From there, you may have decided to change your focus and focus on your reward / risk ratio, thinking that as long as you could earn more on average than you lost, you would be able to make your joint operations profitable. For example, you might have been looking for a profit on each winning operation of 3 or even 4 times the amount lost on each losing operation, although it probably ends up by realizing that the problem continues because your winning trading rate fell dramatically , So that even winning operations that generated large numbers of pips were not able to not even compensate for the series of losses.

A very important concept that is not taught in many trading courses or in specialized sites is this: the rate of winning operations alone is not as important as neither is the reward / risk ratio. What really matters is what happens when you combine the two to determine the mathematical hope of your trading strategy or methodology.

What is the hope applied to trading?

In short, mathematical expectation in trading is defined as the average amount that can be expected to earn (or lose) an operator for each operation with its system, when a large number of operations are performed (at least thirty to be statistically significant ). To figure out the hope for a system, you need to know three things: your percentage of winning trades, your average profit and your average loss. The calculation is as follows:

Hope = (Percentage of winning trades * Average gain) - (Probability of losing trades * Average loss)
It is a simple equation, which however can be extremely useful in determining if a system really has the potential to provide us with long-term profits, or else it will only waste time and money. For example, having a system with a high positive expectation can be very powerful. The impact that this knowledge can have on the confidence, patience and discipline of an operator should not be underestimated.

It is easy to understand the power of hope by thinking of a casino. The casino has many games that have a small positive hope in their favor. The advantage to the casino is small enough that players can have long winning series of bets and get good profits in the short term (inspiring false confidence), but if they continue to play in the long run, the numbers are in favor of the casino Since, on average, they will get a few cents for every dollar that the player risks. The casino always outstrips the masses in the long run.

As operators, we can be like the casino as long as we maintain a high positive expectation over time.
"At the heart of any sistem trading profit konsisten is the simplest of all concepts - that the results should show a positive mathematical expectation for the trading method to be profitable."