The Mental Aspects of Trading (Part 5)

02/29/2008 12:00 am EST


Linda Raschke

President, LBRGroup, Inc.

If you are following a methodology consistently (key word), and making money, how do you make more money? You must build up the number of units traded without increasing the leverage. In other words, don’t try going for the bigger trade. Instead, trade more contracts. It just takes a while to build up your account or the amount of capital under management. Proper leverage can be the key to your success and longevity in this business. Most traders who run into trouble have too big a trade on. Size influences your objectivity. Your main object should be to stay in the game.

Most people react differently when they’re under pressure. They tend to be more emotional or reactive. They tense up, and then judgment is often impaired. Many talented athletes can’t cut it because they choke when the pressure’s on. You could be a brilliant analyst, but a lousy trader. Consistency is far more important than brilliance. Just strive for consistency in what you do and let go of the performance expectations.

Master the Game

The last key to achieving mental mastery over the game is believing that you can actually do it. Everyone is capable of being a successful trader if they truly believe they can be. You must believe in the power of belief. If you’re a recluse skeptic or self-doubter, begin by pretending to believe you can make it. Keep telling yourself that you’ll make it even if it takes you five years. If a person’s will is strong enough, they will always find a way.

If you admit to yourself that you truly don’t have the will to win at this game, don’t try to trade. It is too easy to lose too much money. Many people think that they’ll enjoy trading when they really don’t. It’s boring at times, lonely during the day, mentally trying, with little structure or security. The markets are not a logical or fair-playing ground, but there are numerous inefficiencies and patterns ready to be exploited, and there always will be.

Part 1 |  Part 2  |  Part 3  |  Part 4
by Linda Bradford Raschke,

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