I'm Coming for Your Mind...
Sometime in the middle of last year, I heard a whisper “I’m coming for your mind man”! Scary moment.
It was the market whispering. Thankfully I woke up and it was a dream.
Trading will constantly attack your emotions. I know it’s widely preached to let go of your emotions. But I’m here to tell you that you’ll always remain human. This means you won’t be able to completely get rid of emotions like greed, regret, fear, FOMO to an extent.
10% down on a $100000 is about $10k and that can buy you a nice car/piece of land(s). Even on smaller accounts, a $10-100 loss will go a long way to solve the average person’s day-to-day problems.
When your portfolio is constantly taking Ls, it's hard not to feel a thing. Doesn’t matter how many times you’ve lost money before.
Learn to see money as something you can make back easily (don’t idolize) and that will go a long way to help you manage emotions. Be ready to overcome the voice in your head the moment you open your trading account.
Be ready to take losses. You must understand that losing money is not the end of the world. But it can end your trading career sooner if you don’t cut them fast. Hitting a stoploss doesn’t feel too good, but it’s way better than watching your position run down your account with endless uncertainty. Has a stoploss ever made you feel relief? Good! That’s its job.
In a market of hawks and wolves, the earlier to learn to protect your capital, the longer you will survive.
Don’t Fight the Market: you have to trade the path of least resistance. Where’s the market most likely headed? What’s the current prevailing market structure? Find it and trade in that direction. If it’s going higher, long; if it’s going lower, short. This is why you actually need to learn how to properly trade derivatives with leverage.
Time your entries. You can long in a bull market/short in a bear market and still lose money. This is why timing your entries can be so crucial. You don’t want to be a little too early or a little too late into your positions. It’s another reason laddering your entries is crucial.
You can never be 100% certain that your timing is perfect. When you ladder your positions, you can end up with a reasonably large enough position to be very profitable when the trade goes in your favor.
The market is never wrong! Once you learn this, you’ll realize that you need to be continuously mentally aware enough to dance to its tune.