1. Check your ego – especially if you're a male trader
“Men can have an attitude with their ego that they will be ‘right’ about the market and that the results of the trade may have some implications about them as a person,” Gramza says. “A trading decision is a business decision and it has no connections to the quality or intelligence of the person making the decisions. Women seem to understand this aspect of trading.”
2. Have a strategy
You need a strategy, and you need to know it's profitability and risk management characteristics. You know when to use the strategy and when not to use it. And you need to be aware of 'unproductive thoughts' which will inhibit your ability to trade rationally. “Many thought-demons can be eliminated by starting with a well-thought-out trading strategy,” says Gramza.
Before a trade is initiated Gramza says it's important to have a game plan in place to manage profits and losses under any market condition: it's usual for trades to lose money, you just need to know what to do when they do. “I do not know of any business where every business decision makes a profit,” Gramza says. “A trader will have profitable and losing trades, so having a losing trade is not a surprise."
If you have a thoroughly researched strategy, Gramza says you'll be able to trade using what he terms, 'effortless action'. “The complete creation and research of a trading strategy provides the confidence for the trader to instantly react to trading opportunities and creates the ability to take effortless action to initiate and manage a position,” he says.
3. Don't get emotionally involved
The return or loss of the trade is the result of a business decision and nothing more than that. Any additional reaction the trader has is being created by that trader.
“Unfortunately, oftentimes the trader carries this thought baggage from one trade to the next,” Gramza said. “The beauty of the trading business is that each trade is a new beginning."
4. Breath, relax and visualize
Many traders may feel that talking about breathing, relaxation and visualization exercises is a bit touchy-feely, Gramza concedes. Regardless, these techniques are important because they allow the trader to stay in the present moment and focus on what is happening in the market. This process does not have to take a lot of time to be effective.
“These powerful tools are very common in professional athletics, Olympic athletics and the martial arts,” Gramza said. “I am not suggesting taking 20 minutes in the middle of a trade to go on the corner and meditate.”
Instead, Gramza recommends a very old relaxation technique: Breathe in through the nose for a count of four, hold the breath for seven counts and exhale for eight counts. This cycle of breathing is done four times. The trader focuses on and follows their breath as they breathe in and out. When they feel relaxed, it is important that they absorb that feeling, he said. This imprints on the mind and body what it feels like to be relaxed.
5. Don't trade all markets
Do not start out by trying to trade all markets. You’re setting yourself up for being overwhelmed with market choices. Identify a market that you are interested in following. Have a strategy (see 3). “Properly research your trading strategy including profit and risk management," says Gramza. “Too often, the trader focuses on the where to get into the position, but that is only a part of the trading decision-making process,” he said. “How you manage the profit and losses are critical to trading success.”
Source: efinancialcareers
Picture: pixabay.com
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