Trading rule number 7: don't force yourself to trade

27 9 2014 - Pas de Commentaire, soyez le premier

One of the most common errors that affect young traders, or even the most experienced traders, is to be on the market too much or even constantly. They run out of energy, they lose lucidity and in the end, they are much less efficient.

Trading is an addiction (like the others)


Let us not deceive ourselves, trading can quickly become an addiction in the same way as pathological gamblers in a casino, a bookmakers, etc. Trading can easily become our drug of addiction, I still picture myself trading between 18 and 20 hours a day to do what I called a " World Tour": trading from 8 am until 10 pm on the European and American futures markets, then only sleep for a few hours and follow up on the Kopsi in South Korea. I did this 5 days out of 7 then I would collapse and spend the weekend sleeping and thinking about the markets reopening on Monday.

What a drug! Trading can make us dependent because it gives us the very vivid and contrasting emotions of joy, fear, greed and at the heart of it all adrenaline. "Normal" life seems to us to be really dull and bland compared to what makes us live (and sometimes suffer), trading. You feel "alive" when you are positioned. Many traders haven't gone to these extremes as I have been able to do, trading more than 120 hours per week with sometimes more than 1,000 futures lots per day, but you find among almost all traders this need "to trade to feel alive". Our lives are sometimes so commonplace that trading is a safety valve, a "dream", the sensation of living a full life.

Trading is certainly more socially acceptable than taking drugs, but the cause of the addiction is the same in the end, a psychological problem, a narcissistic weakness, a want, artificially filled by trading. If you are in this situation, psychological work is essential to understand where this disorder comes from, and so mange to control it. To motivate you into taking this approach, I think that it is psychological work which was the most effective in enabling me to become a trader on my own account and to live comfortably from my trading. Through working on yourself more than on your indicators, your performance will be much better. Invest in yourself and the repercussions will be infinitely superior to your expectations, it will even affect your personality and your relationships with others.

Not being positioned is still taking a position

A lot of traders, who need their adrenaline rush, subconsciously force themselves to be on the markets. It is the impulsive trades that you take out of boredom, through want, which are generally the most catastrophic and which will ruin your earnings for the day.

You need to accept this fact: not being in a position is still an act of trading. You are waiting for an opportunity, you regain strength, you think, you analyse market forces. Deciding not to enter a market because the trend isn't telling you anything is an act of effective trading, essential, key to the survival of your earnings. Often amateur traders force themselves to trade and this leads to disasters.

The difference between an amateur trader and a trader on his own account

There is a fundamental gap between a "punter" or amateur trader and a trader on their own account. The first can "attempt big shots", have fun, they generally have a profession, a regular salary while the second risks physical survival every day. Let us make no mistake, trading is the only profession where one can find themselves on the street within 24 hours as a result of their positions being too strongly leveraged, poorly protected by guaranteed stops or hedged options. A football player can have a bad match, a baker ruin a batch of bread, etc. without ruining his life. A professional trader can lose everything overnight. There is insecurity and at the same time there is an exhilarating side to being the master of your own destiny to such an extent.

I constantly sense this gap on my trading blog. I put my daily results there with account statements and an analysis of a few trades in order to provide educational content on real trading and not on theoretical trading. There is a large gap between the theory and the daily practice of trading. In short, a large part of the readers are amateur traders who trade a few hours per day at best. They are going to take a lot more positions to "offset" the fact that they are not able to be present as much as they would like, they will push the machine to the maximum and often it will explode in full flight.

I am often harassed by the same types of questions: Why don't you take more lots, why did you stop trading on Friday afternoon? Simply because a trader on his own account no longer attempts to make big "hits", or even to increase his capital at all costs, he looks for regularity before anything else, taking what he needs to live out of his capital each month. I consider my trading capital as my insurance fund, a life annuity. The act of switching from amateur trader to trading my own account has also changed my vision of trading significantly, I no longer only look for entries with low risk for scalping because I am perpetually on the markets, I can be there as much as my addiction requires of me. Amateur traders carry on trading during the few hours that they can devote to trading as compensation, and also due to the frustration of having missed a particular market movement because they were visiting clients or attending an uninteresting meeting, etc.

Trade less to earn more

In the end, the quality of your trading is not only measured against the standard of living that it will allow you to have, but also by the quality of life that it gives you. I advise amateur traders not to over trade, despite all the frustration that they may feel by missing opportunities because of their professional lives. I was a teacher for 10 years, I am well aware of this frustration...meetings with students' parents while the Michigan index (which at the time made markets shake) was going to fall... a true torment...

Try to trade as if you were already trading on your own account, only take good positions, if one evening you do not enter the market, it doesn't matter, there will be other evenings. By trading less, less impulsively, less with a sense of frustration, you will earn more in the end, if your dream is to become a trader on your own account, it will get closer much more quickly, your working capital will surely and steadily increase.

List of my personal trading rules:

1) Trading rule number 1: do not lose money

2) Trading rule number 2: reread rule number 1

3) Trading rule number 3: always have a backup plan

4) Trading rule number 4: only trade when you are on top form

5) Trading rule number 5: think for yourself

6) Trading rule number 6: check your losses

7) Trading rule number 7: don’t force yourself to trade

8) Trading rule number 8: don’t stick to conventional trading rules

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