Many successful people, Traders and Non-Traders, consistently speak of the value of meditation. I’ve highlighted the benefits of meditation in a previous article and how it can help your trading. Despite the obvious benefits it can bring, it is true that many people simply struggle with regularly practicing meditation. So what can you do to help ease in to meditation if you have no experience of it?
How often have you said to yourself, “I need to more grateful. I need to be more thankful for what is in my life. I need to show gratitude to the people around me.”
How often do you perhaps make a point of expressing gratitude for the good in your life? Once a day? A week? A month?
How many times have you tried to instill this habit, but then find yourself falling out of the ‘habit’ and reverting back into your previous routine and busy life?
What does ‘being grateful’ actually mean, and why is it important, not only in terms of trading, but also your everyday lives?
Whether you are relatively young in your trading career or are a seasoned veteran; still unprofitable, or now trading consistently profitably – one thing is for certain – virtually all traders will agree that learning the art of being patient and applying it to your trading is quite possibly one of the most crucial elements to successful trading.
So why is it that many new traders are unable to follow this simple rule…?
In a previous blog post on Fear in Trading, I briefly touched upon the concept commonly referred to as FOMO.
I’ve spoken to a number of traders in recent weeks and one of the biggest concerns they have is not having the patience and discipline to wait for the correct entry signal in fear of missing out on the move they ‘believe’ is about to occur, thereby taking trades against their system – otherwise known as FOMO.
So what is FOMO and why does it occur?
‘Fear’ is something that I bet every trader in the world has at some stage experienced. It could be a fear of loss (losing money), a fear of being wrong (ego), or perhaps even FOMO (Fear of missing out).
What is certain however, is that any traders who have become truly successful within trading have learnt to manage and master their fears. If you cannot do this, then you stand little chance of staying in the game long term.
So how do we combat fear?
How many traders have snatched profits in their trading careers? How many of you have closed trades based on your P&L as opposed to closing based on your charts? Have you closed a trade to ‘protect’ your profits all the while being almost certain that price will still move further in your favour? Conversely, how many of you let losses run to your full stops (or maybe even further!) when you know you are wrong but are ‘hoping’ the market will turn?
Please see the presentation below, on how small but consistent gains can add up over time.
Thousands of years ago, there was an epic tale evolving in a place that is now known as India. In today’s teachings we refer to it as The Mahabharata.
During this time there was a boy called Arjuna, who was one of five brothers & princes, known as the Pandavas. Now one day, the Pandava brothers along with their Kaurava cousins were out in the forest with their combat and military teacher, Drona, who decided that he wanted to test the boys’ level of focus and concentration.
Generally speaking, it is very hard to find someone who can hand on heart say practicing meditation and/or mindfulness has had a negative effect on their performance, whether it be in Trading or in another domain. Why is that?
If you speak to a wide variety of traders and ask them what their number 1 rule is, adding to losers is probably right near the top. The number one rule is probably cutting losses, which we covered in the previous article. Adding to losers, also known as averaging down, is a key ingredient into the recipe of disaster for traders that is large losses.
The first thing to understand is why traders feel compelled to add to a losing position.