Coffee Traders' Forum - A Discussion about Coffee Futures Trading
Coffee Traders Discussion Forum
Mind Control: The Essential Tools for Consistent Trading Success
People who trade do not act in a rational manner. Their trading activity is a response to the emotional factors completely outside the parameters of the fundamental model. The largest variable to consider when trading is other traders. Every other person who trades is a market variable. Any single trader can cause virtually anything to happen. This means no matter how much you learn about the market’s behavior, no matter how brilliant an analyst you become, you will never learn enough to anticipate every curveball the market will throw at you to cause you to be wrong and lose money. You will be faced in constant uncertainty.
While collective behavior patterns are quantifiable and repetitive with high statistical reliability, it is a probability not a certainty. Technical Analysis is simply a method and a large body of framework that has studied clear indications of when there is a greater probability of one thing happening over another. In a sense, technical analysis allows you to get into mind games with a historical context. You’re playing poker and trading at the same time with the knowledge that when an opponent has a hand of pocket rockets and if the flop is either gunning for a straight (jacks queens king’s) that they’d likely attempt making calls and want to be in the game than to fold the trade. Similarly; expansion breakouts, continuations, bounce and short lived plays are historical setups . Studying years and years of data allows us to project the future price movement proving that we can mimic the if to produce the then.
However predicting the price movement is not going to make us consistently profitable traders. Only getting into and out of the trades are what defines the ones with money and those without. The big question is whether we can master the trading aspect of the price movement. Trading involves varying degrees of frustration and extreme exasperation. While the markets can be described as an endless arena of opportunities; it is also exposure to adverse psychological conditions of fear, anxiety, exasperation, disappointment, betrayal and regret. What separates winners from losers is to achieve a mindset that remains disciplined and focused and confident despite all these adverse conditions.
All trades are risky because all outcomes are probable , not guaranteed. Have many traders accepted the possible consequences?
Four Primary Trading Fears:
1.) being wrong – losing money (staying wrong and not cutting losses after the stop is hit)
2.) being wrong – missing out (staying sidelined)
3.) being wrong – leaving money on the table (selling early)
4.) being wrong.
The source of our trading difficulties is internal; like a virus that plagues its host. If you cannot trust yourself; you will hesitate; jump the gun ; be reckless and hope that the market gives you money, hope that the market will save you from your inability to cut your losses. These are all self generated errors.
Market analysis is not the path to consistent results. It will not solve the problem of lack of confidence; lack of discipline or improper focus. 95% of your losses are trading errors caused by fear. Your fear is immobilizing. It causes you to freeze or to run. You will block yourself out from the limitless possibilities and opportunities and you will narrow your focus to the object of your fear than see the big picture and process market information objectively. Indeed, understanding and controlling your perception of market information is important only to the extent that you want to achieve consistent results.
The best traders are not afraid.
They aren’t afraid because they’ve developed the greatest mental flexibility to flow in and out of trades based on what the market is telling them about the possibilities from its perspective. They listen to the market.
The best traders developed attitudes preventing them from being reckless. Confidence and recklessness aren’t the same.
The best traders truly accept the risk. They have eliminated the tendency to rationalize.
The successful trader that you want to become is a future projection of yourself that you have to grow into. Growth implies expansion. Learning. Creating a new way of expressing yourself. This is true even if you’re already a successful trader in order to become more successful.