“Whenever a trader says “I wish” or “I hope” they are engaging in a destructive way of thinking” – Bruce Kovner, Market Wizard
A common mistake for the trader is to treat the market like a personal nemesis.
The market is, of course, totally impersonal, but sometimes it can seem like it is out to get you. Your stop just gets hit or your profit target just gets missed.
It can be hard not to take these things personally, particularly when you see your profits evaporating in front of your eyes.
But as a trader, is important to understand you can’t force the market. It’s not out to get you and it will give you what it will.
(By the way, for those of you who think that bank traders are out their hunting your retail stops, you don’t even come on their radar – it’s one of the biggest fallacies in Forex trading.)
The market does not care so neither should you
The market does not care about how much money you are making or losing, so neither should you.
If you make or lose money on any one trade, and you are worried about it, your focus is in the wrong place.
Instead, your attention should be on your trading, and the diagnostic process that goes along with it.
What did you do right?
What did you do wrong?
Did you lose because of a mistake?
Is the loss simply one of the “costs of doing business” for your trading system? Or has something changed?
Good trading is generally very process driven. Even for intuitive traders this is true, it’s just they have come to understand the inherent structure in the market though feeling and intuition.
By not caring about money, you become more productive in your trading activities, and take responsibility for your results.
If you are caring about money, your position size is too big
Have you ever lost sleep over a trade?
If you are relying on the performance of any one trade, and it is causing you to think about the money that you will lose or make on the position, then you could be trading too big.
Bruce Kovner’s advice on the matter is to “undertrade, undertrade, undertrade”.
He suggests that new traders should generally be cutting their position size to a least half of what they are currently trading.
So, if this is you, it’s time to take action. Cut down your trade size, and start to focus not on the money but on process. Your trading account will thank you.
About the Author
Sam Eder is a currency trader and author of the Definitive Guide to Developing a Winning Forex Trading System and the Advanced Forex Course for Smart Traders (https://fxrenew.com/forex-course/). He is a key team member at premium FX services provider www.fxww.com and part owner of Forex Signal Provider www.fxrenew.com (You can get a free trial). If you like Sam’s writing you can subscribe to his newsletter for free (https://fxrenew.com/newsletter-sign-up).
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