The concept we are talking about in this article is very important to understand and once you realize that it is actually true, it enables you to see trading from a whole new, self-empowered perspective. We asked ourselves: How much can we actually control when it comes to trading? Or do you believe that you are a victim to whatever the markets are doing? The answer will surprise you.
The one thing you can’t control
There is only one thing in trading that you have absolutely no control over: how price moves and the outcome of a trade. At any given time, anything could happen in the markets and it is not only limited to regular price behavior. A central bank or a government can make an unexpected announcement or a geopolitical happening can impact markets significantly.
As a trader, it is not your job to outsmart the markets and you don’t have to predict what is going to happen next. As we will see shortly, a trader has endless possibilities and that he is in total control over his own well-being.
What you can control
When you trade
Let’s start with the biggest advantage as a trader. You are the one who is deciding when to enter the market and when to just sit on the sidelines. If you don’t like what you are seeing on your charts, you just do nothing. Therefore, only if you feel certain that you have an edge, you enter a trade.
Amateur traders make the mistake that they believe they have to be in the markets all the time. You only need a few good trades every month to come out ahead. Live to trade another day. The more you understand that you don’t HAVE TO trade, the better your performance will be.
Avoiding losing trades is far more important than finding winning trades.
When you exit a trade
And here comes the second huge advantage for you as a trader. Once you are in a trade, you are not stuck and a victim to whatever the market wants to do with you. At any point in time, you can push the button and be out.
If you see that price is going towards your stop loss order, don’t just sit there, but take action and close the trade manually to minimize losses. And when you are in profit, but you see signs that price is reversing, don’t give it all back and monetize on your gains.
You are in full control all the time. Although you can’t control the outcome of a trade, you have major influence about how much you are winning and losing and when you want the trade to be over.
Pick your weapons
Every trader is different and therefore you have to find the tools that fit naturally for you. Whereas some traders prefer to use indicators to make trading decisions, some prefer to trade pure price action and a third group uses a combination of both.
But it does not end there. You can also choose from a variety of tools. Different indicators, oscillators or momentum, tools such as moving averages or Fibonacci, candlestick analysis or support and resistance are just some of the tools that you can choose from.
And it gets even better. Whereas some traders think that the lower timeframes are too noisy and hectic, other traders prefer these fast-moving charts. You can pick your investment horizon and when you make trading decisions completely self-determined.
There is no reason for a trader to trade based on a trading method that does not fully complement his personality.
Your insurance as a trader
A stop loss is a great instrument, although most traders just see it as that nasty thing that kicks them out of their trades for a loss. However, only by using a stop loss order you can control how much your maximum loss will be. By using a stop loss, you eliminate a lot of uncertainty because you already know what the worst-case scenario will be. Cherish your stop loss!
How you interpret trading
“You cannot control what happens to you, but you can control your attitude toward what happens to you.” – Brian Tracy
Revenge trading or over excitement are just two reasons why traders lose much more money than necessary. Emotions and psychology play a big role when it comes to trading success, or failure, but keep in mind, they are created in your head and you are the one who is enabling and controlling them.
A loss is a loss. It’s inevitable, part of the game and no matter how good you are as a trader, you will lose countless trades. The harder you try to fight losers, the more money you will lose eventually.
On the other hand, there is also no reason to get excited about a winning trade. A winning trade should be normal. Yes, it’s great to make money and that’s why we are all in this game for in the first place, but a trader should never get over excited. Move on, follow your plan and treat trading as a business.
Conclusion: Don’t fight the markets. Use your possibilities
Although you can’t control everything, you have great advantages. Yes, you can’t control the outcome of a trade, but there are a lot of different possibilities how you can make sure that the odds are in your favor. A trader is not the helpless victim to whatever the market wants to do to him, but he is the one who is in full control ALL THE TIME!
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