Do you obsess over such decisions?
I doubt so. Why should you? These decisions have very little to almost no impact on your life. On the other hand, to someone with obsessive-compulsive disorder you'll get a very different reply. Every little thing is a big deal to someone with obsessive-compulsive disorder. So what does this have to do with trading?
The Obsessive-Compulsive Trader
A novice trader learning the trade may behave as though they had obsessive-compulsive disorder. They obsess over every single little detail, constantly abandon their trading plan in the middle of a trade, are impatient with the way the markets are moving and so on. Even setting stops that are 1 - 2 pips different can be a big deal decision.
To a seasoned trader, such a trader may really seem to be suffering from obsessive-compulsive disorder!
Seasoned traders make their decisions a matter of fact. It's a decision that has to be made, and so they make it. To them, trading decisions are every day decisions. They have made them so often that it often comes with little or no thought. It seems as though it makes no difference if the trade turns out profitable or not. And with seasoned traders, you can't tell if they have had a good or bad day.
Wouldn't you like to trade in such a free and easy manner?
It makes trading and pulling profits out of the market seem almost effortless, almost as if it were no big deal.
Taking Your Trading Too Seriously
Traders often take their trading decisions too seriously and it's easy to understand why this happens.
When your money is on the line, you want to protect it and make it grow. Each time you trade, you worry about losing it. As a result, it's easy to obsess over every single little detail and every single decision because it affects something so important and close to your heart.
Another reason why traders take their trading decisions so seriously is because they feel they have to be "right" about the markets. If they were to take a loss, it hurts their ego that they were "wrong", and it makes them conscious of what other traders might think of them. The more they dwell on it, the more significance each detail takes on. Until each trading decision can become such a big deal as if their entire social life depended on making winning trades.
Some traders start to have a personal relationship with the market, where every little thing that happens becomes personal. And as a result, every decision and detail takes on personal significance and meaning to the point where a single error can make their whole day lousy. It's almost like having a quarrel with their lover.
When the trader imbues too much personal significance to trading, each loss can be emotionally devastating and possibly even cripple the trader's ability to trade with clarity and confidence. In a sentence, making every single detail a big deal thing is bad!
The more attached a trader gets to every single trade, the more emotional and reactive they can become. Their thought processes get clouded by emotion, and instead of clarity, vision to see the markets become distorted and blurry.
It's much better to take a detached, matter of fact approach towards trading the market. But how do you do it?
Making Trading Decisions From a Detached, Objective Point of View
Season traders know they are going to take many trades, not just a few significant ones. As a result, they view a single trade as part of a series of trades they are going to take. This reduces the significance of the result of a single trade. Together with a solid, tested trading strategy, they know they will come out ahead after a string of trades.
A single loser, or even a string of losing trades, doesn't bother them. It's par for the course. Losing trades are a matter of fact, the "cost" of doing business in the markets.
It also helps you as a trader when you thoroughly understand and prepare for the risks of trading. Using proper risk management, you risk only a small percentage of your trading capital on each single trade. And when you know this, it gives you confidence that a single losing trade won't make or break your ability to continue trading. Even if you should go through a series of losses, you should still be able to continue trading since the bulk of your capital is still intact.
With proper preparation and risk management, the personal significance of each trade is reduced. In turn, this helps you to keep a clearer head, view the markets more objectively and trade more easily. After all, why should you worry? Each trade has little consequence on your trading capital. You might as well take trading free and easy, and have fun doing it at the same time!
And when you understand this, you can start to enjoy trading for trading itself.
Ryan Lee Daniels runs a Forex Trading Education [http://www.smarttradingforprofits.com/forex-trading-education] website for the Smart Forex Trader. Develop Your Forex Trading Strategy [http://www.smarttradingforprofits.com/the-forex-trading-strategy-guide-1] for consistent trading profits!
Article Source: http://EzineArticles.com/expert/Ryan_Lee_Daniels/120397
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