After working with thousands of trader, along with my 13+ year trading career, I have seen the dozens of pitfalls and traps developing or struggling traders continually fall into, that I myself have fallen into early on, and that separate oneself from trading profitably and consistently.
In this article, I am going to share 5 things all forex traders must avoid, but will wait to hear your responses as to what would be the solution to these traps which most traders fall into.
#1 Focusing on Obstacles
Do you come up with reasons why you cannot be successful? Blame the broker, or number of screens you don’t have, your background, your account balance? Do you come up with justifications why you cannot fill out your trading journal, follow your trading plan, or simply put – be successful at trading?
One thing you must avoid when learning to trade successfully is focusing on obstacles – particularly what is stopping you from trading successfully. Ask yourself how/if you do this in with trading now, and see if you can discover why it may be holding you back.
#2 Focusing Only on Your Sub-Conscious Ability
What is your favorite subject or type of article to read? I’m willing to bet its more often about trading and a particular strategy – perhaps about a price action system, or an ichimoku strategy. How much time do you spend looking at charts, studying systems, looking for systems, setups, and trading methods? Then ask yourself how much time you spend on risk management and your trading mindset?
Focusing on the former is only focusing on your sub-conscious mind, and by itself, no matter how developed it is, or how many hours of screen time you have, cannot lead you to profitability or consistency (by itself).
Ask yourself how much time you dedicate to this in relation to the other aspects of trading.
#3 Focusing on Problems
After a big loss, what do you spend your time thinking about? For the mistakes you make over and over again, where does your thoughts, mind and energy go to? Ask yourself how much time you spend focusing on the problem when it comes to your trading. Ask yourself how much time you spend focusing on what happened (in the past that you cannot change).
#4 Focusing on Outcome
I know, it’s hard not to focus on the results, the profits (or losses), your account balance, your accuracy and overall performance. But ask yourself how much time you spend focusing on the outcome, and what you think that does to your self-image and mindset about trading. How much time do you focus on the result of your trading for the day, on your lack of profits, success, or consistency?
#5 Not Protecting Your Capital – Your Mental Capital
There has been tens of thousands of words written by keyboard and ink about preserving your capital, but what about protecting your mental capital? How much effort and time do you spend protecting your mental capital, your self-image, and your trading mindset? What kind of effect failing to do this has on your mind, your confidence and performance?
Take some time to really meditate on these things, how you may be doing some (or all) of them currently, and how they may be affecting your trading. Please do not hesitate to share your experiences around these as well as the info can be valuable for all.
Later this week, I will write a follow up article as to why it’s important to avoid these mistakes, how they impair your performance and growth, and then discuss solutions to avoid making these mistakes in the future.
Looking forward to your comments and thoughts about this.