My Trading Alter-Ego Made Me a Profitable Trader
Are you a born trader? I'm not.
Recently I came to the realization that I have two distinct personalities. There is 'Nick' and there is 'Trader Nick'. I had to create this second personality to do my trading.
You see I am a terrible trader because I am:
- Impatient
- A risk taker
- I do not plan ahead.
Ok that's enough of my anti-trading qualities. The bottom line is, I am not a natural born trader. The three qualities, mentioned above, should have utterly destroyed any chance of me becoming a successful trader, but they didn't.
I was able to create a trading alter-ego. A guy that:
- Is infinitely patient
- Does not take unnecessary risks.
- Plans ahead
This alter ego awakens every time I open my trading platform.
So why do newbie traders find it so hard to defy the odds and become successful traders?
Because it's hard. Because it requires us to significantly alter our perspectives and step outside our comfort zones.
It's almost like becoming another person.
How to Create a Forex Trading Alter-Ego?
Well, that is far beyond my realm of expertise.
What I can do for you though is explain, in detail, the traits that make up my alter ego. Maybe you can adopt some of those traits for yourself.
These traits are not all essential but I have found that they help.
Dissecting My Alter-Ego
So let's inspect the mind of my alter-ego and see what we can find.
First Important trait:
Letting that which does not matter truly slide.
This trait is first because it is far and away the most important trait, when it comes to my trading. The ability to let unimportant things slide is an invaluable asset to any trader.
Many newbie's tend to dwell on unimportant details. These details can range from a simple losing trade to a winning trade that was closed out too early. If I have a losing trade, or I close out early, I let it slide. There is no reason to dwell on the negative.
So learn to let it slide. You need to concentrate on the positives.
Second Important trait:
Embracing mistakes and learning from them.
Easy one...... and don't be afraid of screwing up.
Before I became consistently profitable, I blew two trading accounts. My first trading account was $1,000. I managed to double the account in one week and then lost it all. I did pretty much the same thing with my second account.
So I messed up a few times, but instead of crying like a baby, and giving up, I kept at it. Mistakes are essential to our learning. Do not be afraid of making mistakes but ensure when you make mistakes, you learn from them. There is nothing dumber than consistently making the same mistake.
Living in fear of screwing up restricts your trading freedom. So let go and relax a little, you are going to make mistakes as they are inevitable. Accept them, learn from them, and get over them.
Third Important trait:
No Fear
No you don't have to be a mindless, emotionless robot. However, if your heart starts pounding, beads of sweat appear on your forehead and your hands start to tremor whenever you enter a trade you have a problem.
I used to get really nervous whenever I opened a position and because of that I used to close out early. It sucked having a target of 100 pips and only making 20 pips because I panicked, at the sight of a slight retrace. My solution was to trade less money.
It's not rocket science. The more money you have on the line the more worried you become of losing it. Over time, I started to increase my stake, in stages, as I built up a resistance to that trading nervousness.
Now I am a fearless trader. Muahahaha!
Fourth Important trait:
Independence
If you are not independent you will have a very tough road ahead of you. I am sure a lot of you know exactly what I'm talking about when I say traders are constantly put down by family and friends. Perhaps you've heard them say these kind of things before:
"It's a scam"
"It's too hard you'll never make it"
"Get a real job"
"You have a perfectly good and secure job, why do you want to leave it and take a huge gamble?"
The second you let that crap get to you, you're done. The ability to be independent and block out all the negativity you will receive is essential. The truth is, if you are coming into this market you are an adventurer and you should be proud of that fact. Most of the people putting you down will never do an exciting thing in their lives.
Learning to ignore that rubbish, by being independent, is a massive weight off any traders' shoulders.
Fifth Important trait:
Patience
Sometimes, I look at the market and I think, "This is untradeable". Sometimes this happens every day for a week. The market can be completely untradeable at times, so I won't trade for that whole week.
Every day that week, I will get an email from somebody saying "I lost money". Well of course they lost money. They are trying to trade an untradeable market. Most newbie's do not have the patience to sit out the bad periods. They just don't seem to be able to sit and watch the charts, for a week, without taking a trade.
Patience is essential to a trader. There will always be periods in which you shouldn't trade. Having the patience to wait it out is invaluable.
Being patient is also useful during a trade. Waiting for your target to be hit, instead of closing out early, takes a great deal of patience.
A patient trader is a successful trader.
P.S. I am not a patient person, but when it comes to trading I can sit on the sidelines, for weeks waiting for a trade. I learned to apply patience to my trading. If I can do it, so can you.
Like this post? Than please leave a comment!
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- 12 Essential Trading Tips to Make You a Pro Trader 21:30 12 October 2008
- 4 Psychological Pitfalls That Will Blow Your Account 20:07 04 November 2008
Archived Comments (15)
Forex Blog: Art of the Chart
Wondeful post Nick! I share with you about the same experience, even though I'm not certainly a great trader as you are.........maybe I'll become it in future ;-). I started trading forex in last december and after a couple of months I had burned 11,000 $, about 3 months of my salary!!! When I knew Babypis, I uderstood that I myself was my worst enemy, so stopped trading for a couple of weeks and managed to learn the basics of forex, as well as to working on myself in the direction you have so clearly pointed out. Now I've got back all my money and my account is active by 10,000$. Cheers from an italian trader
Great post Nick. I think one of my biggest struggle right now is knowing when NOT to trade (like you said in your last section). I've already been taught to avoid news time as well as illiquid hours. But there are very few lessons out there on how to look at a chart and say "forget it". We newbies can't tell that we'd be rough waters until AFTER we came out all bruised and beat up. Can you give us some tips on what you see on the charts that make you just walk away for the day/week?
Nick, this is a great post, I feel exactly the same struggle as beginner, I am in demo since 2007 and want to start live, but I do not have enough confidence in myself, the system is not my problem, it is myself.
regards,
roman
Hi NickB, great post (althougth is almost scary, it's like you know me :D).
I'm working on patience because that's my worse weakness (I still feel fear, but not that much). I hope I don't wipe out my acc (I'm near that point) and be like a zen master :). I think I've overcome the independency part 'coz people got tired of telling me crap about wetting my feet in this market.
Anyway, thank you for sharing how you surpass these things that are common on human nature.
Thanks NickB, very interesting insight, who thought trading could teach us so much about our personalites and their quirks, I think we can all identify which everything you have written above as real or demo trader.
Please keep the blog posts coming.
I am looking forward to the Sunday post and "trading with" on the GBP/JPY.
Nick - excellent post! Patience is indeed a great quality in a trader, and without it your risks skyrocket. It took me about a year to develop some basic patience (using techniques like sitting on my hands, literally).
But I think the point about independence is crucial too. I told some people early on in my trading life what I was doing and their reaction/discouragement etc threw me back weeks if not more.
You only lost 2 practice accounts? you are a genius trader then comparing to me. I've lost 4-5, and all because of the msae mistakes, depite that I had "Dont make the same mistakes" written in Capitals in My traders blog (I do have one, helps sometimes, but not enough=). But I've got at least one trait- independant. I've been told a lot of times that this is speculation (said in a pejorative and demeaning way), and its a gamble bla bla....
But I SHALL be profitable, I Like Forex, I WILL DO IT, I will make it in the end with a real account, be it part time wing trading or full time scalper, lol :)
Dahlia ,what time of the day is the illiquid hours?
Thanks for the support guys. Glad to see everybody enjoys the psychology posts as much as the others. I will keep them coming!
I am putting a new one up this week. Something along the lines of:
Five Psychological Barriers That Will Blow Your Account!
@FxTraveller: Don't be so hard on yourself. I had 2.5 years stock market experience before I even touched Forex so I wasn't exactly a newbie to the financial markets. most people who are successful at anything have failed multiple times on their way to success. We are talking people like Richard Branson, Donald Trump, Alan Sugar and Warren Buffet. All of them are swimming in money, but they have each felt the sting of defeat many times over. Oh and good attitude.
@RomanDG: Take a plunge, fortune favours the brave.Trust me when I say, the longer you put it off the harder it will be to open a live account. I have seen it many times before and it is a path you do not want to take. These days you can open accounts with as little as $10. So dig into your wallet, pull out $10, and open up a Forex account. Even a micro live account is better than no live account at all.
Nick, Excellent post. I'm just starting FOREX (like, this is my 3rd day on the web and I just activated my babypip account today). Still trying to suss out what's what, but your post has given me a shot of confidence.
My story is that I will be laid off soon, around the end of 1Q/start of 2Q next year and, at 45 years old, chances are slim to find another position that pays like the one I am losing. Fortunately, I have warning, and figure that by starting now with practice accounts and learning at sites like this, I can at least smooth the transition to FOREX.
Wonderful job Nick. I've spent months with Babypips and everyday has been interesting to me. Before my finding this great site, I lost close to US$10,000 on my life account and that made me freakout thinking its all scam like they said. Now i realise I was my enemy, so I'm about to start all over again, but the difference is I know better now.
Nick, I would like more one on one mentoring as I intend trading Forex full time and would like to know everything about it to be able to trade successfully like Warren...lol.
Any advice will do. Cheers and keep up the good work.
Nick, that post was inspiring, keep up the good work
Nick, that post was inspiring, keep up the good work