Market timing principles are applied not only during the actual trading but rather before and after the actual trade. It involves a fundamental feature called “Discipline”. Traders must be innately disciplined enough to prepare their mind and emotions, even before the actual trading happen, by successfully implementing his own well edged trading plan. This involves not just a thorough preparation. It must be complete and flexible, involving all vital parts of a fool-proof trading plan. Setting a “risk level” is vital in your trading edge which gives you a certain percentage of how much you are allowing to lose in one trade. This depends on your own trading system and your personal risk tolerance that you tend to hone as you go on with your daily trades.
When a particular trade doesn’t go as planned, traders must have the discipline to clear up the position. Results might not provide specific expectations, but every game plan must have its own strategy for coping from the unexpected.
The best market timing is hit when you are mentally prepared. Having a sound and robust mind allows traders to sustain pressure that was garnered from their past wins or loses. Not being emotionally and psychologically stable to start with is a definite call for losing in the trading business. Taking a day off when you are not at your best would be a good idea, till you are mentally prepared for a battle. This mental preparation involves two musts: Identify rewards and manage risks. To identify probable risk – reward ratios will provide a mindset that focuses more on trades that provides far more rewards in hits than in losing, during unexpected tumbles.
Some would think that top traders have constant wins and continuous overwhelming profit, which is probably a result of numerous filtered trading write-ups focusing on winning trades and purposely disregarding their stories of occasional or even losing streaks. What we wish as traders to see would be the how’s in disabling emotional aftermath and recovering. This knowledge can help us anticipate unwanted losses and prevent panic, devastation and destructive returns when inevitable losses in trading happen.
Being constructive in handling these losses can dispel possibilities of careless comebacks. Withdrawing from and ignoring trading losses won’t be of any help in any case. In whatever position you found yourself in trading, it is the outcome of your own decisions, and thus blaming undesirable results is not the most logical thing to do but rather owning up and learning from it can deviate you from being emotionally desolated. Stepping back for a moment and giving yourself a break would give you the chance to assess where you fell short and prevent making any trading move influenced by your unstable emotional state. And lastly get back on the game with an improved trading plan honed from the experience.
Cedric Manrique is a blogger and a passionate trader. He trades Forex, Stocks, Commodities and Futures since 2014. His blog, The Freelance Trader( [http://www.thefreelancetrader.com] ) contains reliable information gathered through various learnings and experiences in the Trading world. He aims to provide people with the know how in carving your own success in the trading industry.