Monday, June 12th 2013 by Tim Lanoue
When it comes to being a trader we often fall prey to measuring our success by gauging the sum in our trading account. Unfortunately for us this is a rather poor technique for measuring success. If this was the true way to measure success then I must have been an icon turning $200 into $9,000 in 10 days. How did I accomplish such success? Well I was very aggressive, more aggressive than I should have been, over playing the market not thinking much about the possible consequences. But, if you were to look at the next 10 days, I would have been one of the biggest failures of a trader in history. Losing all but $1,500 in 5 days in a period half that time. So what happened to the mature, fruitful trader that I was? Where did he run off too? How could I possibly measure my maturity and success after such losses?
The reason why I am writing this article is because I want to share with you my experience, my knowledge and give you the right information so you know how to properly access your level of maturity as a trader. So here are 3 signs that reflect you are maturing as a trader.
#1 Use of Proper Money Management
When it all comes down to trading maturely and successfully the most important instruments to use is proper money management. When things are going good you can prosper and grow as a trader, but the moment when things go downhill and turn dark you can be rest assured that proper money management has saved your hard-earned money. I feel compelled to admit that I believe most new traders think that trading online is a quick rich scheme but it isn’t. It is not a sprint but rather a marathon. It is easy to sit and day dream about the possible income you could have earned if you would have placed another $100, $200 or even $500 for an old winning trade. It is that naive mindset that gets traders into trouble, because they tend kick money management to the curb saying if they would have placed that added amount they could have made that much more. So the next time they take a trade with a larger amount and lose it they are in aw, wondering how they could have been so careless. Leaving them upset often times causing them to double up again on the next trade which may very well diminish 70% or more of their account in as little as 2 trades. It is that harmful mindset and those irrational actions that can cause even the most mature traders to turn into immature traders.
So how can one implement a proper money management strategy? Well the answer to that is easy, simply take the sole sum of your account and tell yourself you are only going to trade 5-10% max per trade. At the beginning of each day, force yourself to only trade within those percents. An example would be if you have $1,000.00 in your trading account and decide you are going to trade 5% of your account balance per trade. To start off the amount would be $50.00 which may not sound like a lot but you can earn a decent amount of money for every right trade. Remember trading is like a marathon, not a sprint!
#2 Avoiding Emotional Trading
The second sign that shows that you are becoming a mature trader is avoiding emotional trading. That means no more nervous feelings when you place your trade, no more trigger happy index fingers and no more overplaying the markets to compensate losses. Avoiding emotional trading is a difficult task to do and cannot be done by many traders. It is this skill that needs to be learned in order to become a mature, successful trader. In order to learn more about how to avoid emotional trading please stick around for my next article solely concerning the harmful effects of emotional trading that will be published later this week.
#3 Following a Strategy, No More Holy Grail Searching
The last sign that dictates if you are becoming a mature trader is if you are following a good strategy. I feel that many online traders today are looking for the holy grail of trading strategies or systems. So much precious time is being spent searching for the one system or strategy that will make you profitable, when in reality all you need to do is find one decent one and stick to it. Through the thick and the thin you utilize your strategy, on average you only need to be right 57% of the time to make profit, so use this percent to your advantage. Don’t spend countless hours searching for a better strategy when you could be profiting using a decent strategy that you may be using now. Yes, there may be times when your strategy isn’t working out in you favor but you are never sure how well your strategy works until you use it for an extended amount of time.
To conclude, if you are unsure of your maturity level as a trader, try to distinguish if you have followed these three signs. If you have chances are you have found good success in any form of online trading. May it be binary options, online Forex trading or stock exchange if you noticing that you are following these signs then you have a bright future! To learn about more about a great strategy please stay around where I will go over in depth and in video one of the most accurate trading strategies used today.
Check out the Binary Options Play-List on Michael Freeman’s Channel for a compilation of BO Strategies!