Skillsfirst Level 5 Diploma in Financial Trading (RQF) - Module 4 - Technical Analysis
Skillsfirst Level 5 Diploma in Financial Trading (RQF) - Module 5 - Psychology
Skillsfirst Level 5 Diploma in Financial Trading (RQF) - Module 6 - Risk and Money Management
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No matter how good a trader you are, there are days when nothing you do goes right! the key to risk management is never to have a loss, on any trade or on any day, which is impossible to recover. The pitfalls of ego!

Psychologically, it is the last thing you will feel like doing but this is exactly the time to stop before lethal catch up, double up trading starts. Just by walking away you will certainly save further enormous damage to your account and once you are out of the office, you will see the world more clearly and feel much better.

Get familiar with the word discipline!

Once again, it is having the discipline to do this, not just knowing what it is you should do, that makes a successful trader.

Using how you feel on the close…

How do you feel on days you make a profit? Do you feel different on days you take a loss? If so, this can be a significant indicator that you’re allowing your emotions to influence your daily trading activity.

How it can help or hinder!

Many traders don’t understand this, because they tend to realize and recognize the emotional effect of their day’s results only after the markets close, and they reason that their after-hours emotional state cannot negatively impact their trading during the day.

The win/lose rollercoaster…

Feeling like a “winner” on profitable days and a “loser” on losing days tends to indicate that your emotional balance is closely related to monetary gain or loss. Money distorts the process because the potential result of any trade will cause your emotional balance to shift, often resulting in decisions that are not motivated by what is the correct trading decision, but by the potential gain or loss.

Remind yourself consistently that..

Remind yourself consistently that successful traders are not emotionally affected by their account balances, because they tend to view trading as a long-term activity and do not value this activity based on the dollars they gain or lose. Put the facts into a simple truth that the real value in trading is in properly interacting with the markets.

The monetary results of each day are therefore only to evaluate if you did a good job in your analysis of and interaction with the markets. If you made what you thought were the best choices and learned from your mistakes, you had a typical day (no matter how much you made or lost). Often traders are unsuccessful because they’ve convinced themselves that they have their emotions under control when they really don’t.

Use what you have learnt and monitor the emotional changes you experience even if they come after the trading day or on the weekend to make sure that you’re properly managing your emotions. Remember live and learn, use and earn!

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