It is typical for a modern person to count on the rapid achievement of goals. Advertising actively exploits this psychological vulnerability. We are offered to become slim and muscular in a couple of weeks by buying a subscription to a fitness club. Or chew a new piece of gum and immediately get rid of caries. Or be insanely happy by drinking lemonade of a certain brand.
This primitive cunning is also present in trading. Just today I saw an advertisement for training a trading strategy, the use of which is allegedly able to bring 4000% (!!!) profit per month. The person who receives such a profit is an incredibly modest guy, he was even ashamed to open his name and lay out the trading history
Learn to set real goals, do not chase millions and billions of dollars at once, everything has its own time. Your initial task should be to survive in the market. Everything else later. If you have not lost money for several months in a row, you can congratulate yourself after all, you have reached a level that 95% of traders cannot overcome. This is a great result for a beginner.
After reaching the break-even stage, start working on gradually increasing profits. Again, thinking about the real size of earnings, and not about money waterfalls. A profit of 1% per month is a success. Even a stable monthly profit of 2% is an excellent result. This is how much Warren Buffett earns from the 50s of the last century to this day.
Or are you smarter than him?
When calculating interest on interest without withdrawing funds from the deposit the progression generally works wonders. Check yourself on the calculator, taking your trading account as a starting point. How much can you earn in five years at 10% per annum? And in ten years? Surprised?
For your information, investment managers of large hedge funds and major banks are simply happy if they manage to earn 15% per annum. As one major investor said:
Their names are forever in the financial hall of fame.
Recommendations:
Do not relax, even after reaching the level of conscious mastery. There is always somewhere else to grow. Even steadily making a profit, from month to month, from year to year never consider yourself smarter than the market. This is the most dangerous mental trap. Repeated financial crises every ten years (or more often) can suddenly and crushingly correct such self-confidence. Traders who survived the crash of 1987 recalled that the market then opened far beyond the level of the established stop-loss. Just jumping over them all in one fell swoop. In such a stalemate, stock market players can only look at the losses.
You should never stop working on improving your trading system. This is by definition an infinite process. Markets tend to change, and what worked perfectly yesterday may not work at all today. Observation, constant self-education, creative thinking can not but give birth to new trading ideas. You will begin to notice more and more new market vulnerabilities. And use them to make a profit.
Do not try to embrace the immensity to profit from every price movement in any direction. Its impossible. Our task is to get a decent profit on obvious trends. It is enough to be on the right side of the market even for 50% of the life of the trend. For example, if a short-term bullish trend lasted for a week, and you held long positions for two or three days great. This is more than enough.
Unconscious (intuitive) competence
Once upon a time, a young Russian scientist Peter Kapitsa (future Nobel Prize winner in physics) I was at an international technical exhibition. It was in the first half of the XX century. Then the United States presented a technical novelty a complex electromechanical device. Suddenly, right during a demonstration in front of the public, this pride of American engineering broke down. It was not possible to perform repairs on their own.
And then someone suggested: Among us is the great Russian scientist Kapitsa. He will surely be able to fix it, he is a genius!".The price for repairs was promised at that time huge a thousand dollars. A lot of money.
The physicist accepted the offer and asked to bring him a hammer. He carefully walked around the unit from all sides: looked, listened, thought. Then he swung and hit a certain point. The device immediately started working. The manager of an American company paid the promised amount (for comparison with todays prices, you need to multiply by about thirty we get $ 30,000).
For a report to the accounting department, he asked to give him a receipt for receiving money. And an estimate for repairs with a list of completed works. Secretly hoping that Kapitsa would be ashamed to take the entire amount for such a small effort. Just one hit.
However, the scientist was not confused by this request and he wrote on a piece of paper:
Receipt
I have received US $ 1,000 according to the estimate for the repair:
Hammer blow $ 1
Determination of the place of impact $ 999
This seemingly simple blow concealed a huge amount of experience and knowledge.
Intuitive trading is the last stage at the end of a long and correct way. And it will not be achieved in a short time. You will not be able to jump over the steps (skill levels). First you need to understand that you know almost nothing and do not know how. Then you will learn a lot, gain experience, including unsuccessful experience. And only then, perhaps, an intuitive understanding of the market situation will appear.
Intuition is an unconscious skill. Jesse Livermore wrote about intuition in trading, being already a millionaire, after decades of stock trading. Jesse Livermore wrote about intuition in trading, being already a millionaire, after decades of trading on the stock exchange. George Soros wrote about the same thing, after successfully managing his multibillion dollars investment fund for many years. If you do not have at least five break-even years in the world of professional trading behind you, do not rush to become on a par with the people mentioned above. Its too early for you.
A novice boxer who knocked on a pear for a couple of months and imagined himself ready for a fight with Mike Tyson is not just ridiculous. Dangerous to himself. He will lose with a probability of about 100%, and its still good if he stays alive and well. To begin with, the right step is to train like Tyson.
Mike recalled in his autobiography Undisputed Truth that after training, he did not have the strength to walk, and he was crawling to his room. He lived at that time in the house of his coach Constantino Cus DAmato. He had to crawl from the first floor, where the gym was located, to the third floor. And only then, after long and hard training, Mike defeated opponents in the ring in a matter of seconds. Most often a direct blow to the chin. The simplest intuitive movement.
And yet, every trader (beginners even more often) has encountered one or another manifestation of intuition. Many people are familiar with the feeling when, without any clear reasons, it seems that the trend is about to unfold. Or vice versa it will continue. The irrational principle is generally very strong in a person.
So, in order not to lose profit, you need to fix it right now. Then it will be too late! But after the order is closed, the price moves in the right direction by 3,000 ticks. Or the same trick with losses: it seems that the trend is about to turn around, and the losses will definitely turn into profit. We need to be patient a little more, and more, and more This may result in margin call (lack of funds on the trading account) or stop out (forced closing of positions).