As most traders would know, good trading is all about having a good trading psychology. For this, you need to understand yourself. There is a famous Indian song which says that if you know what you are, if you know what you can do and what you cannot do, if you know what your limitations are, you can always succeed in life. Whatever happens to you, you will never lose your self respect and you will always be successful.
So, try to understand yourself and choose a trading method that is fit for your psychology. There are basically traders who are scalpers and traders who are medium to long term. Scalpers get in and get out of markets very quickly. Their trades last for about an hour or lose and their profits vary from 7-8 pips to 100 or more pips (if they are lucky enough). They have a SL of mac 30-50 pips. Medium/long term traders trade with a view of 1 week to several weeks Their TP is hundreds of pips and so is their SL.
But what happens is, most traders cant stick to one trading psychology. They start out thinking that they are scalpers looking for 10-15 pips. They do take a few trades as scalpers but find that after they took profits, the trade went their way for several hundred pips. So, next time they are tempted and wait a little longer but then suddenly, the trade moves in the opposite direction and gets close to their scalping SL. They suddenly start thinking like a medium term trader. They think 'why dont we let this run and maybe it would turn back'. What happens ? even though they increase their SL, it still gets hit and they lose 150 pips or more. Imagine losing 150 pips aiming for a TP of 15 pips ??!!
Vice versa for medium term traders. They start off thinking to go for medium term for SL and TP of more than hundred pips but when the trade starts moving against them for 20 pips, they get scared and get out of the trade only for the trade to turn around and hit their TP....Or they get satisfied with just 20 pips profit and they start taking their profit too soon.
All the above is perfectly the wrong way of trading. Decide what kind of a trader you are and stick to it, whatever happens. If you are a scalper like me, have small TP and SL and take them as and when you see it. Dont bother about the trade after closing it. The more you bother about a closed trade, the more it affects you psychologically.
So understand who you are and trade. And always follow the KISS principle. Keep It Simple Stupid !!
So, try to understand yourself and choose a trading method that is fit for your psychology. There are basically traders who are scalpers and traders who are medium to long term. Scalpers get in and get out of markets very quickly. Their trades last for about an hour or lose and their profits vary from 7-8 pips to 100 or more pips (if they are lucky enough). They have a SL of mac 30-50 pips. Medium/long term traders trade with a view of 1 week to several weeks Their TP is hundreds of pips and so is their SL.
But what happens is, most traders cant stick to one trading psychology. They start out thinking that they are scalpers looking for 10-15 pips. They do take a few trades as scalpers but find that after they took profits, the trade went their way for several hundred pips. So, next time they are tempted and wait a little longer but then suddenly, the trade moves in the opposite direction and gets close to their scalping SL. They suddenly start thinking like a medium term trader. They think 'why dont we let this run and maybe it would turn back'. What happens ? even though they increase their SL, it still gets hit and they lose 150 pips or more. Imagine losing 150 pips aiming for a TP of 15 pips ??!!
Vice versa for medium term traders. They start off thinking to go for medium term for SL and TP of more than hundred pips but when the trade starts moving against them for 20 pips, they get scared and get out of the trade only for the trade to turn around and hit their TP....Or they get satisfied with just 20 pips profit and they start taking their profit too soon.
All the above is perfectly the wrong way of trading. Decide what kind of a trader you are and stick to it, whatever happens. If you are a scalper like me, have small TP and SL and take them as and when you see it. Dont bother about the trade after closing it. The more you bother about a closed trade, the more it affects you psychologically.
So understand who you are and trade. And always follow the KISS principle. Keep It Simple Stupid !!
