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Vital Trading Factor
The 3 Components of Trading In trading, the 3 most important components are Trading System, Money Management and Trading Psychology. If I may, my analogy of a good Trading System would be like a sword which will slice though the obstacles and slaughter the
enemy in the battlefield. Good Money Management rules are like the Shield, protecting the Warrior from endangering harm and injuries. Trading Psychology would be the skills and strength of the warrior.
The Importance of conditioning the Trading Psychology
If you are following me, you will understand that without skills and strength, the
warrior will not be able to pick up the sword nor the shield. And even with the best
sword and shield in the world, without strength and skills, the warrior is entering the
trading battlefield to collect battle scars and worse still, be slaughtered. How to Train and Condition Trading Psychology?
How does a person train how to box? One way is to just jump into the boxing ring and
start fighting someone. However, without first acquiring the strength and skills, even
with the best boxing gloves, you are likely to be badly damaged at the end of the fight.
But if you do not give up and pick up more fights, chances are you will gain
experience and become stronger after each fight, if you are not permanently damaged. This path is taken by many traders who succeed eventually. They entered a trade
without strong trading psychology and suffered. But they are persistent and continue
to grow. All Great traders go through the 3 stages I termed as Infant Stage, Growth
Stage and Maturity Stage. Most, if not all traders started out thinking they are strong
and can follow the system that they have acquired, but the truth is many traders never
get pass the first and second stage. Back to our example of boxing, most quit or are
slaughtered after less than 10 matches. For those who never give up, their trading
psychology strengthens after each trade, especially losing trade Using NLP to Strengthen and Condition Trading Psychology Is there a better way to train yourself up for boxing without incurring so much better
scar and risk losing your limbs or even life? The answer is of course, yes. By first
training under a proficient coach who will equip you with the skills and knowledge
you need for boxing. But having the technical know-how is not good enough. The
coach will also put you through strength training by going to the gym, doing weights,
or static exercises. He will then likely drill you will punching techniques practiced on
a punching bag. He will then find you a sparing partner to have a practice/friendly
match where you guys won’t go all out to kill each other.
Just as in boxing, the entire training for trading should include trading psychology.
One amazing way to train the psychology is through Neruo Linguistic Programming.
If you understand the need for trading psychology is to mainly deal with undesirable
traits of traders, using NLP can strengthen your management of emotion when faced
certain situations which will arouse undesired emotions like greed, fear and
impatience. Our decisions unfortunately are driven by emotions rather than logic. If
we go against our emotions, we will feel guilty and unhappy for that instance and will
reinforce the beliefs our emotions cook up by searching for biased evident.
NLP helps us manage our emotions through reframing and conditioning. So what exactly is NLP? There are many definitions to NLP and I would rather illustrate using a story.
A man asks another, “What is NLP?” The other replied, “if you really want to know,
you got to do something, go ask boss how is the scratch on his new car?” The first
man went to do so and come back complaining, “Boss is really upset about his car. He
seems so depressed. I should not have asked him about it”
The second man says, “Now go ask Boss how he feels about his recent promotion.”
The man went to do so and came back smiling, “Boss is giving me a treat this
afternoon. I think I made his day… So by the way, can you tell me what is NLP
now?”
“What you have done is NLP. You changed a person’s emotions with just a few
words and questions.”
Put it simply, the story above describes the gist of NLP. The entire NLP makes use of
this principle to aid in training the mind for better trading.
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Contributor's Note
I have acquired trading skills from 7 different trading courses and read hundreds of books before i start making consistent profit from online trading. You too, should take step by step to achieve your trading success!
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The copyright for this content entitled "Vital Trading Factor" has been specified by the contributor as:
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This content may not be copied, distributed or adapted by anyone under any circumstances.
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This intel was contributed by Sean Seah
Sean Seah
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May, 2012
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