This is the second part of a great article we introduced yesterday about your emotions and the psychology of trading. Sometimes not trading is the best trade of all. Read on. The GotForex Weekly Newsletter by Rob Booker Are you currently experiencing unusually large gains? Here are some thoughts. There is nothing quite like the joy of making a good trade. We like to be right. We enjoy the thought that we planned, executed, and closed a position successfully. Here are some thoughts if you've recently found yourself in this fortunate circumstance:
1. Well done! Congratulations on the profitable trading!
2. Remember that your profits are only "on paper" until you take them out of your account. A close friend of mine accomplished the nearly unbelievable feat of earning profits of over $60,000 in his trading account earlier this year. He sadly lost all but $3,000 of that money, in a margin call, in just a couple of weeks - as he let the entire account slip away by making trades that were far too big. Princess Leia once told Grand Moff Tarkin, "the tighter your grip, the more star systems will slip through your fingers." Substitute "pips" for "star systems" and you have yourself the beginning of a good book about trading psychology.
3. It's easy to fall prey to the worry that you did not hold onto your winning positions long enough. Be careful about being ungrateful for the winners that you do have. Don't let what you didn't get spoil what you did get.
4. Just because you've had some good trades does not mean that you have "figured it out." There is no holy grail of trading. Every trading system has its weaknesses. Be careful not to concentrate so much on the good points as to not pay attention to what can go wrong.
5. Consider using part of your profits as a "Research and Development" budget. With your profits, you may have bought yourself some time to test, fine tune, or otherwise improve your trading skills. I'm not saying you should spend your money on education, or books - or spend any money at all. Perhaps the profits simply give you some breathing room to sit back and deeply think about what you did that got you to this point where you have experienced some success. Learn from your success!
Most of all, please don't become so accustomed to this huge market movement that you expect these huge trends to come along every week of the year. We are experiencing volatility that is off the charts, that is higher than anything we've seen in a long time. Most of the time, the market does not move like this - so please do not start to expect that the GBP/JPY is going to move 1,000 pips every day for you.