In one of my previous posts, I discussed how important it is to learn to deal with a loss. Today, I want to talk about the opposite: learn how to win.
As much as losing can produce number of bad behaviors and self-destruct actions, winning can lead you on a very slippery path. That being said, winning does not only increase your bank account (which is the ultimate goal for everyone in this business), it also boosts your confidence and that’s very important for a trader. Without confidence, you miss opportunities, you take profits too quickly and you second guess yourself to a point where you can’t take decisions properly so we want to avoid that state of mind at all cost.
But all of that leads me to one of the biggest danger in trading: over confidence. During my short trading experience, my biggest losses where always after my biggest wins. After winning, I told myself that because I won money, I could go back in the market and if I lost the money I made, it’s not that bad. Or I would see myself better than I actually am and start taking stupid risks thinking “I get it now, I know where the market is going” and in the end realizing that things changed.
The only thing I want to emphasize here is that over-confidence is very dangerous place to be and to avoid it, you should do the following things after a winning trade:
- Analyse your trade (why was it good, how can I do this trade again and again, etc.)
- Ask yourself : did I get lucky ? If yes, just directly to point #4
- If you go back in the markets to place another trade, be sure that it is because your analysis leads you to it rather than just pure greed
- Discuss your trade with your mentor, let him give you some feedback
Winning is the most amazing feeling a trader can get. Trust me, if you play that game smartly and get help for experienced people, you will win at some point and you’ll enjoy it like crazy. Just make sure that you manage your success properly and keep your two feet on the ground.