There are several traits that a trader must have in order to be a successful trader. However in this post today, I will be going through one important trait that I believe is the most important which is your ability to accept risk.
In order to be able to make a living in trading, you have to be able to generate income consistently as well. This involves your consistency in following your trading plan, entering trade when all the conditions in your plan occur, never adjusting your stop loss that you have planned and never exit a trade before it hits your projection.
Therefore the most terrible error that you can make is usually after you have lost a trade that you feel is a sure winner. This will cause you to lose your rationale and trade based on emotion. With your lost of money, you will quickly enter a trade to get back your losses that you think should not have occurred even when the condition is not right.
To be frank, this kind of revenge trading seldom results in a win and most of them gets you more losses in the end.
So why did revenge trading occur?
Revenge trading occurs because traders do not have the ability to accept the risk. In fact, every time before you enter a trade, you should know the amount of comfortable risk that you can take if the trade goes wrong. If you always stick to this mentality of trading within your accepted risk, you will not be upset or angry when you lost and you will continue to plan your next trade properly.
Here are some ways you can do to help yourself accept the risk:
1) Proper Planning: There is nothing more important than having a proper planning when it comes to trading. You should always plan your entry, exit, stop loss and criteria before you enter a trade. In this case, once you have all these in check, you will never alter anything once you enter your trade. If you get stopped out, it is at an amount that you have already anticipated and so you will definitely be able to accept the risk.
2) Treat Trading like a Business: If you are able to think of trading as a business, you will be able to accept losses as part of expenses that you have to pay in a business. If you can accept the losses that you incur, you will not think that the market is against you every time you have a losing trade.
Spend some time to think the above over to see if you have the ability to accept risk in your trading today.