Successful Stock trading or Futures trading is all about managing your emotions and expectations. You already know that!
Stock trading doesn’t often turn out exactly like we want it to. Especially in an uncertain Fed policy environment and with unpredictable International banking problems. This affects our emotions because we are wired to want instant results
There is a difference between what we expect from a trade and what a trade actually gives us. A common mistake is to expect some unrealistic profit on nearly every trade you take, not taking into account the time frame you’re on or the average true range of price action.
If you’re a day trader it’s unrealistic to place your profit targets 200 points away from your entry. When this target doesn’t get hit you experience emotional pain and distress. Worse is possible confusion.
Also you’d often have unrealistic expectations of how long the trade will take to play out. You want immediate profits and you don’t give the trade the time required to develop. I am also guilty of this. I want every trade I enter to immediately go into profit territory.
It would be gratifying to be so good at timing entries to enjoy a big move in the position on the first day. But if the average daily range is only 60 ticks it’s an unrealistic goal. A trade can often take several hours or days to play out, again depending on your time frame. Keep this in mind because you will never make money if you don’t.
Do your planning the best you can to time the market to move in your favor. The next time you place a trade, you should be prepared to see it out and let it run for days or weeks if it needs to. If you’re a swing Trader like me, don’t get thrown off by an intraday fluctuation against your position. Don’t manually exit too early or you’ll miss out on a potentially strong trend move. Let the market stop you out. Don’t meddle with a good plan.
It’s also very important you understand that each day and each week the market can only move so far. Don’t have unrealistic expectations of how your trade might move in a certain period of time. Now these are only a part of the measures I took to improve my trading. If you want to learn other tips and tricks to be ahead of the game make sure you register to join our futures coaching group.