Trading Psychology

"I wish I knew then what I know now." How many times has that thought rolled through your head? Our friend James has probably thought that about his trading career hundreds, if not thousands, of times. You see James started on the wrong foot as a Futures trader. He thought the most important thing to understand was the market. He focused all of his energy trying to learn about the market and didn't spend any time focusing on himself as a trader - and he paid the price.

Futures traders have to not only compete in the Futures market but also against themselves. You have the potential to be a successful Futures trader, but you also have the potential to be your own worst enemy. We, as humans, are naturally emotional. Our egos want to be validated - we want to prove to ourselves that we know what we are doing and that we are capable of taking care of ourselves. We also have a natural instinct to survive.

All of these emotions and instincts can combine to provide us with trading successes every now and then. Much of the time, however, our unchecked emotions get the best of us and lead us to trading losses unless we learn to control them.

Many Futures traders believe it would be ideal if they could completely divorce themselves from their emotions. Unfortunately that is next-to-impossible and some of our emotions may actually help us to improve our trading success. The best thing that you can do for yourself is learn to understand yourself as a trader. Identify your strengths and your weakness, and pick a trading style that is right for you. Don't get too far down the road, like James did, before you spend time learning about you.