Trader Self-Control: A Necessity Or An Impediment? 

Control – we all need to feel we have it and tend to seek out situations where we get the feeling we are in control as opposed to having forces control us. For the trader this basic need is quite possibly one of the biggest barriers they face to profitable trading.

Understanding the need and what creates it is pretty simple as traders have put in place a strategy that requires the market to move in a specific manner in order to profit from it. Their money is on the line and they want to be able to control as many elements as possible to reduce their stress and manage their risk.

However, the very nature of markets means they are not going to be controlled and so the trader has to control their own emotions and impulses instead. A tough one as one of the traits of most traders is an independent streak and an expectation that they have things their way.

For traders, these are good things to have as it is what gives them the ability to go their own way and set themselves up to take advantage of market shifts by going against the crowd. However, when things don’t go their way, how they react can significantly impact their trading and their ability to shift their strategy accordingly. Many will be frustrated and can become angry as events seem to conspire against them. They forget that things such as interest rates, economic reports and media hype are all independent of them and are therefore out of their control. Indeed the markets are never going to be controlled and the trick is to work with them.

So what can the strong minded and independent trader do? Well first and foremost they need to retain their composure and discipline. This will help them get through any blips as the markets apparently conspire against them. They need to avoid becoming angry at events as it will only lead them to impulsive trading which rarely pays off.

The use of a detailed trading plan that gives clear entry and exit strategies will ensure that the trader always have a clear and defined path to take no matter what the markets throw at them. Plans give a sense of structure within an unstructured world which helps bring back some element of control. This plan will also give a focus which should have dissipate the frustration and give back a sense of control.

So whilst it is not surprising that a trader is going to try to exert maximum control as that is what helps them cope with putting their money on the line, it is not realistic for them to think they can control all the elements.

Have a detailed trading plan and a risk management strategy will give a significant amount of control to the trader and should help them retain their focus and not spiral into negative emotions if the markets don’t move as anticipated.

The trader has to learn to live with that old adage “change the things you can and learn to accept the things that you cannot”. So control the plan and let it follow the markets.

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