Trading mistake#3: Not being accountable
The power of accountability
Hooray! My tech problems yesterday are resolved, so I am able to post again. A big thank you to Justin for jumping in and posting part 2 of our 5 part trading mistake series. As a recap, the series looks like this:
- Mistake #1 Over leveraging
- Mistake #2 Speculator's Guilt
- Mistake #3 Not being accountable
- Mistake #4 Over trading
- Mistake #5 Revenge trading
Today we are on Mistake #3, the mistake of not being accountable. Having spoken to a group of around 70 or so traders and aspiring traders over the last three days in Dubai I have been once again convinced of the value of this site. Understanding fundamentals is so key to trading and the breakout in Gold, which was clearly signalled with the Fed's leaning towards a cut last night, was a trade I was pointing out to the group I was speaking to last night. The fundamentals, not the technicals, were going to lead the breakout or otherwise of Gold on the 1350 level. This is where ForexLive.com is so valuable, the constant fundamental analysis of the team here and not to mention our regular contributors who add their valuable market wisdom to our proverbial pot. It was good to be flying the Forexlive.com flag as a free, fundamental resource for retail FX traders.
When trading becomes gambling
I was also convinced of this trading lesson, the mistake of not being accountable. From the person who was many thousands out of pocket on open wheat positions to the person long and loaded into Gold, before the Fed meeting. Both asking me for direction and advice with a slight frenzied feel. It was uncomfortable to witness people under strain with large positions they are not sure to hold, but are unequally unsure about whether to close. When trading becomes gambling then hopetimism followed by the inevitable crash. Now, don't think I am one to pour scorn on those who have made these errors. Oh no, I feel the pain and I have been there. I am just a voice in the desert saying, put your trading house in order. Let me show you how. And today, here is lesson three, find some accountability.
Mistake #3 Not being accountable
When I started learning to trade, back in 2009, I did it from the internet. It was a nightmare of a process. You would be hit by a barrage of multiple factors: trading robots, internet forums with 'experts' telling you how to trade, people insulting other people, and internet marketers touting for your business more than your progress. It can take a while for the fog to clear. In fact, you may still be in that confusing position. One of the lessons that I have learnt during that time is that accountability is a great tool in helping your progress as a trader. There is something strangely powerful in just having to articulate your current trading state to another person. It makes you own your mistakes in a personal way, puts perspective on your success and provides greater clarity on your solutions too. So, can I encourage you to keep greater accountability with your trading? Here are four ways:
- Find a FX trader who you can be accountable to. Why not go through each other's trades in the last month and ask each other questions about that record. Articulating your trading can help flag a problem and reinforce good habits that are working. Ideally this will be a person who has years pf experience in the market and can teach you how to marry fundamentals, technical and sentiment together.
- If you can't find someone to help you in this way, keep a trade journal and then make some comments after each trade. I find this less effective than speaking to another person, but you will know your own best learning methods
- This will depend on the nature of your finances and personal relationships, but have a close friend or family member you are accountable to if you are struggling with blowing up your trading accounts. Why not give them an equity figure you will start demo trading with if you hit a certain level. Having a 'think-again' equity level could help stop the rot before it eats too much capital
- Consider getting a group of FX traders to meet in your area. Could you have a coffee shop meet up once a month or once a quarter? Learning online is good, but there is no replacement for face to face contact. I don't know about you, but when I meet someone face to face I find that a far more helpful experience than just meeting someone online.