Can you Trade for a Living?
The reality of the situation is that only 10% of traders can make a living at it, and only 5% of traders make a lot of money. Sure, everyone makes a winning trade occasionally, but in the long term, their portfolios and their accounts remain about the same or even dwindle down to nothing. There are all sorts of reasons for this, such as bad timing, poor risk and money management, lack of trading discipline, unrealistic expectations, and a lack of knowledge.
Trading Is Not a Hobby
Since trading is a business, we should treat it as a serious business venture, not a hobby. The world of trading has very little room for emotions. There is only room for calculated, well-planned decisions. Our emotions have a tendency to skew the decision-making process, and far too often, they generate poor decisions that lead to losses. Success or failure in the business world can bring out the best and worst emotions. Clear thinking, experience, discipline, instinct, and skill are essential, especially in the trading world. So our emotions must be kept under control.
To achieve the success in trading, you need to learn how to control your emotions. If you manage to understand human psychology and what motivates buying and selling decisions, you will be able to position yourself ahead of the action. This way you can anticipate profitable trade setups.
How to Eliminate Emotions from Trading
When analyzing the market, the first thing to do from a technical perspective is to identify the market trend and determine the support and resistance levels. How do we do that? Using Fibonacci.
How exactly does Fibonacci drawn will be discussed in Currency Conversion Program, since it is a complicated subject. I’ve met some traders who draw Fibonacci just with one glance at the market. This is not the approved method and, if you have this habit, you’d better get rid of it. Why? Because you must have some strict rules and these rules will make your trade easier and free from emotions. Generally, rules demolish emotions and emotions demolish our trading accounts. Therefore, less emotions mean more opportunities for better results.
By having some consistent rules, you can control and even eliminate your emotions when trading.
Fibonacci serve to identify the market trend and determine support and resistance levels use to gauge the emotions surrounding an instrument or the market overall.
Fibonacci Support and Resistance Levels
Fibonacci support and resistance levels are largely shaped by traders’ emotions and this is where the forces of supply and demand meet. Support and resistance levels are where you really see the ongoing battle between the buyers and the sellers.
Many traders look at these levels to gauge entry and exit points for their trades. A support level is formed when the price tends to find support, preventing the price from declining further. This means that the price is more likely to ‘‘bounce’’ off this level rather than break through it. However, once the price has broken this level, it is likely to continue dropping until it finds the next support level.
A resistance level is the opposite of a support level. It’s when the price tends to find resistance, preventing the price from rising further. This means that the price is more likely to “bounce” off this level than break through it. However, once the price has broken this level, it is likely that it will continue rising until it finds the next resistance level.
Trading is like war. You are battling some very smart, experienced and very well capitalized opponents. To be successful, you need to have an edge, because psychology plays a major role in all forms of trading. For this reason, you need to consistently keep your emotions under control. This can be a tough task when money is involved, but it can be accomplished by establishing and focusing on these set plans and rules of action.
If you consistently follow your rules without breaking them, you could eliminate emotions in trading. And if you achieve that, it can help you improve your trading decisions and, thus, trading will become an art!