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Last time we spoke about starting to think about what development is required for success & this week I’ve tried to draw on two experiences that I have witnessed or will witness. The latter being the Howard Jones concert I’m going to this weekend. Now as I sit back, I often ponder how fortunate us 80’s diehards are with the kind of musicians & vocalists out there. You see, back in the day, there was no x factor, pop idol etc to contend with & pop bands literally had to be formed out of rough cold edges… you only have to look at the human league to know  that a pitch perfect voice was non-existent!

But I do wonder how artists like this can still fill small capacity crowds & still enjoy success, after all, next to the Pet Shop Boys; Howard Jones is Japans favourite artist!

The answer I believe, is that they do what they do best & that is stick to the one kind of music that suits them & when I mean stick to it, I really mean like glue – they know it is their winning formula & by applying it consistently they generate success. Now one off reunion bands like Duran may make a small fortune on the reunion, that is it… no more… & the reason being is that they have changed their musical styles so much to what they thought the public wanted.

So what has all this got to do with trading? Well, if you think about it the successful traders will work to find their winning formula (genre style) & stick to it like glue & the Duranie traders will take one losing trade (perhaps a poor chart position) & look to change the formula. So in essence to be long term successful you need to have a consistent long term method which you will stick with through thick & thin as this is the only way to seek success in trading.

Now all trading methods will hit a skid patch now & again, this is fact & is unavoidable in trading however the key to success lies in not discarding it but adjusting the sails. Think of a boat in a heavy storm, the sails will be pulled down, the hatches locked down & the crew will ride out the storm. Any sailor will tell you the irony of people leaving a still floating boat for a life raft which technically is what a lot of traders do in their day to day trading. For example, how many times have you picked up a system, had a losing trade & discarded it. I think we’ve all done it but the key once again, is riding out any rough areas.

In order to do this you can simply lower your stake right down, demo trade or paper trade.

Sounds easy doesn’t it?

Well, actually, yes however in practice you will often be battling your inner trading demons & looking for the next Holy Grail & this is where the initial stages of your trading development must take place.

Consider the next two phrases & have a think which one applies to you;

  1. “Damn, I knew I should not have taken that trade, I lost £100”
  2. “Shame, I did everything according to my trading plan but got stopped out so clearly something external affecting the market. Let’s move onto the next trade”

Now, if you chose the first statement you are in effect, reinforcing your negative side which is no good for long term success. In most cases in this statement, you will learn nothing & probably not even look at why it went wrong. Secondly, the trader essentially blames themselves & how many times have we heard that it is often not you that is wrong about the trades but your stops.

By continually reinforcing this, the individual begins to program themselves that trading is painful.

The second trader has reinforced that this was simply a market low probability, no problem & can carry on BUT only because they have spent countless hours looking at screenshots & setups knowing that this method works & works consistently. In essence, it actually becomes a non event.

So now you are going to be shouting at the screen & telling me that nobody likes losing £100, positive or negative person & yes this has a much deeper underlying reason within each of us however we can train ourselves to acknowledge these non events through the use of demo accounts.

Any top performer in any area of pursuit whether it is sports, music or trading, all have one thing in common.

They believe.

Now in order to believe you need to enter trades with absolute conviction & to the point, that you are following your trading plan. Put into context that of someone flying a plane… one wrong decision & there is only one outcome! So how do they get to the position of being calm & collected & flying an airliner with no concerns. Well, we all know, they spend many hours in simulators but do you think they are in there thinking “it’s ok, if I crash it’s not real”. I don’t know for sure but my guess is not.

However, even positive traders during rough patches will turn their attention to the money side & at that point this means that emotions are starting to creep back in & possibly doubt… which means the “believe” part of your conscious mind is starting to be fragile. The ONLY way to reinforce this back again is a return to the demo account as this is where the learning, the confidence building & the ability for your mind to just accept what it see’s in front of them begins.

Demo trading has a very real & relevant part of trading & convince yourself that it does not replicate real trading at your peril. If I have something new I wish to try out do you think I lunge straight into the market with it? Or do you think I would practise it on a demo account until it is engrained into my memory & my belief systems.

So, if you ever find yourself having to weather a storm don’t abandon a perfectly floating ship for a life raft, instead lower the sails & get to a position of safety i.e. a demo account.

Please remember success in trading is a lifelong marathon, not a 30day sprint.

Until next week, have a brilliant weekend & I’ll see you at the top!


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