Torque Trading System - sonumahar/sonu GitHub Wiki

Not a day goes by when I am not asked to advise a brand new trader on commerce direction and realistic expectations. Expectations aren't projections or probabilities. Expectations are not a analytic animal. Expectations are emotional and emotional, and trading psychology should be the main attention for a new dealer. Trading psychology can determine your success or failure on the long run, period. In the following guide, I'll cover some core emotional aspects you will need to be conscious of to be a successful Torque trading system.

RISK

The first trading psychology topic that I shall talk is proper trade management. What is proper trade management? Fundamentally this:

Definitely Never risk more then 5 percent of your account balance on any 1 trade. This means that your maximum Cease Loss on any one trade should not exceed 5 percent of your total balance. As an instance, if you had a $1000 account, then 5 percent of $1000 is 50. This means your biggest stop loss should not exceed 50 pips presuming you're trading one mini contract with a worth of 1 per pip. I see brand new Torque traders each single day risking 20, 30, even 40% of their accounts on one trade. Having that much risk, and four losing trades in a row, so you will wipe your account. You will not last long carrying uncontrolled risks for example, and the psychological damage will likely be irreversible. Therefore minimize risk. Use 5% as a maximum risk threshold. Personally, I risk no more then 1 3 percent on any 1 trade. If you've got a bigger account, you should follow the same rule, no exceptions. However good a trader you are, it's not uncommon to have 6-8 losers in a row. No one enjoys it, but if you stick with a 1-3% hazard limit, expect and be emotionally prepare for it, it will roll off your back instead of breaking up your soul.

LOSES

Many traders miss vanhelsing's cross to improve when this hellish monster shows it soul-stealing teeth: Losing trades! A brand new dealer will frequently feel ashamed after incurring a losing commerce. He feels he has made a blunder and beats himself up on it. Penance does no good at this life, therefore acknowledge your trading sins, so resolve to sin no further, but usually do not scourge yourself. Listen to this Truth: Losing trades are part of this game and are to be fully expected. Forgive yourself, and move on, but don't quit. It is the trading travel that entire will probably be right, but maybe not each individual measure. So accept each misstep. Like a shop keeper paying rent to maintain his store open, losses are part of the cost of working as a trader.

SYSTEMS

New traders sometimes act like impatient scientists, both embracing and embracing theories and models haphazardly. But real science not just includes patience, but necessitates it. An inexperienced dealer can try out a brand new system briefly. If it fails a few times, will state"This doesn't work" and discard itthe same way an impatient scientist might when taking a look at an ineffective compound for a cure for an ailment. When it doesn't perform, then it must be erroneous, I usually hear. Perhaps howeverthe observed interval was too brief, or maybe the chemical was impure, or contaminated. This same mistake can be manufactured in gambling. A method must be implemented over a sufficiently long time period, plus it has to be implemented precisely and without the emotion. I often hear"Hey Steve, I've a wonderful trading platform. See me...I am moving LONG here of course whether or not it works... I've proved for you it is a good system, blah blah blah". To these dear, excitable, impatient traders, I've got a few hard-won advice for you: If a machine wins six times in row or loses half a week in a row, it proves nothing! It will not state anything regarding the value of the trading platform. Do not judge a method within a few trades. Basing conclusions on mathematically invalid data sets (too small, too few transactions ) is amongst the biggest psychological mistakes the newest or impatient dealer makes. Trading is an art which needs to be mastered over the years. Every trader starts out as a losing dealer, and also every system starts by being insufficiently tested. Some traders lose for months while some others lose for many years. Some systems work for 2 trades, some can work with five hundred. Stamina, statistical validity, and psychological preparation are what make for a successful long-term trading livelihood.

PRACTICE MAKES PERFECT

This really is sad to see a new trader mortgage the home and begin trading large and cease after only a couple of weeks, however I see and hear about it regularly. 99 percent of new traders will shed most of their trading accounts at the first couple months, so do your self a favor and maintain your"instruction" costs only possible. Trade on a simulation for as long as possible. Afterward, once you think you're ready, start trading a tiny amount of real cash. Let your live trading grow your confidence and slowly start adding to your rankings.

In summary, psychological prep means don't let emotions dictate your transactions. Stress and Greed will be the most powerful temptations to over come. Greed keeps you into the commerce as much time, salivating for larger profits (that not materialize). Stress makes you depart trades for smaller profits than you may have achieved, or pull your ceases to avert a loss that never does occur. Don't forget to just trade with money you can afford to reduce. If you have ever heard the expression,"Scared money can't acquire", it's very true in trading. Don't trade with money you want to feed your loved ones or to fund a pressing financial need that thinking that warrants taking big risks. Do what I do. When I enter a transaction, I think of it shoveling cash into a burning fireplace, never to be seen again. This way, you eliminate all psychological attachments out of the currency and rigorously follow the trading rules. Since you're already emotionally ready for failure and loss, you do not have anything to fear. And as you let your system drive your transactions instead of your own dreams and wants, you expel greed. That leaves one with only a single effect: Success.