To improve is to change; to be perfect is to change often.
The New Year is here and it's a time to renew commitments, make big changes, and live 2015 as if it is a new beginning. Changes can be hard to make, despite the best laid plans. If you want to make permanent changes to your life and to your market approach, you must understand how most people fail and make sure you avoid common traps. The most common trap is to be unrealistic in terms of the changes you wish to make and the rewards that you will receive. If you are realistic, you will be able to make the changes, and perhaps more importantly you will be able to make them stick.
One common mistake is to attempt dramatic changes when modest changes are much more realistic. Do not strive for goals that you cannot possibly achieve or have expectations beyond reality, you will fail quickly, feel disappointed, and just give up. Do not underestimate the time it takes to affect change. For instance It would be unrealistic for a newer trader to expect to make huge profits without honing their trading skills or gaining a wealth of knowledge and experience with the markets. You can't just will yourself into becoming a seasoned trader over night, give yourself enough time. This coming year set some learning goals. Set aside a specific amount of time each day to hone your skills, and reward yourself for achieving minor goals, whether you profit or not. Make a small goal to read one trading or investing book a month, and reward yourself when you finish. If you start out with this strategy, you'll feel you are making progress and you'll find it easier to persist when the markets appear to be fighting you.
I have at times seen people give up trading prematurely simply because they thought that mastering the markets was easier than it actually is. Good traders spend years honing their skills, a hobbyist approach will not work. In 2015 make a commitment to master the market and work towards it. Do not under estimate the difficulty and expertise needed. When you are trying to master a challenging profession it is easy to react with overconfidence and unrealistic optimism. I have often stated to friends, the best thing that can happen to a new trader is a loss, so they begin to understand this profession is not easy. If your hopes are dashed it is hard to continue fighting. I do not believe it is helpful to be a pessimist, but it is essential to be a realist. Cultivate a healthy skepticism regarding your trading skills and your trading strategies, you will find you stay positive and focused. Setbacks will be a minor glitch, rather than a major tragedy.
It is not only necessary to stay realistic when it comes to how difficult it is to master the markets but also it is essential to be realistic about your expectations regarding potential rewards. Novice traders often envision extreme wealth. Media images do not help matters. Expensive cars and luxurious homes are associated with happiness and bliss, and it is reasonable for people to think that making huge wins will produce ultimate contentment. These expectations rarely materialize and one usually encounters disappointment. Realize that even the most successful trader does not have a perfect life. The potential rewards most people dream about are often unrealistic. It is wise to make sure that your expectations of reward are realistic. When it comes to trading, long-term enduring financial rewards may take a little while. It may not bring the happiness you are searching for. It is useful to enjoy the process of trading. Trading is a fun and rewarding endeavor in and of itself. If you remember that fact, you'll feel happy and rewarded every day. That will help you continue trading in 2015. Make a new commitment to trading. Stay realistic and enjoy yourself. The more you can do so, the happier you'll be and the more successful you'll trade.
Reprint from PrudentTrader archives 2006