From a very young age, we are ingrained with a powerful short-term reward system. We are taught to eat on day one and we get the reward of satisfying our hunger. This immediate gratification teaches us to always eat when we are hungry.
As we began with our education, we are rewarded when we do well in our exams and tests, by going up grade levels.
And as you get better with our grades, we soon realize that we get more approval from parents, teachers, and peers.
This gives us the reason to study very hard before we take an exam. Because we get the assurance that we’ll receive a better grade from it. As we enter the job-market, a day’s work is rewarded with a monthly salary.
In many cases, an immediate commission is rewarded for each sale we make – or it is aggregated into a bonus at the end of the year.
How all off this reflects on trading?
Very small percentage of people makes a real income and success out of trading.
My personal opinion is that, most of the people get taken out of this game because they think about the short term rewards instead of the long term goals.
Most novice traders take small profits instead of letting their winners run. They take short term profits just to be satisfied with their short term reward.
They will hold onto their losers for a much longer then they should. This is because they will not be rewarded if they close them early, so they chose to hope that positions will probably swing back into positive territory.
Only by doing this, you have a chance to make it in this game.
The problem is that there are few people who understand this and that is the reason why we have so many losers in the trading game. But, I guess, this doesn’t apply only to trading – it applies to everything around us. Only few people make it in big league, starting alone simply because they were not satisfied with their salaries at the end of every month. So, they take bigger risks and start their own companies.
How do you become successful trader?
A trader who is just starting out, should endure many setbacks during which he must always keep long term goals in mind.
Short term rewards are tempting when you want to just bank a profit. When you bank your profits too early, you break your own systems rules, even if you’re in a solid trade.
You need to work on this. You need to follow your trading strategy, with winning and losing trades.
Only this will make you a successful and profitable trader.
Trade with trend!
Originally published on: ALSI-TRADER