How To Obtain Lasting Success In Trading? – Emotions

While a handful of people manage to have lasting success in trading on the various markets, most people tend to lose or, at best, to have alternating winning and losing streaks. Some blame their luck for their shifting success; others believe that refining the perfect system or trading strategy will allow them to become permanently successful. But what is the truth?

All the trading systems claim that they will make you money. How much and after incurring what losses, that is never specified. Many of the system designers will offer historical data of past transactions as evidence for their systems’ lasting success in trading – but they make sure to include a disclaimer somewhere at the bottom of the page, informing the world that their historical data does not guarantee or determine the possible future earnings obtained by using the system. Why do they do that?

A major factor which plays a key role in determining the success of any business is the complex of human emotions. That holds true when trading stocks as well – you can be the most knowledgeable person on the planet using the best system and you will still fail if you are unable to control your feelings. No one else can control your emotions for you – hence, the disclaimer on the system manufacturer’s web page.

Every trader will sooner or later have to face two such emotions. Fear and greed are very common, and they influence all the trades, by a smaller or larger margin. The secret behind lasting success in trading relies not on eliminating those emotions, but rather on determining the best way to act on them. Different actions lead to different results – and in the world of trading, that translates into the degree of success you have with each transaction.

A common example every trader should be familiar with: once you get three or four losses in a row, there is that nagging feeling that you’re doing something wrong, getting a bad luck streak or that your system is failing. Fear strikes.

On the contrary, two or three consecutive wins may cause you to feel elated; you start thinking that you’re maybe ready to move on, to begin investing more or maybe to take more positions, and eventually you deviate from your system. That is a sure sign that greed is currently in charge.

In order to have lasting success in trading, of course you will need your skills, your knowledge, and a solid system. However, having all the above becomes irrelevant if you lack the discipline to control your emotions and act on them instead of letting them dictate your actions. This discipline is what will determine your success on the market.

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