Mindset

Congratulations for the Profit

Often when people talk about the importance of psychology, the need to be as unemotional in your decision making as you can be is frequently mentioned. Decisions are required often when trading and a fair percentage of the decisions that are required will be difficult.

Humans are naturally inclined to break the time tested trading rules and this is why your psychology and decision making is such a vital part of your success. Successful traders have great internal control and discipline to overcome the natural tendencies.

When you have a great trade, why not reward yourself for it? When it is often considered that trading well for an extended period of time can be difficult for many, yet you have a trade that all goes well, you may think it appropriate to congratulate yourself for it.

For example, you may have followed all of your selection criteria, and you considered all the things your trading plan insists you follow when deciding to enter a position. Once the trade was open, you monitored your initial stop loss point and then started to trail the price with your trailing exit.

Some time later when the position reversed sufficiently on you and your trailing exit was hit, you executed the sell order without emotion and realised your profit in the trade. All in all, it was as close to a perfect trade as you can have, and it was your largest profit you have had in 12 months.

A situation like this will occur for almost everybody at some stage and more often for some. When this does occur, you should consider rewarding yourself.

Depending on the size of your profit, you could take the family out to dinner, escape to a country retreat somewhere with your spouse for the weekend, or perhaps buy that new #1 wood for your golf set you have been eyeing off for months.

In some way, reinforce to yourself that you have had a great trade and have followed your trading plan to the letter in doing so. It helps reinforce the positive and instill in you that good things can happen when you follow your plan.