Probably the best CFD trading tip out there is to simply stop obsessing over your trading.
All obsessions in life are unhealthy. And trading is no different. Traders who are consumed with their trades are traders who suffer from performance anxiety.
This anxiety mainly manifests as a compulsion for screen-watching.
Only when you stop caring quite so much about your trades can the results improve.
This is the act of following markets far too closely. It may start with good intentions; for instance, as a desire to know more about how price moves. But over time can morph into addiction with serious implications.
This compulsion gives a similar dopamine rush as checking Facebook or your email inbox. But unlike them can prove costly. What's worse, traders lack the awareness to see it. They think their actions are actually productive and simply what a good trader is supposed to do.
Having a quote machine is like having a slot machine at your desk, you end up feeding it all day.
In rookie mode
Most newbies start out learning technical analysis.
Before opening an account, many have preconceived notions of what trading is about. They think traders follow every piece of news. Or, think stock traders read company balance just like Warren Buffet.
Technical Analysis is usually a real eye-opener. The idea of making money, by scanning a few charts is a major revelation. Newbies get to feel part of some elite club, pitying all the suckers who aren't in on its secret.
But... deep down there's scepticism. They just cannot believe that trading is simple.
The dissonance affects results. They've more faith in the guys on CNBC than their own system, and so become glued to the financial news channels.
When the experts on TV are saying one thing, and their strategy another, panic can set in.
They're often sat at their trade station for hours on end. This is understandable though, as they're still a rookie.
The 'experienced' trader
With an increased number of trades, maybe a year or two under their belt, they don't suffer from the same dissonance. They've likely experienced enough winners they're convinced Technical Analysis works - and that the talking heads on CNBC are talking out their rear end.
But with the wins, they are likely to have had back to back losses too. Many of which probably got well out of hand.
'That's ok', they tell themselves.
Because, now as a much better trader, they can claw back all they lost. So, they get ever more involved with the market.
At this point, they're probably trading intraday, under the delusion the more trades they have, the more money they make.
This is what I call the 'seat of the pants' phase. No real plan. Just a gambling mindset urging them to make up their losses. Their systems change week to week, as do timeframes and markets traded
This is when real damage is inflicted on a trading account.
Every time they analyse the market for long periods, they're risking a knee-jerk reaction to some price move or other.
Willpower and screen-watching
Traders mistake self-discipline issues with what's really a lack of will-power. The two aren't the same.
Will power is a finite resource. We only have so much of in-store. Self-discipline, on the other hand, is the steady development of actions that overtime becomes productive habits.
There is a direct link between screen-watching, will power, and impulsive trading.
If we are at your screen all day we're tempting fate.
Put distance between you and the market
In the Greek epic Odyssey, the hero Odysseus requests his crew to put wax in their ears whilst he is tied to the ship's mast. Odysseus was a wise man. He knew he couldn't think rationally when he heard the call of the Sirens. He knew he would be lured into danger.
We need to do the same thing. We need to remove as many ways possible that can lure us into impulsive trading situations. Watching the market too much, it's likely that we, just like Odysseus, will stop thinking rationally.
If we are serious about trading profitably try the following:
- Stop trading highly volatile markets (for now at least)
- Remove all intraday timeframes from your trading platform
- Remove your trading app from your mobile
- Stop day trading
- Start an online business
- Go get a hobby
- Just get a life, seriously.
You might think that these CFD trading tips are a joke. They are absolutely not.
Take it from me, as someone who spent years in a cycle of impulsive trading, there is nothing funny about it.
The more we worry about losses, the more losses will come. We need to put some distance between ourselves and our account.
This is why day trading is so hard for so many. We're forced to watch the market all day, which sooner or later depletes our resource of will power.
If we are in a trading hole, we are not going to go from being a bad trader to a good one overnight. That never happens. The negative momentum of our mistakes needs to be slowed down first before it can change direction.
Once we've dropped the bad habits, the poor trading form stops and our trading improves.