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processAfter many years of mentoring and coaching traders, I’ve realized that most beginning traders have the completely wrong mindset throughout the entire lifespan of a trade. From the beginning, middle and after the end of a trade, most people have their mind and focus on the wrong things.

Today’s lesson is going to be a mini-tutorial on how you should be thinking and what you should be doing before, during and after a trade. Hopefully, this clears up a lot of the confusion and questions you may have been having about what exactly you should do in the market and what your mental and physical trading routine should look like…

Before you enter a trade…

After you spot a high-probability price action trade setup in the market, here are the next steps you need to take and important points to keep in mind and act in accordance with:

  • Calculate most logical stop loss placement – Don’t ever place your stop loss based on greed. Meaning, don’t place it too close to your entry just because you want to trade a bigger position size. I discuss the need for wider stop losses in this article. You need to place your stop loss strategically so that the trade has proper room to breathe.
  • Accept the potential for loss – You need to mentally accept that any one trade can lose. No matter how good a trade setup looks or how confident you are, it can still end up being a loser. If you truly accept this fact you will not risk more than you’re comfortable with losing on any one trade and you won’t do things to try and ‘avoid’ a loss; like moving stops to breakeven too soon or perhaps even trading without a stop loss.
  • Accept that the trade needs time to play out – As I said, ‘accept the loss’ mentally before you take it, then you won’t be trying to avoid it the whole time and you won’t adjust your stop or otherwise interfere with your trade. Just accept that the market is going to fluctuate before (if) it eventually hits your profit target. If you try to react to every little fluctuation in the market, you will be a wreck and so will your trading account. You need to accept that your trade will need time to work itself out before you enter it, so be prepared to do nothing.

During the trade…

During the trade is where most people screw it all up. They sit for hours staring at their trades, watching the charts, etc. This is unhealthy and it’s not part of proper trading nor the proper trading mindset.

  • Let the market prove you wrong – Have a predefined level or spot on the chart that will show you your trade idea was wrong if price moves past it, then stick to that level (stop loss level). Your goal is to leave the trade alone and either the market proves your trade idea wrong or right.
  • As I mentioned above, there are going to be ebbs and flows for and against your trade, this is normal. But, if you sit there watching every little one, you’re probably going to react by closing the trade early or making some other stupid trading mistake. Once you’ve decided on a trade setup and got all the parameters set, you have to commit to letting it play out, and that means you have to ‘sit on your hands’. The most important thing you can do once your trade is all set up, is nothing.
  • Checking in on your trades once or twice a day is normal and you should make a trading routine. Remember though, most of the time you should do nothing. If you find that you’re constantly wanting to adjust profit targets, stop losses or close or add to positions, you are probably over-thinking it and becoming over-involved.

The key thing to remember during a trade, is that if you don’t leave the trade alone and let time pass, your trading edge won’t have a chance to work for you. Whatever reason you had for the trade, let it play-out and trust your pre-trade logic and make the market prove you wrong.

After the trade is over

The first thing to do after a trade, win, lose or draw, is to relax for a while. Forget about the market for a while, take a break, etc.

After your last trade ends, it can be very hard to get back to where you need to be mentally in order to wait for the next high-probability trade without over-trading. I discuss the problem of over-confidence after winning trades in this article, and it really is a big problem for traders. A winning trade is almost worse than a losing trade due to the fact that it can make us over-confident and even ‘arrogant’ about our trading, which in turn causes us to enter low-quality trades soon after a winning trade.

After a losing a trade, it’s also very tempting to jump back into the market on a low-quality trade setup, or on no setup, because you feel the urge to ‘make back’ the money you just lost. This is wrong though, and it’s not proper trading psychology. You have to really understand and accept that each trade is unique and you can potentially lose on any one trade; and if you accept that beforehand as I discussed above, you won’t be surprised if the outcome of your last trade is a loss. It’s all about eliminated the feeling of being ‘surprised’ by a trades outcome, as it’s that feeling of surprise, either a bad or good surprise, that can make us emotional about the outcome of a trade.

The correct thing to do after a winner or loser is to remain disciplined and patient and stick to your trading plan; wait for the next high-probability trade setup. For most people, the easiest way to do this is to remove themselves from the charts until they ‘cool down’ and get back to their ‘baseline’ mental state, i.e., neither overly-confident / excited by a winner or overly angry / frustrated by a loss.

Remember: if you just made money, don’t lose it – capital preservation is critical to trading success! Take some profit out at month’s end. Withdrawing a portion of your profits each month is a good way to reward yourself for proper trading behaviour and also secures some of your money so that you can’t lose it. After all, making money is THE POINT of trading, so it makes no sense to not withdraw some of it regularly.

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About Nial Fuller

is a Professional Trader & Author who is considered ‘The Authority’ on Price Action Trading. He has a monthly readership of 250,000+ traders and has taught 15,000+ students since 2008.
Checkout Nial’s Professional Forex Course here.

Now I want to hear from you! - Click Here to Leave a Comment

30 Comments

  1. Peter says:

    Thank you, sir!

  2. John Copperfield says:

    Great article Nial

  3. Ranjit says:

    Outstanding article and wise words… In our eagerness to get into a trade and make a profit. How many of us actually ‘stop’ long enough to consider any of the points that Nial has mentioned?

  4. Emmah Daniels says:

    THANKS.

  5. Emmah Daniels says:

    Your articles are rewarding. EMMAH DANIELS

  6. Paul Mitchell says:

    The best advice you could give to any trader, experienced or newbie alike!

  7. Darragh Coyle says:

    Hi Nial,

    Love the article, I think it will help a lot of people. I think the hardest thing for people to accept is the possibility of loss. I traded for a while on my demo and had no problem with pulling the trigger, but as soon as the live account was opened it was completely different, however I did eventually get over the fear of losing real money , but it did take time.

  8. ron smith says:

    Wise words, I might input and say I am still playing with pretend money, one day I will trade real money, I do anticiapte. But what is being said here is so true, the fun part for all of us I suppose, well personally at least is: the challenge to stay true to these set of guidlines. It is easy one day or easy one trade but can one do it evry trade, every day?

    Challenge yourself, get yourself in the right mind set every trade every day, be aware of yourself and how you feel, are your externally influences affecting you.

    Achieve this and I believe what Nial is teaching should place you in good stead.

    Happy trading traders

  9. Dotty says:

    Thank you, we learn by our mistakes, am learning fast. great article .

  10. AWS says:

    Thanks a lot for making it clear that Trading psychology is the key to be successful in the Market.

  11. Thabang says:

    Thanks a lot coach, what more can I ask for. NGIYABONGA KAKHULU (THANK YOU VERY MUCH) :)

  12. Olatunde says:

    Very Good as usual. Thanks.

  13. Roger says:

    Brilliant as always

  14. Emmanuel says:

    Am a victim of this stages of mistake, but with this article I will adjust to help me trade better. Thanks Niel.

  15. Hatinder says:

    Very nice advice thanks

  16. Anne says:

    I Don’t write much. but learning by your advice
    Thanks for not bombarding me with sale pitches
    Respect your teaching thank u
    Anne

  17. Alex McCullie says:

    I’m a new trader, and this is great advice to treat trading like a business and not an obsession. Well written.

  18. Woodrow says:

    Just what I needed Nial.
    I have been getting right back into trades especially after winning ones and giving profits back to the market.
    Thank you for the insight

  19. marlon says:

    Brilliant!

  20. Nick Warwick says:

    Never mind this lesson (sound and solid as ever), more generally just having this “bloke on your side” is worth the one time subscription fee on its own. Because in trading how you feel is as crucial as how clever your intellect is. Niall you do wonders for the former just by being there.

  21. Richard says:

    Sound article Nial, thanks a lot :-)

  22. Teb-ZAR says:

    I wish had learned all this on Monday when I started my first trading account with a mere $250, which quickly went to $525 on Tuesday and $50- by the end of Wednesday from heavy Google shares looses. Great article and I’m going to the market on Monday with all guns blazing!

  23. Milutin says:

    Oh man, what an article! It applies to my very early trading so very much.

  24. Serge says:

    BTW gentlemen, a’ve recently counted the quantity of Nial’s articles in my file since 2011.
    200 !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
    Almost all of them are gems.
    Suspect, he is a Genius!
    (IMHO)

    Respectfully yours.

  25. Mario says:

    Good one!!!

  26. Mo says:

    That’s great advice it can be related to how we should deal everything we do in life if it’s trading or playing a tennis match. Great stuff Nial and heaps of thanks :)

  27. Gustav says:

    I’ve never seen anyone as selfless as you Nial. You sir, are a champion in this field; you share with the world your knowledge without any prejudice or reservation. I’m truly truly inspired by this giving attitude.
    It’s just overwhelming cos we don’t see this kind of behavior in this world anymore, this here is the meaning of philanthropy!

  28. Moses says:

    This is actually all there is to it, no magic formula. Great insight

  29. Doris Telfer says:

    Very good educational article

  30. teewar says:

    Amen! Thanks coach!

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