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Crossing out problems and writing solutions on a blackboard.Being in the position that I am in of helping and mentoring other traders, I have pretty much seen everything at this point. You might be surprised to know that are many traders who stumble through the same types of frustrating trading scenarios you have probably found yourself in recently. Today’s lesson is written from experiences that I have had both in helping other traders through their trading struggles and from my own personal trading.

This lesson is going to take a very practical approach to helping you improve your trading; I am going to discuss different trading scenarios that happen to each and every one of us at some point in our trading careers; including myself during my 12 years of trading. Then, instead of just discussing what the problem is, I am going to give you some actionable solutions to fix them…

The “up-all-night” trader

Scenario: You wake up at 2am, check the market and see your trade is negative. You sit there for a while staring at your charts, watching the trade slowly move against you, inching closer to your stop loss. You’re tired and exhausted and so you decide to close the trade out now because you can’t stand the “pain” of seeing it move against you anymore…and you can’t keep your eyes open. You wake up the next day fully expecting to see the market would have hit your stop and continued moving against you. However, you see the exact opposite; you see that right after you closed up your laptop the market started moving back in your favor and actually surged significantly higher and would have a hit your profit target instead of your stop loss! You sit there in amazement at the fact that had you just DONE NOTHING and stayed in bed you would have both profited AND gotten more sleep! Frustrating!

Solution: The root causes of waking up in the middle of the night to “check” on your trades and generally just thinking about them too much (at night or during the day), are risking too much money per trade and trading too frequently. If you find yourself glued to the screen watching your trade tick up and down, you have probably risked an amount of money that stimulates your emotions too much. The goal is to find that dollar amount per trade that does not stimulate the fear of losing what you have risked. Once you find that “sweet spot” for your risk per trade, you should be able to truly “set and forget” your trades and not feel that constant urge to check on them (and probably sabotage them as a result). If you’ve mastered a trading strategy and you’re sticking to it, then you need to trust your analysis and trust the trade setup; second-guessing and doubting your trade after it’s live is something that decreases the longer-term winning percentage of your trading edge.

Not taking profits when you know you should

Scenario: You are up around 2 times your risk on a trade and the market looks like it’s getting exhausted, but you see that open profit and you start making up reasons why the market should keep going in your favor. You leave the trade open only to see it turn against you and then before you know it 50% of your open profit has vanished. You sit up all night staring at the trade as it slowly drifts against you wondering in frustration why you didn’t take the profit when it was staring you in the face!

To demonstrate this scenario let me give you a recent example from my own personal trading:

Late on Thursday of last week, I entered a Gold trade, I bought the market on the back of a nice price action signal that indicated to me a rise in price was imminent. My risk was just over $2,000 and within hours Gold had risen just over $40 an ounce and I was sitting on a profit in excess of $5,000 (1 to 2.5 risk reward).

I mentally noted 3 important factors: 1.The market was at resistance around 1425.00. 2. Gold had made this large rally in the Asian session so the odds of it continuing all through Europe and US sessions were not that great. 3. It was a Friday, and since gold had crashed that week, traders might take profits into the end of the week.

Now despite being up a nice profit, and despite noting all these factors that gold could reverse any moment, I stayed in the trade. Sadly, Gold reversed back to 1395.00 ($30), and I ended up completely mis-managing the trade and the result was that I made just a very small profit after an open profit of 2.5 times my risk was staring me in the face. Even worse, is that this week gold has smashed through 1425 and has rallied up into the 1470’s. !!!

Solution: The lesson here is to either stick to the exact original plan and let the trade run its course completely,  OR if you’re up a nice profit and you see real and logical reasons to exit (like I did), simply exit the trade. Even though I have been trading for 12 years, I did NEITHER of the above on that gold trade, I mis-managed a perfectly good trade.

When I make mistakes like this, I go back and completely dissect the problem/incident and work on a solution for the next time it happens. It’s important that I have recognized what I did wrong and have a plan for the next similar situation. We never stop learning as traders and we must listen to the “little man” on our shoulder (our gut), because it’s often correct.

You need to accept that you should trade based on what you SEE on the chart; that is to say, based on what the price action is telling you…NOT on what you “want” to happen or what you “think” should happen! It’s time to put your ego in the closet and realize that you don’t have to be right to make money trading. Whilst I have been guilty of not exiting trades when I knew I should have based on the price action, I rarely make this mistake anymore because I know that what I want the market to do and what I hope it does, has absolutely ZERO EFFECT on what it actually is going to do! This is a BIG lesson that many traders struggle with accepting for years, but the sooner you accept it and act according to it, the sooner you will start exiting trades at more profitable times.

A little exercise to help you take profits more effectively is to ask yourself when you are up a solid profit on a trade: “What do I honestly think is the highest-probability scenario based on the current price action and market structure?” In other words, you should ask yourself: “considering the overall market structure and price action do I believe this trade will keep going in my favor without much of a retrace, or do I think a retrace is more realistic right now?” If you answer that question to yourself honestly, it will go a long ways towards helping you improve the timing of your trade exits.

Constantly giving back winnings from profitable trades

BurningMoneyScenario: It seems like whenever you hit a nice winning trade and make a solid profit you simply cannot hold on to that profit for more than a week or two. You end up deviating from your trading strategy after a profitable trade because you feel like you’re trading with the “house’s” money. You find yourself making this mistake after almost every winner you have and the end-result is that even though you know how to analyze the market effectively and find high-probability entries, your trading account is still not growing.

Solution: The reason people give back their profits after a winning trade is because the money they’ve just made temporarily masks their perception of the risk in the market. This is similar to why most people cannot walk out of a casino with more money than they went in with, despite being up a nice  amount of money while they were gambling. Not to say trading is equal to gambling, but the emotions of a winning trade or a winning bet in the casino are very similar. People tend to instantly think (even if only on a subconscious level), something like “I just made money, so now I have more to ‘play’ with”. Whereas, prior to the winning trade or winning bet they were much more cautious and concerned about finding a very high-probability scenario to take advantage of; after they’ve made the money they often lose this awareness of risk and it’s replaced with an almost over-whelming urge to make more money, which is of course derived from greed.

Three simple solutions to putting an end to giving back all your profits are the following:

1) Keep risk constant until you’ve doubled or tripled your account. Most traders tend to increase their risk per trade way too soon after only a few winning trades.

2) Master your trading strategy and don’t trade unless it’s really telling you to.

3) Physically remove yourself from the market after a winning trade for at least the rest of the day.

If you actually do the above three things, you will be on the track to retaining the profits from winning trades rather than consistently giving them all back.

“That was a stupid trade!”

Scenario: You find yourself consistently regretting many of the trades you take. Too often, soon after you enter a trade you close it out for a loss because you realize you basically just randomly entered because you wanted to be in the market, and then it started moving against you. You look back at your trading account history and you see numerous losses that have slowly eroded your pervious winnings; most are small losses, but you also know most are trades that you shouldn’t have taken; “stupid” trades.

Solution: The best solution to this problematic trading scenario is to simply realize and ACCEPT that you are NOT increasing your chances of making money by constantly being in the market. Trading is a profession that people succeed at by having a high-probability edge, like price action strategies, and having the DISCIPLINE to stick to that edge over a period of time. You need to reach a point where you NEVER regret any trade you take; I am at that point, but it took time to get there. The way you get there is mainly just being very discriminating about what trades you take. You should pass on far more trades than you end up taking; don’t every worry about missing a trade or feel like you’re “missing out” on opportunities by not being in the market all the time. Trading is about finding a high-probability entry scenario in a sea of low-probability ones, sadly, most traders end up taking a lot of low-probability trades and very few high-probability ones.

Entering multiple positions out of greed

Scenario: You’re in a trade that’s up a profit, you see another potential setup and so you move your first trade to breakeven just so you can enter the second trade. The first trade moves back to stop you out at breakeven and the second trade starts moving against you. The first trade then moves back in your favor while the second trade continues against you…at this point you want to pull your hair out and you wonder WHY you even did anything!

Solution: When in a valid trade that meets your plan requirements….don’t do anything unless there’s something to do! Never move to breakeven ONLY to enter another trade…this is greed / emotional trading. There are times when you can add to a position or enter another trade by pyramiding into the market, but these situations typically do not happen very frequently. Especially if you’re a beginning trader or a struggling trader, you should really stick to trading one position at a time until you’re more comfortable with your trading strategy and more confident in your trading abilities.

Denying trends and trading against them

Scenario: A market is obviously trending strongly in one direction yet you still can’t seem to make any money from it. You keep thinking the trend is going to end soon because it’s already been trending for “quite a while”. As a result of you believing the trend just “can’t possibly continue” much longer, you keep betting against it, and losing.

Solution: Trust your gut, trust your eyes and trust what is ACTUALLY happening on the charts…not what you have convinced yourself MIGHT happen. Don’t listen to people on financial news networks telling you all the reasons why the trend is “going to end” soon and don’t trust your trading friend who sounds really “convinced” that he or she “knows” something is about to happen in the market. First and foremost, you need to trust your own analysis of what you see happening on the charts. Once you realize that you can accurately read the price action of the market and that you don’t need outsider opinions, you’re trading confidence will really start to grow. You have to ignore the urge to over-analyze what the market is doing and instead just “go with the flow” and trade along with what you see happening.

Conclusion:

Whether you find yourself in one of the above scenarios or a similar one, you should remember that with enough determination and discipline you can train yourself out of any bad trading habit. The same applies with building a positive trading habit; slowly train yourself into a particular routine and set of trading guidelines…slowly train yourself into following those guidelines, make lists and tick them off as you complete each item to hold yourself accountable and drive home the discipline. You should get enjoyment out of changing your trading mindset and putting an end to bad trading habits, it should be an uplifting experience, like a pressure has been released. If you want more help with developing positive trading habits and getting rid of your old / destructive ones, check out my Forex trading course and members community.

nialfuller

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.

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61 Comments

  1. Golam Moktadir says:

    Superb article Indeed.

  2. frank says:

    Exact these Huge mistakes in my trading practice.Thanks for giving ways to kill these all.

  3. George says:

    i don’t know what to say. this article has just hit my brain. am in the process of stopping this killer habit. God should bless our mentor.Amen

  4. Damien Byrne says:

    Mr Fuller,

    Definitely items that everyone needs to monitor, from novices to more experienced. On the subject of the news though, true you should never blindly follow calls of reversal when the pair has gone “too high” and “must come down”, but I have always found it pays when the pundits are all crying a super trend it is time to start looking for the retrace signs. This happened earlier this year with the EUR/USD run up to 1.371. When I started seeing headlines on the blogs and finance news saying “gravity defying euro”, “super euro” and “euro rocket” I thought it was probably time to take heed of exhaustion signs.

    Thanks for site Mr Fuller, it is a very valuable resource you have provided and I thank you.

    Kind regards
    Damien Byrne

  5. Sherrod says:

    A few of the scenarios hit home. I should read this over and over…great lessons and article. You’ve really helped my trading improve. Thanks again Nial

  6. fiza says:

    Im all of d above

  7. Nuno Barbosa says:

    Great article Nial, as always.

  8. 3arle says:

    As always perfect clues.

  9. Chio says:

    Weldone Nial

  10. PERI says:

    Good Educative Article !

  11. Euan says:

    As always great stuff you are my must read on the weekend when I can focus on what you are saying……I think the gem this week is ” trade what you see on the chart and not what you want to happen or think what should happen”
    I find what influences this is if one has a draw down then its what you “want to happen” to get back into being positive…or reduce your draw down

  12. Richy says:

    I really appreciate your sharing the specifics and what you were thinking on your “mismanaged” trade. As always all the best to you and yours…r

  13. JJozsef says:

    Hi Nial.
    Thanks a lot for this lesson, great article, i was just doing the same mistakes! From every mistake we have to learn to be a better trader, i have to correct them now,
    thanks once again Great Article!

  14. tochukwu ughadinjo says:

    a great lesson from a great teacher for great traders alike…. thanks Nial, this is going to be a big help to me.

  15. Haroun Kola says:

    I’ve seen myself in many of the situations you describe Nial, and working consistently to turn into the consistent trader that I should be.

  16. Patrick Embale says:

    Nial, you really hit the nail on the head. All the points you raised are what I have also personally experienced and I believe most traders make the same mistake as well. If only one can stick to one’s trading strategy, control his emotions and not trading more than the risk he can bear, of course, one would make a good trader.

    Thanks a million for the enlightening article.

  17. Toby says:

    Great article Nial.

    I’ve done all of these mistakes numerous times, I’m sure like many of us have.

    Thanks again, keep up the good work for us amatuers…:)

    Toby

  18. Pappico says:

    Guilty on 5 of 6 counts. Very timely piece Coach. Thanks.

  19. Bruce says:

    Thanks, Nial.

  20. alanw says:

    Hi Nials , Good info as usual. Have a Great w/end in QL
    Cheers W

  21. Tshepo says:

    I totally agree, honesty is the best policy.
    If we can just stop to justify our actions and accept the wrong, we will become better.
    Thank you Nial.

    Tshepo

  22. Rahwa says:

    Hey Nial, Thanks very much for a great article. Since I follow your articles I am marching toward profitable trader. May God bless you and your family.

  23. DTrades says:

    Hey Niall,

    I really enjoyed this article because you used a recent and personal example in one of your trading scenarios. The fact that you discuss losers openly is what sets you apart from a lot of other trading coaches and teachers.

    DTrades

  24. Mario says:

    Immense Nial!

  25. Irma Reitz says:

    Hi Nial, Thanks very much for a great article and although I am new to price action and have so far only done a few trades in the last month I pleased because the stress of trading has now been removed. I am still demo trading, so am very mindful of what could possibly happen once I use real money. So far your ‘set and forget’ is just the best thing ever for me.
    Thank you so much again.
    Irma

  26. Emeh Matthew Emeh says:

    i am now convinced more than ever before that you are God’s gift to forex traders all over the world. This article is the missing link that i have been looking for in a very long time. Once again i say God bless you.

  27. Shaun says:

    You hit the nail on the head with this one. I kept nodding all the way through going I’ve done that, and that, and that..

  28. Sonny O says:

    Thanks for this Nial.

  29. Jennifer says:

    Thanks Nial,

    My issue is do not know when to take profits and giving it back. I do have many good trade but I just do not when to take profit as I am idealistic about my profit target.

    When the trade reverses, I returned most of my pips and closed it when it is too late.

    How can we know when we should stick to the trade on a daily or not?? When there is aa retracement on a 4hrly, we keep believing that it will not hurt us as we are trading on Daily TF. But when it showing a Pin bar on a daily, this we know we need to get out. But when there is not sighs at all and the trade reverses with strong engulfing bars.

    Please advise how should we manage our trade.

    Thanks

  30. Jolene says:

    Thanks! Your articles are brilliant. I stayed up until 3AM last night unnecessarily. Fortunately the trade ended well, but the set and forget would have worked perfectly, and I would be more alert right now.

  31. Kerry Tan says:

    Thank you Nial for you enlightenment , you really pointed out my mistakes i made all the time . Is time for me to accept the facts that ‘Hope ” is a useless word to use rather we should have take action on what we see and trust the “Gut ” feeling , it always happened !

  32. Okoyeocha says:

    thanks a lot for this lesson, soon I will join your membership area for more lessons and practicing

  33. Mayur says:

    Great article, no matter how experienced you become sometimes it just hard to let go of some habits! Awesome practical advice.
    Thanks

  34. Erol Andrews says:

    Nial great reading and thank you, some of these are me all over so will not change my trading ways, keep up the good work as always enjoy reading and viewing your daily updates – thank you

  35. Ramli M.S says:

    Thanks

    GOOD lesson.

    Cheers

  36. Paul says:

    Excellent article,thanks!

  37. Olatunde ademola says:

    Telling us of your own mistakes makes you more real and the fact that learning to trade forex market through you will be an excellent decision.
    Pls keep it up.

  38. Henry says:

    Great article, thank you!

  39. Grant says:

    Hey Coach,

    thats a stand out article for me because you touched on every single point i have went through at some point, and probably the only things you can come across while trading. Was also really good to hear you talk about your trading and mention that you make the same mistakes as us at times.

    Thanks Nial

    Grant (Honda27)

  40. Venkat says:

    Thanks for such a nice article Nial…..I’m facing all the scenarios that you have mentioned…but it’s very difficult to control your emotions when the trades are going against you…Hope I’ll follow your footsteps and gradually grow my trading account…Thanks Again….

  41. Tamil Selvan says:

    Excellent Explanation Nail…. The reality which happens for most of the Forex traders

  42. Enoch Bulus says:

    Thanks Mr Nial for being willing and able to share from your wealth of experience. I find your article quite helpful. once again, thank you.

  43. tim says:

    Fantastic lesson, I found myself in almost all of these scenarios, except checking my trades at night!
    Thanks

  44. shailendra badoni says:

    dear sir,
    great article , thanks i was doing same mistake , hope i correct them now,
    thanks once again

    regards
    badoni
    india

  45. Sanjay says:

    Great Article.

    You are some one special……..
    You are pointing out some biggest mistakes, we all make & keep making. More over that you are providing solutions for that, that so nice of you.

    We all will be benefit from it near future.
    Thanks a bundle for Great Article. Hoping for more greats to come.

    Sanjay

  46. Adebanjo says:

    Made many of those mistakes myself as well.
    Thank you

  47. peterwillis says:

    I have to say it is great to come across a real pro in Nial
    I have had a few bad experience with other so called pro traders charging thousands of dollars and giving nothing. As first advised by Nial using larger time frame than I was using and less trading should make a positive difference to my account.I am please to say my account has doubled in size and my wife is a lot easier to live with.
    thanks.

  48. raymund says:

    great article mate..serves me a nice reminder, just at the nick of time…thanks so much..learned a lot from you mate

  49. wycliffe says:

    Thanks Nial,quite the article i needed at this stage as I perfect my trading to be a mega profesional soon.Thanks once more

  50. Lyte says:

    Thanks Nial. I’m always learning and so appreciate you sharing today’s lesson. I also traded gold and closed out for a profit knowing I could’ve held on but feared a retracement.

  51. Azizul Haque says:

    Hello Mr. Nial, you always nail the exact problems and have the solutions! I was reading the article going could see that I made most of those mistakes and more. Trying to better my trading, no, actually the mental aspects of trading! Thank you for another nice article.

  52. Mark says:

    The most powerful message for me in this lesson is the gold example. This is something I am currently working on and Nials solution is most helpful.
    Secondly, I have rarely seen an established trader admitting to making mistakes In a public areana like this. For me this is very encouraging and adds a lot to the message
    Thanks

  53. Roberto says:

    every now and then I fall on those errors. The problems, in fact, are the poor discipline and lack of emotional control.
    Thanks Nial.

  54. Martin says:

    Hi Nial
    just for others who struggle not taking profits,i asme the question do i have more joy ,is it ok for me or do i suffer closing now the position with profit.When the idea of getting less profit than i can get actually is hurting me,i get out.
    a good question is also why i like to earn more or why i am not happy with the amount of money i can get.in mostz cases i dont regret the decision to get out.

  55. KRISTOFA OKENTA says:

    You are really in the position of helping and mentoring traders of which I am one.
    Since I stumbled upon your4 site my trading has not been the same again,. I CAN CONFIDENTLY AND ‘PROUDLY’ SAY THAT IN A SPACE OF 4 MONTHS MY ACCOUNT HAS BEEN RUNNING.
    This is because I am DILIGENTLY following both your lessons and your daily and weekly analysis.
    Thank you and keep it up.
    I thank you and call on other traders to dutifully follow ‘Prof Nial and it shall be well with your trading.

  56. Mike says:

    Excellent. Although I know how to trade and am normally very disciplined, last week I was guilty of every one of these mistakes! I’m sure these wise words will help keep me disciplined and profitable. Thank you.

  57. l3xm4rk says:

    I must admit, I suffered from not taking profits when they were there to be had a couple of times recently. Really quite annoying. Of course, the problem now is I think I’ve overcompensated in the other direction. I find myself closing out profitable trades too early. I suppose that’s not too awful though as at least +1Rs and +2Rs all add up, particularly as I’m only 3 months into live trading. But this article was a good reminder to go back through those kinds of trades and learn what happened and why.

  58. Geetha says:

    Very good information and guidance Nial, thank u

  59. rajiv says:

    Hey Nial, U are an absolute mind reader,
    The article is ausumn, and ur explanation on taking profits when it is staring at you is really great.
    I experienced this feeling just yesterday on GBP/JPY

    I wonder when u started watching me?
    Really thanks for the article.

  60. abraham says:

    That’s great Nial…but sometimes we can control our emotion to learn the same mistake what we already have. Even we think that is an correct position but the emotion is more importance.

  61. Karl says:

    Thanks for the insights.

    Could you write another special article, about how large players trade with some examples on chart. This would be very informative and interesting.

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