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Old 24th-July-2008, 19:16
L.C. L.C. is offline
Join Date: Jan 2008
Posts: 4
Default “The time value of money and its psychological effects.”

The psychological impacts of a trade will always determine the net result.
It has been stated in many trading books that you must trade without emotion. However any of us who have tried to trade knows this is probably the biggest challenge we all face in becoming a successful trader.

It would be great if someone would write a book filled with many exercises we could do that will help us change our emotions or control them.
Until then, the best advice I can offer anybody trying to achieve this goal is to learn how to change the way you think about a given obstacle or challenge.

At the same time it is also true that in order to change the way you think about something, it will take time and discipline. This is where the value of time come in to play with trading.

Most new traders enter this business hoping to make a lot of money right away. They have unrealistic expectations about the length of time they need to allow themselves in learning how to trade and understand the market.

I have said countless times that for each one of us the length of time it takes is different. This is because we all have different backgrounds and lifestyle situations.

I learned from the beginning of my trading career, a unique way of looking at an open trade.
This was due to my prior experience in a previous business.

I will try to put it in a simple explanation I recently saw on the television sales show.
It involves the simple concept of “the time value of money.”

If you have a debt note which is owed to you for the amount of $100 and will not be paid off in full for at least one year, would you take $50 now from me instead of waiting for one year to receive the $100?
In the simplest form, this is the basic concept of “the time value of money.”

This is what I had in mind when I started my trading career. And it was this same process I saw myself experiencing when I had an open trade and I did not know how the markets work. My fear or uncertainty about the future caused me to close my trades and take whatever was given or offered to me at the time.

The difference now after understanding the markets and studying for over seven years, is that I now know why the markets move the way they do and what they are capable of doing.
In the beginning of my trading career my fear caused me to take five or seven pips when there was really 20 or 30 pips available. This again is also the time value of money.

Many times new traders don’t want to wait at all and as soon as they get even just a few pips profit they will close the trade and take what they can. Again this can be linked to their fear and unrealistic expectations. It also serves as a measure for them to see how much more work they need to do to understand how and why the markets move.

So the next time you find yourself in a trade and you don’t have clear targets available, then ask yourself, “are you falling into the same scenario I mentioned above?”

One of the most important things you can do to become a successful trader is to record your trades. But in addition to the net profit or loss you must also record how you felt, what you thought while the trade was open and if you actually had a trading plan that you followed for the trade.

It is a serious business to become a successful trader. It takes many years of discipline and an unrelenting desire to succeed even after countless failures. The fear of the unknown will always be the biggest challenge that must be conquered to become successful as a trader.

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Old 19th-August-2008, 06:26
richemil richemil is offline
Join Date: Jul 2008
Posts: 5
Default Re: “The time value of money and its psychological effects.”

thanx but take it easy!!
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Old 13th-January-2014, 03:43
mikepowers mikepowers is offline
Join Date: Nov 2013
Posts: 21
Default Re: “The time value of money and its psychological effects.”

I wanna also say that everything is psychological. We control things through our minds and so we should always be optimistic in everything.
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Old 18th-November-2014, 12:43
mogul mogul is offline
Join Date: Oct 2014
Posts: 13
Default Re: “The time value of money and its psychological effects.”

The success of a Forex trader directly depend on his or her trading skilled, experience, knowledge and determination. On the other hand, a good trading broker is another important point for a trader to be a regular profitable Forex trader. by the way, after joining in Forex, I always want to trade in a regulated broker which ensure best trading facilities like, narrowest trading spreads, no requotes, almost no slippage, low mark up fees even for
commision base broker. By long time research about broker activity, thought I have chosen best option for me as my trading partner.
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