rss

Reason For Trading Failure

bellaquote

The quote above is from Mike Bellafiore’s  The Playbook: An Inside Look at How to Think Like a Professional Trader.

Unfortunately, too few make it in the trading business, not for lack of desire or want for success, but for ignorance of what is necessary for success.  Successful trading is not about predicting the future but about managing it.

If you find that each day your time is consumed with searching for the next great indicator or a combination thereof or with the endless search for the best time frame to use, then you are trying to predict.  If, on the other hand, you focus on a specific, well-defined price pattern for entry and exit on a specific time frame, allowing the price to dictate your future action (win, lose, or draw) then you are managing the future.

The former is a “path to trading failure”; the latter the road to success.

 

Discouragement Reveals Our Courage

Discouragement is between you and your dreams. Imagine the ways you deal with it in life, business, sports, board games and romance, and then take a tip from deep in the desert. I’ve discovered after living here for two decades that desert rats, as they fondly call themselves, deal with the hardships or heat, privation, and loneliness in eight ways.

1. Books: This is a lifelong plunge.
2. Booze: So is this, so try the other seven first.
3. Exercise: This was my adaptation many years ago; the washes are my sidewalks.
4. Refrigerator People: Live with one hand on the door.
5. Hobby: For most, it’s fixin’ cars.
6. Estivation: Not found in some dictionaries, this is the desert form of hibernation.
7. TV: Hours of it.
8. Sex: Beats watching the cactus grow, or does it?

One of the first questions to ask a person to know them better is: “What do you do in your spare time?” The answer in the desert is always one of the above. And from that you will be discouraged or encouraged. Think of encouragement as a cheerleader that says, “Do it!, Don’t give up!” until you reach your dreams.

Successful trading is about making money…not about being right

According to Mark Douglas…

In any particular trade you never really know how far prices will travel from any given point. If you never really know where the market may stop, it is very easy to believe there are no limits to how much you can make on any given trade. From a psychological perspective this characteristic will allow you to indulge yourself in the illusion that each trade has the potential of fulfilling your wildest dream of financial independence. Based on the consistency of market participants and their potential to act as a force great enough to move prices in your direction, the possibility of having your dreams fulfilled may not even remotely exist. However, if you believe it does, then you will have the tendency to gather only the kind of market information that will confirm and reinforce your belief, all the while denying vital information that may be telling you the best opportunity may be in the opposite direction.

There are several psychological factors that go into being able to assess accurately the market’s potential for movement in any given direction. One of them is releasing yourself from the notion that each trade has the potential to fulfill all your dreams. At the very least this illusion will be a major obstacle keeping you from learning how to perceive market action from an objective perspective. Otherwise, if you continually filter market information in such a way as to confirm this belief, learning to be objective won’t be a concern because you probably won’t have any money left to trade with (italics mine).

From Chapter Four of THE DISCIPLINED TRADER

What's The Price of Your Dreams ? MAKE THE GAME WINNABLE

  • “There is only one thing that makes a dream impossible to achieve: the fear of failure.”  -Paulo Coelho
  • You win by living on your own terms–as well and as fully as you can, for as long as you can.
  • If you’re chasing someone else’s goal, you always lose.
  • Most people overestimate what they can do in a year, and they massively underestimate what they can accomplish in a decade or two.