The following are 5 common pitfalls I have seen traders experience and I have listed 5 practical solutions you can quickly implement to overcome these assassins to your performance.
Pitfalls
I have observed that Losing money doing the right thing does not destroy a traders’ mental focus. It is when they lose money doing the wrong thing…That is what truly eats at their soul and messes with their head.
With that said, the following are 5 common pitfalls I have seen traders experience and I have listed 5 practical solutions you can quickly implement to overcome these assassins to your performance.
Pitfalls
1. Focusing on the P & L
2. Losing objectivity while in a trade
3. Becoming emotional about a trade
4. Lacking confidence: exiting early, failing to put a trade on, not sizing up
5. Difficulty adapting to a changing market
Solutions
1. Quantify success base on the caliber of the trade (i.e. high quality entries/exits).
2. Continuously ask yourself, “is my original reason WHY I entered this trade still there?”
3. While you are in a trade, ask yourself, if I had no position on right now, what would I do? Buy? Sell Short? Do nothing? Then re-evaluate your trade size and direction.
4. Confidence should always come from within. Step#1: Write bullet list of data points proving WHY you are a skilled trader. Step #2: Prime yourself each morning by reading it over to yourself. Could be the most valuable 30 seconds you spend each day.
5. Flip your perspective by keeping track of what is not working (by default this tells you what IS working).
The following are 5 common pitfalls I have seen traders experience and I have listed 5 practical solutions you can quickly implement to overcome these assassins to your performance.
Pitfalls
Solutions
A Reader of our Blog had sent me the following question …
“When should a trader know when to say it is enough and I need to get out of the position. More importantly, how do you find a balance between learning from a mistake and not being weighed down by it on your next trading decision.”
Here was my advice:
* if you have “edge” in a trade, then winning or losing on a trade will be determined long before you find out the outcome (profit/loss) on the trade.
* important to focus on the process of the trade… making ONLY high quality trades
* your job as a trader is not to determine or decide how much you make or lose…that is up to the market. Your job is to put on trades with “edge.”
as far as not being weighed down by the mistakes, my suggestion is to begin a “lessons learned” spreadsheet where you document mistakes you make and the lesson you learned from it.
I also suggest you start a qualitative trading journal that way you can get the emotions out of your head and onto the paper.
this will help you move past your barriers and get some closure on them so you can be focused on the next trade.
A Subscriber of mine asks me the following question …
“When should a trader know when to say it is enough and I need to get out of the position. More importantly, how do you find a balance between learning from a mistake and not being weighed down by it on your next trading decision.”
Here was my advice:
* if you have “edge” in a trade, then winning or losing on a trade will be determined long before you find out the outcome (profit/loss) on the trade.
* important to focus on the process of the trade… making ONLY high quality trades
* your job as a trader is not to determine or decide how much you make or lose…that is up to the market. Your job is to put on trades with “edge.”
as far as not being weighed down by the mistakes, my suggestion is to begin a “lessons learned” spreadsheet where you document mistakes you make and the lesson you learned from it.
I also suggest you start a qualitative trading journal that way you can get the emotions out of your head and onto the paper.
this will help you move past your barriers and get some closure on them so you can be focused on the next trade.
1) Inner Abundance – This relates to self-care and maximizing one’s energy and internal resources;
2) Quality Time – Time spent by oneself, for oneself;
3) Finding Meaning – Having goals that give purpose and significance to life.
The key idea here is that happiness is not just something that happens to people. It is the result of one’s relationship to oneself.
I encounter many traders who lack a sense of abundance–they are forever fearing that they will miss market moves and opportunity. I find many traders that lack quality time: they are slaves to the screen and experience more frustration than joy in their efforts. I also see many traders who derive little sense of meaning and purpose in their work. If they’re not making money, they are not happy. (more…)
If you want to win then you must create your own trading plan and follow it, if you want to lose just trade whatever you want whenever you want based on your own opinion.
If you want to win then you must control your risk carefully with only 1% or 2% of your capital at stake in every individual trade, if you want to lose then just trade huge position sizes, put all your chips on the table.
If you want to win plan your entries and exits before you enter a trade then follow them, if you want to lose ask for everyone’s opinion and just make decisions based on other people.
If you want to win cut your losses short and let your winners run, if you want to lose hold your losers and hope that they come back and sell your winners quickly to lock in gains.
If you want to win trade only the best high quality stocks in the market, if you want to lose trade the junk and hope for a miracle come back.
If you want to win then build complete confidence for your system through chart studies and back testing, if you want to lose trade with no idea of if what you are doing even works.
If you want to win go with the current trend of the market, if you want to lose fight the trend and trade against it.
If you want to win then go long the hottest stocks in a bull market, if you want to lose short the hottest stocks in a bull market.
Do what makes money not what you feel like doing.
