Turn off the news.If you’re not feeling well for whatever reason, take the day off.
Feeling overly confident? Decrease your size.
Waffling on a trade? Pull the trigger! The hardest ones are usually winners.
Resist the urge to take off half when a trade is going your way.
Have a target in mind for every trade. Exit when price approaches that level.
Support, resistance and targets are ‘areas’, not specific prices. Give them some leeway.
Trade in the direction of the Cumulative TICK.
Unusually strong/weak Cumulative TICK? Increase your size.
Use mental stops. Adjust your stops based on the current volatility.
Establish a total maximum loss you’ll take in one day and stop trading if that’s hit.
Be conscious of your self-talk. Maintain a positive inner dialogue with yourself.
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Turn off the news.Emotional Fractals – The Market is the Ultimate Authority Figure
- We apply what we learned about ourselves, our relationships to important people in our lives, and our perceived role in the world when we were young, to our perception of what is happening in our adult lives.
- The market acts as the ultimate authority figure, and its tick-by-tick declarations tap into the feeling contexts from earlier in life.
- The markets, as symbolized in the most implacable authority figure — price — creates an inference regarding whether your current value is better or worse. That taps directly into how you feel about yourself.
7 Deadly Sins of Trading
Perfectionism: There is no perfection in trading as far as making money on every trade or having a perfect system. All you can hope to be perfect at, is following your system, rules, and trading plan. A winning trade should be measured as one in which you followed all your preset guidelines. Even the best traders only average about a 50%-60% win rate at best over long periods of time. The key is having bigger winners than losers, not being perfect. Like in baseball where a .300 hitter can get into the hall of fame. A .500 trader in the market can become wealthy if his wins are much bigger than his losses.
Fear: Faith in your system is the only way to overcome your fear of trading. You must complete enough back testing on your system until you know that you have a valid edge over the market in the long term. You must see opportunity in trading and just accept that there will be possible losses. You must take your systems trade signals each time and if you can’t overcome your fear of loss and failure then perhaps trading is just not for you. Traders are entrepreneurs not employes they get paid only when successful there is no guaranteed paycheck.
Pride: We are not our trading account and staring at our profit and loss too much is a major detriment in one’s trading. Traders must cut losses at their predetermined stop, not pridefully hang on trying to prove they are right. We must separate ourselves from the trading. A person’s value is not tied to a trade or performance record. If we followed our system then we can’t view that as a personal loss. The market was just not conducive to our system that we followed with discipline. (more…)