Winning and Loosing Lies With The Traders Not The Trades
Wins and Losses are familiar to us all, the pain of loss and the joy of a win. There is no confusion there.
However in considering the loss of a trade, the strategy is usually sound, it is the trader that came up short.
Well, yes there is a good chance this described you. In this article I will talk about ways to change all that. Your stop loss order is a really good place to start, this should be decided before you place an order.
No discussion of position entry is complete without a thorough explanation of stops. But I'm left to wonder why so few investors use stop-losses. If you're guilty of not using stops, you need this information. It might just mean the difference between retiring on time with a healthy nest egg or retiring later and still just "scraping by."
By planning and placing stops you plan to win, but prepare to take losses and still live to trade another day. So we need to look at the trader psychology around taking losses.
A professional trader needs to know where the exit point in their trades are before they start trading. Having a visual of a wrong trade is key so a trader can know when to get out fast. This is a basic knowledge that all pro traders need to have.
What are the answers to these questions?
1.) When should you stay on board and when should you bail out?
2.) When a stock is losing, do you have a guide that lets you know when to sell?
3.) Do you have a rule of when to move your stop to break-even?
If you can't answer these questions, you're not alone. And what it means is that you need to establish some rules for yourself, especially when you go to short stocks. But, all the trading rules in the world are meaningless if you don't use them. That's why you and I need to "talk turkey" about what's really going on with you when you refuse to manage your risk in a proactive and professional way.
Many investors refuse to take a loss for two basic reasons:
1. Admit they are wrong? No Way!
For many traders a realized loss is a huge admittance of being wrong and that is just too hurtful to acknowledge. To them it is linked to being a failure at life and their self image is directly affected by this perceived failure.
A trader like this experiences real pain from the loss, and would rather deny it than fess up to the fact that it is giving them the pain. Quite often it requires a total loss before he can begin to change. To quit trading is the only other alternative.
2. The losing position is too big relative to their overall portfolio value so they can't afford take the loss.
Losses aren't just on paper, they are real. The loss is what it is and the quoted price is it's value.
These 2 situations are types of self-denial this problem is common with tons and tons of investors. Observe Merrill-Lynch, AIG, WAMU, Lehman.. and on and on.... you should be comforted to know that this self denial is not limited to just one income level or social status.
If this article is making you uncomfortable or bringing up feelings of anger or powerlessness, then that's a good sign. It means you have enough self-awareness to change.
The winning trader uses a different strategy from the losing trader by regarding the pain from the loss in an impersonal way. They use the loss as a sign that something went wrong with their approach, or their execution, but NOT that something is wrong with them.
Winning traders separate who they are from what they do. They know, or learn, that their trading faults lies in their approach or their skill level but not in their fundamental worth as a person. The pain they feel is quickly transmuted into motivation, which fuels their desire and determination to become a better trader.
Both are learned responses and within your control. The opportunity for growth from the pain of losses is the same. It's what we do with the emotional pain of a loss that matters, not the loss itself.
Stay true to my tried and true ETF Trend Trading System and develop the habits of a winner. Apply yourself, ask questions, and observe your position size as it relates to your portfolio and your trading trends will move to the winning side.
My constant reminders about proper stops and risks are one of the strongest parts of my one year mentorship program. Even after you understand my system 100%, it's still good to hear me tell you, "Don't move your stop" or "Be sure to take profits when the system says to, not too early and not too late." Most my students like the mentorship part as much or even more than the course itself. - 23196
However in considering the loss of a trade, the strategy is usually sound, it is the trader that came up short.
Well, yes there is a good chance this described you. In this article I will talk about ways to change all that. Your stop loss order is a really good place to start, this should be decided before you place an order.
No discussion of position entry is complete without a thorough explanation of stops. But I'm left to wonder why so few investors use stop-losses. If you're guilty of not using stops, you need this information. It might just mean the difference between retiring on time with a healthy nest egg or retiring later and still just "scraping by."
By planning and placing stops you plan to win, but prepare to take losses and still live to trade another day. So we need to look at the trader psychology around taking losses.
A professional trader needs to know where the exit point in their trades are before they start trading. Having a visual of a wrong trade is key so a trader can know when to get out fast. This is a basic knowledge that all pro traders need to have.
What are the answers to these questions?
1.) When should you stay on board and when should you bail out?
2.) When a stock is losing, do you have a guide that lets you know when to sell?
3.) Do you have a rule of when to move your stop to break-even?
If you can't answer these questions, you're not alone. And what it means is that you need to establish some rules for yourself, especially when you go to short stocks. But, all the trading rules in the world are meaningless if you don't use them. That's why you and I need to "talk turkey" about what's really going on with you when you refuse to manage your risk in a proactive and professional way.
Many investors refuse to take a loss for two basic reasons:
1. Admit they are wrong? No Way!
For many traders a realized loss is a huge admittance of being wrong and that is just too hurtful to acknowledge. To them it is linked to being a failure at life and their self image is directly affected by this perceived failure.
A trader like this experiences real pain from the loss, and would rather deny it than fess up to the fact that it is giving them the pain. Quite often it requires a total loss before he can begin to change. To quit trading is the only other alternative.
2. The losing position is too big relative to their overall portfolio value so they can't afford take the loss.
Losses aren't just on paper, they are real. The loss is what it is and the quoted price is it's value.
These 2 situations are types of self-denial this problem is common with tons and tons of investors. Observe Merrill-Lynch, AIG, WAMU, Lehman.. and on and on.... you should be comforted to know that this self denial is not limited to just one income level or social status.
If this article is making you uncomfortable or bringing up feelings of anger or powerlessness, then that's a good sign. It means you have enough self-awareness to change.
The winning trader uses a different strategy from the losing trader by regarding the pain from the loss in an impersonal way. They use the loss as a sign that something went wrong with their approach, or their execution, but NOT that something is wrong with them.
Winning traders separate who they are from what they do. They know, or learn, that their trading faults lies in their approach or their skill level but not in their fundamental worth as a person. The pain they feel is quickly transmuted into motivation, which fuels their desire and determination to become a better trader.
Both are learned responses and within your control. The opportunity for growth from the pain of losses is the same. It's what we do with the emotional pain of a loss that matters, not the loss itself.
Stay true to my tried and true ETF Trend Trading System and develop the habits of a winner. Apply yourself, ask questions, and observe your position size as it relates to your portfolio and your trading trends will move to the winning side.
My constant reminders about proper stops and risks are one of the strongest parts of my one year mentorship program. Even after you understand my system 100%, it's still good to hear me tell you, "Don't move your stop" or "Be sure to take profits when the system says to, not too early and not too late." Most my students like the mentorship part as much or even more than the course itself. - 23196
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posted by X - Men @ 5:48 AM
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