|Become a Disciplined Trader|
Become a Disciplined Trader
The number one problem for most traders, and reason they cannot get ahead, is that they simply cannot muster the discipline to get out of a trade when they should.
No matter how often I say it, I cannot persuade others to get out in time.
Part of the problem is human nature, and part of the problem is erroneous hype from most sources that traders encounter when first entering this business.
If there is any one key to my own success as a trader, it was that I learned the lesson of "getting out on time" early in my career.
Human nature as a factor displays itself in a complexity of interwoven emotional and physical phenomena. It is not the same for each person, so I cannot simply say that the reason you stay in too long is due to greed. For many, greed certainly plays a big part in not getting out in time, but that would be a purist point of view and it is not practical. Greed mixed with pride would be more like it. Whereas greed cannot be satisfied with small profits - actually it is never satisfied at all with any amount of profits - pride won't allow you to be wrong about a trade. But is greed mixed with pride enough to describe why traders stay in too long? Not really. Laziness also enters the picture. Some traders are simply not ruthless about taking profits while they are there, or cutting losses when they are there.
O.k., we've talked about greed, pride, laziness, and not being ruthless about getting out on time. Now, what about distractions? Some traders are simply too distracted by other things to extract themselves from a trade when they need to.
Of course, then there is industry hype to contend with. You are told to cut your losses and let your profits run. But no one ever tells you quite how to do that.
Almost everyone tells you to use a stop loss, but no one tells you where to put it. No wonder aspiring traders are confused.
There is really only one answer to getting out on time: self-examination.
Pardon me if I tell something about myself, maybe it will help you. Perhaps you could say that it derives from the song "Get me to the church on time." It was many years ago when I first heard that song, and it stuck. Some 35 years ago I went from being an atheist to becoming a Christian. Now I don't mean Christian in the sense that I became some sort of religious nut. I find that the doctrine of a great many churches is in conflict with the plain words and truth of both the old and the new testaments. I also found that a lot of people have not discovered what a church is really for. Those people may look and sound religious, but they are not really living it and don't spend enough time being what they say they are. What I wanted then, and still want more than ever, is a growing relationship with the Almighty God who created each and everyone of us.
To obtain that relationship I read in the scriptures that we should not forsake the assembling of ourselves - i.e. the real reason that any church should exist. Assembling to be taught, to share, to love one another, to build a relationship with others of a like mind.
What I learned in attending "church" was that to build a relationship with the Almighty, I had to do a lot of self-examination - and it has to be on a continuing basis. In other words, for the past 35 years and still today, I am busily engaged in finding out who I am, what makes me tick, and what makes me behave the way I do.
I found out that not "getting out of the trade on time" was due entirely to who I was and what made me tick.
Back to trading:
When the profits are there, be sure to take at least some of what is available. When you see that you are wrong in the trade, get out. Do not give it time. Do not give it space. Get out, get out, get out - especially if you are trading a 3 lot.
But to do that successfully, you are going to have to find out who you are, who you really and truly are. That is going to require deep introspection.
There are at least two ways to do that: 1. look to man's ways. 2. look to God's ways.
Man's ways are to read a whole bunch of self-improvement books and see if that works. For some, I suppose it does. However, I found that, in general, those books don't take you deep enough.
God's way is to seek him first, and then he will add to you what you need. I did that and he did what he said he would do. In fact, he gave me a great deal more than I ever asked for or expected. Included in what he gave me was the ability to write. Have you ever known anyone who was dyslexic, who could read only 25 words a minute, who could write faster than he can read? That's me! He also granted me an insight into the markets that goes far beyond my natural ability to understand. There were and are a great many other things I never sought, but along with it all, I received the discipline I needed to get out of a trade when I needed to.
So these days, I sing a new song: "Take me from the trade on time."
May you, too, be so blessed.
All the best in your trading,
Joe Ross, trader, author, trading educator is one of the most eclectic traders in the business. His 50+ years include position trading of shares, and futures. He daytrades stock indices, currencies, and forex. He trades futures spreads and options on futures, and has written books about it all - 12 to be exact. Joe is the discoverer of The Law of Charts™, and is famous for the Ross hook™ and the Traders Trick Entry™.