One of the easiest mistakes any trader can make is not a 'trading' mistake at all.
Rather, the mistake is complacency with his or her trading skills and knowledge.
Unfortunately, trading is not like riding a bike - you can (and will) forget how.
Obviously you'll always know how to enter orders, but the efficiency and accuracy of
your trading will diminish without constant renewal of your trading mindset
The reason that most traders don't undergo psychological self-development is a lack
of time, and that's understandable. However, a good book or class is actually an
investment in yourself, and ultimately an investment in your bottom line. Today as a
primer, and a challenge, I'd like to review some self-development concepts that Ari
Kiev explores in his book 'Trading To Win'
(http://www.invest-store.com/cgi-bin/bigtrends-bin/moreinfo.cgi?division=books&page=d
esc&item=10234).
This in no way is a substitute for his excellent book, but they are still useful
ideas even in this abbreviated form. None of them are going to be new to you, but all
of them will be valuable to you.
1. Plan the entire trade before you enter the trade. Have an entry strategy, and an
exit point (both a winning exit point and a non-winning exit point). This will
inherently force you to look at your risk/reward ratio. Write these entries and exits
down in a journal.
2. Eliminate distractions. It's difficult enough to find trading time at all if it's
not your regular job. If you're a part-time trader who trades at work between
meetings and phone calls, think about this: there are full-time professional traders
who are concentrating on nothing other than taking your money. It's not that they're
better or smarter than you - they just have the time to focus. If you must trade, set
aside blocks of time to study or trade without distraction. Or it may be more
feasible to do your trading on an end-of day basis, meaning you place your orders and
do your 'homework' the night before when you can focus on it.
3. Choose a method or a small group of methods, and stick to them. Far too often we
see a trader adopt a new indicator or signal only to see it backfire. Become a master
of your favorite signals, rather than a slave to any and every signal. Understand
that an indicator will fail sometimes. That's ok. The sizable winning trades should
more than offset the small losing trades initiated by an errant signal. This trading
method is designed to eliminate the emotional bias of trading.
4. Choosing not to trade can also be a prudent choice. You'll frequently hear 'don't
fight the tape'. The same idea also applies to a flat market - you can't make stocks
do something they're just not going to do. Wait for good entries into a developing
trend rather than force a bad entry into an unclear trend.
5. Take responsibility for your trades - all of them. Examine why the losing trades
failed, and why the winners were successful. The reality is that you chose to enter
each and every trade. This can be painful, at least initially, since the ego is built
to deflect blame yet accept praise. That's a trap. If you find yourself saying "that
was a good trade entry but……." then stop yourself immediately. Either
everything before 'but' or after 'but' is inaccurate. If you rationalize or justify
poor trades, then you'll never learn from them. This may be the most important idea
of the five - the ego can prevent real learning. If you can learn to accept some
failure without being emotionally devastated, then you'll be a good trader.
The only advice I would add to this list is simply to keep a daily trading journal.
This can be a journal of trades, signals, ideas, and emotions about your trading. The
more you put in the journal, the more you'll get out of it. It will also help you in
applying and tracking these five concepts above.
Se não receio o erro é porque estou sempre pronto a corrigi-lo
There's no bull side and no bear side. JUST THE RIGHT SIDE!
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