I'm not sure he's been trading for awhile, but he has taught me somethings and life has also and I'm starting to detached myself completely and trading with no fear. With that my numbers have increased, and its only been a few months so anyone can do it.
Thinking too much causes you not to pull the trigger, the goal is to become like a robot. When the stock meets your "checklist" for an entry just get in, and do it every time it meets it not just once and awhile. And if you want to know where the stock is going, learn to read the tape. Price and volume will tell you were the the stock is going, it never lies. Charts show were the stock has been, the tape tells you were its going.
I've got to agree that we need to remove emotional response from trading as much as possible. Out of control emotions seem to be the biggest factor moving us away from our plan. I have no problem pulling the trigger, my issue is overtrading, and for that reason Patience is the biggest virtue in my trading. I think the sequence we need to follow is: - study the markets to detect a combination of entry, stop and exit strategy that gives us an edge - make that edge so rigid and well qualified that Nathan's statement above is wrong - forward test the edge (paper trade) to build faith, patience and discipline - really test the edge (cash to invoke emotional response) to continue building faith, patience and discipline - scale up Why I challenge Nathan's statement is this. Nathan, you say, "perfect setup, it will never come until AFTER" but if you follow the process, understand that you don't aim to make individual trades winners but to trade your system so that a series of trades is a winner then you will find that your perfect setup is perfect before you place the trade. The trouble is that you are trying to achieve perfection on a trade by trade basis with perfection defined as profitable. I could be wrong here but I believe this because u imply that the setup isn't perfect before you trade. Either that or you haven't defined it tightly enough. The setup must be perfect before you place the trade. You just don't know whether this trade will win or lose. And accepting that, and knowing that its the sequence that matters, not the individual (we really can kill our soldiers to win the battle) then everything can be perfect even when the individual trade loses money The earlier advice to read Mark Douglas (the disciplined trader) is spot on. Then you can build mind to develop good setups, patience to wait for them to develop, and discipline to overcome fear and take the trades and hold them until your rules say exit. The best of luck. And, apologies to Nathan if I misinterpreted him. Back to trading
There's a difference between being unafraid and being arrogant. Fear may keep you disciplined, but my discipline comes from knowing that if I follow my plan, I'll make money. Fear is not an issue.
Proper execution of your trading plan will result in trading losses. Thats the good part. If you can get your mind around the above statement, it can actually give you some relief. Relief in the sense that once you accept the fact that losses are part and parcel of trading you will be accepting the reality of the situation and also taking responsibility. The reality of the situation is the future is unknown, if we agree the future is unknown and we accept that fact, then not pulling the trigger comes down to not having confidence in your system or your ability to execute your system consistently. Since the future is unknown we don't know which trades will work out, so your difficulty in pulling the trigger suggests you are predicting an unfavorable outcome, and predicting is in direct conflict with the supposition that the future is unknown.
Better to rid yourself of emotions when trading. If you have fear then you'll never reach your potential. Think about it .. when a professional baseball player steps up to the plate does he have "fear" of being hit by the pitcher? No, he's confident that he'll get a hit. It's he versus the pitcher. What about a running back in the NFL? Does he "fear" being hit by a linebacker and tackled hard? Heck no, in his mind he's focused on how to gain 10 yards and break any tackles. In golf, do you think a PGA tour player "fears" the water hazard paralleling the fairway? No, he's focused on drilling his drive right down the middle. Same with trading ... a good trader is confident and looking forward to the trade. And he/she accepts that they'll lose on some trades and win on others. No different than the pro athletes .. the baseball player gets some hits, strikes out at times. The football running back gets nailed for a loss now and then but also gains plenty of yards. The golfer misses the cut some weeks and makes a good check other weeks. But they are focused on executing with confidence. Trade with fear and you'll not last very long.
Trading with fear allows you to "see' what could happen, and you plan accordingly. Confidence is great, but you have to look at things realistically. you COULD lose on any given trade..you cant just be all happy go lucky and think you're invincible....fear will quickly remind you that you're not. - nathan
Being smart allows you to see what could happen. I know that if the specialist fills me on the whole 30k shares I have on the bid, I could lose 10k. I know that but I'm not affraid, so I trade my plan if it does happen I get out. I'm not happy and I'm not lucky, I just know thats part of trading so I move on to my next trade. Fear didn't remind me that I could lose, the market did. Now the next time an opportunity comes arcross and I am fearful and I don't pull the trigger even tho the plan I have set out says I should and miss a good trade, now I'm saying I should of and I could of and if I would have.... To me thats counter-productive.
This isn't trading with fear; it's planning the trade. If you don't understand that a trading plan incorporates loss, then you don't have a fully-developed plan. You continue to focus on the outcome of the trade rather than on executing the trade properly. If one recognizes the inevitability of loss, there's nothing to fear. That doesn't imply invincibility; it's simply a recognition of the reality of the trading process.
I think you pointed out the the real issue here: emotional balance, knowledge and self-trust. You trust yourself to get out without fear/rejection if things start looking erratic, that comes from a proper balance of confidence, humility and market/self knowledge. Trading is a balancing act on three levels: emotional, financial and pyshcological: Emotional neutrality, fiscal discipline and psychological "peace". This is the mind set you need to have to be effective. From my experiences the hardest of the three is physcological "peace" - a mistake is made, money is lost and one is likely to take it personally. Keeping a cool head doesn't matter, although it helps, what matters is how your mind interprets the loss - are you now fearful of making another mistake/taking a loss? If so, you have to find a method to resolve that thought process. Mistakes are a part of life, they are ok - just don't make them too many times