This is the biggest mistake trades fail to grasp.....and is the very first chapter in my book, Failed Traders: The 20 Common Mistakes Committed By Over 1000 Losing Traders. Chapter 1 is "Not Treating Trading As A Business" Trading is hard work. It looks easy....just hit a couple keys on your computer and make some money. Traders who fail to treat trading as a business feel they can just show up 9:29AM and leave at 4:01PM and trade without a plan. These traders won't last long. First, you need a tested strategy before you even attempt to make your first trade. This is the equivalent of having a business plan. You wouldn't start a business without having a plan, and you shouldn't start trading without one either. Besides having a plan, you need to be prepared by having a list of stocks ready to trade. This should be done long before the market opens. Also, after the market closes, a trader must review all their trades to make sure they are sticking to their plan and that it (the strategy) is still working.
Curious to know the titles of other chapters in your book. How do you see business, is it purely an art, or purely science or blend of both ? If it is a blend then is it predominantly art or science ?
I don’t agree at all. What you post is based on your personal experience. Each trader will have his own story. And that story can be completely different but nevertheless be a success story. I start 5 minutes before the opening and I stop 5 minutes after the close (if I don’t close earlier as I don’t always wait end of the session). 5 minutes before opening to check that charts are open, broker connections are working and to quickly see the actual situation. After the close or when I close trading for the day, I just need 1 minute to check if I followed the rules of my last trade and to check if my result matches what my broker’s statement will say. That’s all. That’s evident and logical. I only trade the ES so I don’t need any lists. The ES has enough potential to make millions, so why make life complicated? I can already review the closed trade while trading the next trade. I have plenty of time for that as I only trade the ES and most part of the day I just am waiting, waiting, waiting… Sticking to the plan is checked in real time while I am trading. So after closing my last trade of the day I just need 5 minutes. My bank account will show if my strategy is still working, don’t have to do anything for that. Conclusion: each trader has his own story. And these stories can be almost opposite of other stories.
Mtrader, You are definitely the exception to the rule. Obviously if what you are doing is working then you are doing something right. My book is not solely based on my personal experience, but also based on over 1000 losing traders. These are the mistakes that I have repeatedly witnessed traders make over the last 10 years that have caused them to fail. Again, if something works for you that is great, but the majority of traders benefit by having a list of stocks to trade (doesn't apply to you since you only trade ES) and reviewing their trades at the end of the day.
The chapters are listed below. There is additional info about the book here: https://www.elitetrader.com/et/thre...committed-by-over-1000-losing-traders.305385/ Good question about whether trading is an art or science. It is a question that is often asked about trading. If trading was purely science, then there should be rules that if were followed should produce profitable trading. Obviously this is not the case. It is definitely a combo of the two. As for which one is more important or more predominant in trading I have always felt if differs between individual traders and the traders that can match their personality to their trading strategy have a better chance of succeeding. Chapter 1: Not Treating Trading As A Business Chapter 2: Trading Live Before You Are Ready Chapter 3: Not Having An Exit Strategy Before You Enter A Trade Chapter 4: Not Getting Out Of Losers Chapter 5: Relating Trading To Gambling Chapter 6: Trying To Be A Full-Time Day Trader When You Have A Full-Time Job Chapter 7: Not Listening To The Market Chapter 8: Overtrading Chapter 9: Undertrading Chapter 10: Trading With A Large Portion Of Your Net Worth Chapter 11: Trading Too Big Chapter 12: Only Trading Long Chapter 13: Consistently Attempting To Buy Breakdowns And Short Breakouts Chapter 14: Trading The Same Stock Every Day Chapter 15: Trading Based On Your Previous Performance Chapter 16: Not Matching Typical Profit With Typical Loss Chapter 17: Not Adapting Your Strategy To The Current Market Condition Chapter 18: Trading Based On Chat Rooms Chapter 19: Listening To Gurus Chapter 20: Missing Trades Due To Poor Execution Tactics
Attachment towards ones own "personality" is the real culprit Suppose if the personality of a trader is strongly analytical and does not believe that trading is an art and trades "in match with his personality", treating trading purely like an analytical job, then does he have "a better change of succeeding" ? I will put the same question in a analogy style... "Suppose if the personality of a trainee painting artist is strongly analytical and does not believe that painting is an art and paints in match with his personality, treating painting purely like an analytical job, without invoking the creativity within, then does he have "a better change of succeeding" as a painting artist ?" We may simply say "treat trading as a business", and we may also say that "trading business is an art", but if we don't invoke the creativity within ourselves, or in other words invoking the "creative personality within", being in the comfort zone of the shell called analytical mindset, and not daring to break the shell and come out it, then where is the "chance of succeeding" as a trader ? This is my point of view... https://www.elitetrader.com/et/threads/day-trading-basics.305348/page-5#post-4381370 Trading is a skill. Its creative skill. Its all about invoking the skill within. If one wants to play a flute then he has to invoke his musical part of the heart in his soul. He cannot say, i am an analytical dumb, yet i want to play a flute by matching my activity to my personality. The beauty of trading or any other business in this world is that it is an opportunity for a person to transform into a creative personality breaking out from the mechanical dull analytical head. Every profession have their own characteristics. If i want to become an engineer or a doctor i need to invoke a matching skill within me, not that i have to match my personality to it. Reality... This mentality of sticking adamantly to ones own personality, and not willing to invoke the matching skill within or in other words "not willing to TRANSFORM the personality", is the real real real reason for more than 90% of traders failing. A 9 am to 5 am employee turning into a successful trading businessman is a "transformation". Trying to trade matching to his personality is pretty ordinary and results will be ordinary too.