Psychology from the Merc

PSYCHOLOGY, by Mark Forrester

There will be no not threat of allowing your-self the possibility of financial loss. If you find yourself considering, weighting, or judging, then you are either not predefining what a loss is or you are not executing them immediately upon perception, in which case, if you don’t and it turns out to be a profitable, you are reinforcing an inappropriate behavior that will inevitable lead to disaster. Or if you don’t and the loss worsens it will cause panic, which will make it difficult to stop. The next error after letting a loss get out of hand is usually not taking the next opportunity, which invariably is always a winning trade.

The markets may be a mass of confusion, but you can address it by clearly defining a target profit objective, and entrance and exit strategies. The more structure you have to follow, the less uncertain and unorganized you'll feel. You will know what to do and when to do it. The more each element is defined, the easier it will be to follow your trading plan, and maintain discipline. For instance, “get out of your losers quickly” this is easy advice, but doing it took the knowledge that you are not right all the time, so accept this knowledge.

I have learned from experience that being a profitable trader one must engage in more losing trades than winning trades. Some of my most profitable trading months my clearing firm had me clocked at around 37% winners. I was simply profitable because I was holding my winners 5 times longer than my losers. I was shocked to learn this, but the matter of fact is when you hold your winners for long periods of time, a trader will become confident, setting himself up to make sound decisions. It is much easier for a trader to protect his profits by making smart decisions, than to work all day to recoup losses. When a trader is faced with recouping losses, the trader will become anxious and stress allowing mistakes to be made.

 

Most traders never get past the realization that taking losses comes with the territory.

That fact is the MAIN obstacle needed to be overcome, without it the game is over in a matter of time.

Ya learn or Ya burn.

Baseball players make millions a year and still strike out. Why is it so hard to comprehend losing in the trading game? It is all in the head, it is perusing the flawed thoughts of winning without fault. "it ain't gonna happen"

PS, I can give out 10 signals (some redundant depending on mkt action as the daily battle unfolds) and those signals would if used properly will make anyone a winner. Properly..... simply means KNOWING in advance that ANY signal will never work all the time and when they do not work, BAIL OUT DUDE, do not go down in flames just because the engine quit at 20k feet. What the heck do you think they put parachutes in the cockpit for? Why else would they spend a million $$$ a copy for ejection seats? They have a purpose, even a 25 million $ plane is not without failures.

STOPS have a purpose, use them and fly another day. :eek: