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."
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™.
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