The 12 Disciples Of Trading
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Today I put together some basic rules and guidelines that can help you improve your trading results
Psychology and mental toughness should be your best trait– Indicators, strategies and set ups mean a great deal in helping you execute a trade but if you freak out in trades when they do not quickly work for you, get emotional over losses and have a short fuse, you will find trading to be a miserable life. Your ability to remain calm and focused will pay you more dividends than any stock set up ever will.
Common sense is your best indicator- Just like in real life. sometimes in trading our beliefs embedded in our minds and hearts override our basic common sense and judgement. There will always be a situation where you “know better” or when you just know a certain trading scenario just isn’t right. Trust who you are and trust in your experience. Because at the end of the day you are the only one you have to answer to.
Never take a boredom trade- Just because the market is open doesn’t mean you have to trade. The strategies we rely on will not present themselves every minute of every day. If your favorite set ups are not presenting themselves then its best not to trade at all because what you end up trading in those times are sup par opportunities that most likely lead to losers that end up increasing your frustration level.Save your money for the prime stuff.
Learn from others but do not blindly follow others- In the age of social media there are alot of quality traders that give quality advice but there are many anonymous social media traders who may be promoting a stock under a hidden agenda. When a trader recommends a position you have to take into consideration their trading strategy, time horizon and bank roll. Of course much of this information is never disclosed. Example someone may recommend XYZ as a long term buy and can handle a 10 to 15% drop in the stock price because they are well funded and they may be looking for a +35% return over a span of 12 months or more but that means nothing to the day trader or short term trader as they are looking at movements that will happen within minutes to hours.Trade your plan and your agenda.
Losing should be your best friend-Why should we love losing I mean all of our life we’ve been told that losing ,well, is for losers and we certainly don’t want to be losers right? But in this game is different. If you want to be a successful trader not only will you lose but you will lose often. The market itself has too many variables for you to be perfect and I’m sure you understand that. Even so almost every day I see someone getting upset over a losing trade. Part of the reason for this is we feel because we have put so many hours into research and study that we are entitled to success but you cant just study your way success you have to earn that.
Stay humble– In the music business they say ” You are only as good as your last hit”. In trading you are only as good as your last trade. It never fails that as soon as you get over confident and think you got this all under control you get nailed. Be happy about your accomplishments but understand trading is a journey and there will be many ups and downs throughout that journey.
Help others– Winston Churchill once said “We make a living by what we get. We make a life by what we give.” There are certain things in life money cant buy and sharing your success with others can be priceless. When I say that I dont mean you need a Rappers entourage but be grateful for your success . Donate money or time to a cause that means something to you or reach out to a struggling trader.The benefits of being a part of something larger than you has value money cant buy.
Do not get greedy– Once you experience tremendous success and you are winning a lot on your trades it’s easy to forget about the losses , hard times and the sleepless nights. As your confidence grows you begin to take larger risks because you think you’re not vulnerable to losing anymore and just when you think that…. Well you know what happens.
Don’t try to learn everything because you will not-In my years of experience I notice that most traders try to complicate the process of trading. Every brokerage firm tries to impress you with their state-of-the-art software heat seeking maps and deep library of technical indicator tools. While those tools can be helpful to some traders for most people it just complicates the process. Keep clean charts, focus on specific inflection points, support and resistance and keep it simple
Embrace hatred– Having someone hate on you means you are probably more successful than they are. Successful people are always a target of hatred and you can try your best you play the middle ground but you will still have haters. Many times these haters are the people we thought were the closest to us, friends, family etc. which can be tough to take. Most people believe that when you’re successful that you are either stealing, cheating or doing something underhanded. While there are definitely people in every industry that do that most people just don’t believe that hard work got you where you are and no matter what you say they never will. The thing I learned is people really don’t hate you they’re just jealous of your success and wish they were more like you. Therefore, embrace the hate
Learn to short stocks-Most traders and definitely most investors loathe the short seller. Short sellers are often called evil ,disgusting and unethical but in reality short selling brings justice and balance to the market and without them epic short squeezes would never happen. No matter how much you hate them they will always be a part of the financial landscape. You don’t necessarily have to short sell stocks but you should definitely know what short-sellers are looking for and how they short stocks. This will help you nail down proper entry prices. In my opinion not having short sell knowledge in your toolkit is a major financial disadvantage. Stocks will always drop a hell of a lot faster than they ever will go up and having this talent cant be an account saver, especially in bear markets.
Find a mentor-Tony Robbins once said “Stand on the shoulders of giants” and the easiest way for you to achieve success is to find someone who has achieved it, lived it and grown from it. Pick their brain, clone them, learn to think like them and learn to do what they do. Having a mentor is the best way to shorten your learning curve and hit your goals faster. Every top level athlete, businessperson, actor, etc has a coach because they know what it takes to win and have committed to doing so at all costs. Also, a great mentor is not just somebody who will teach you how to trade but the right mentor can provide mental and psychological support when it is needed the most.