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Based on my own experience as well as working with hundreds of traders over the years, I have come to the conclusion that there are three major components to winning in the stock market. An excellent Method, a customized Plan that fits YOU, and the right Mental Approach. While mastery of each of them is paramount, building the right Mental Approach seems to be the most challenging to master for the majority of traders. Without a winning attitude and the proper mindset, even the soundest of all methods will lead to lost money. In fact, a winner is more defined by mental make-up than by method. This is why the trader with a winning attitude and a faulty approach can still produce positive results, while the trader with a loser's mentality will stumble and fall, despite an excellent approach. Don't think so? What do you actually think causes one trader to play six winners in a row, and another to experience six consecutive losses? How is it that one trader can use a daily newsletter and win, while another uses it and loses? What do you think differentiates the person who buys XYZ and wins, from the person who buys the same XYZ and loses? The difference lies in the Mind, plain and simple. One of the most revolutionary axioms I have ever come across is this: "As a man thinks in his heart, so is he," and this universal truth is just as applicable to traders as it is to anyone else. Monitor the attitude of a winner and you will find a level of confidence and certainty that is almost beyond belief. And while most people will make the mistake of assuming that winners are confident and certain because they win; the truth is that winners consistently win because they are confident and certain. No method, however sound, will work for the trader who mentally pictures himself losing before each trade is placed. And no amount of Money, however large, will save the individual who secretly harbors the belief that, "Whatever I touch, turns to mush." As choice-making individuals, we must choose a winner's mindset. You can never fail, or even feel like a failure, if you recognize the simple fact that you are not your results. You create them, which means that you posses the power to alter them if you happen not to care for them. There is room at the top for all dedicated traders, but the first step is to actually believe that. The second is to start acting like it. Think the part, then act the part and the rest mysteriously takes care of itself. But don't take my word for it. Just try it. Jared Wesley
Having trouble adhering to your stops lately? Well, for some traders this is a difficult psychological demon to overcome. One that if not corrected quickly will lead to your demise as a trader. Sounds pretty serious, doesn't it? It is! For those of you who have this nagging problem, you already know the costs. So, let's try to do something about it before the damage is irreversible! As traders, one of the major weaknesses we have is being human. We are not robots, therefore we bring emotions with us wherever we go and with whatever we do. Being emotional creatures is not conducive to success in trading. Though our mind is a beautiful thing, we must always stay grounded and objective with our thoughts, which is no small task! Most traders who don't stick to their stops know they are doing the wrong thing, but, they also won't allow themselves to exit the position, because they are unable to accept a loss. By accepting a loss, they are admitting they are wrong, and in turn, they will lose money. So, instead of facing or accepting this pain, they choose to forego their stop loss, and let the stock move against them, in HOPES that it will turn around and eventually make them a winner. They will literally do anything to avoid the prospect of becoming a "loser." Sound familiar to anyone? Well, if I'm talking about YOU, then you need to continue reading... Most things we listen to or learn in our training seminars make perfect, logical sense. Find a pattern, stalk a quality entry, locate a reasonable area for the stop, pull the trigger, sit back and manage in between. Let the stock do the work for you. It's simple right? Heck, if someone asked you for technical advice about a particular stock, you could probably rattle off some very nice objective, logical advice worthy of a pro, as long as YOU are not in the stock yourself! Everything changes when it's our own money on the line. This causes many people to lose objectivity and become irrational. For some traders this nasty habit can be easily broken by going back through personal statistics and looking at the positive difference in your P/L by taking your stops versus not taking them. Unfortunately for many, merely looking back at past statistics is not enough. You've been ignoring your stops for so long, it's going to take some stronger medicine to cure this disease! The first thing you must decide on is this: Do you like trading? If the answer is yes, then the choice becomes very simple. Take your stops, or quit trading. Period! Take some time and really internalize those thoughts. Imagine your life as a trader, and all the positive things that go with it. The freedom to trade when and wherever you want, the potential to earn as much or as little as you desire, the ability to spend more time with loved ones etc. Now, picture your life without trading. Can you handle the alternative? If you don't like the alternative picture, then you are taking the first step towards correcting this habit. If you've decided that trading is your passion, then you will do whatever it takes to succeed. That includes taking your stops. So, before you enter any trade, you must first accept that the money is potentially GONE. If you are going to risk $100 on a trade, then BEFORE you enter the position, you must emotionally tell yourself, the $100 is gone. I no longer have it. After all, you can't lose something you don't have! If the thought of losing $100 is too frightening, then you need to lower the amount of money you are willing to lose per trade, until it becomes emotionally acceptable. If you cannot find a dollar amount small enough, then try using a simulator account and work your way up to trading with small shares. If that doesn't work, then there is a chance that this business is not for you. Always keep in mind that we are not going for homeruns, we are looking for base hits. We focus on a consistent approach to making money, something we can repeat day after day. We are not investors, we are technical traders. We have very specific parameters for our set-ups, and using stop losses is a large part of that process. When something does not work as we plan, we take the loss and reassess. We don't opine about the "what if's", we simply move on and stay objective. Remember, it's just one trade! So, don't let that "one" trade wipe out your account and destroy your trading aspirations. Is one trade worth that much? If you feel yourself losing control, then step back and slow things down or perhaps stop trading for a bit. Don't worry about missed opportunities because the market is not going anywhere. When you are ready to trade again, the market will still be there. If you need to, put a sign up in front of you that simply states, "I will adhere to my stop, no matter what!" Another approach might be to record yourself when you are feeling anxious about not taking a stop. Then go back and replay it afterwards to see what your emotional process was. A "consequence" system may work as well. For example, if you don't take your stop, then you are not allowed to play golf for 2 weeks. Take away something meaningful, something that will help promote change. As our own PMTR moderator Jeff Yates always says: "You won't change until the pain to change becomes greater than the pain to stay the same!" I truly believe that. So you need to ask yourself how much money do I need to lose before I change? Although not adhering to stops is a very serious problem, one of the nice things about having this type of issue is that it can be corrected in just one day. Similar to smoking, if you so choose, you can literally quit smoking today and never have another cigarette again in your life. I'm not saying this is easy, but it is possible. Same goes for adhering to stop losses. For example, learning chart patterns will take time, it's not something that you can force yourself to learn in one day. Whereas with adhering to stop losses, if you have the mental strength and desire, you can literally change overnight! It doesn't have to take months. Good luck out there, and remember this is a marathon not a sprint, and it all starts with a good, objective trading plan! The choice is simple: Take your stops or stop trading! Make sure to register for other programs that interest you the most at the following link: Pristine FREE Webinars I would be happy to see you join us and to answer any questions you may have. Jared Wesley Contributing Editor Interactive Trading Room Moderator Gap, Intra-Day and Swing Trading Specialist Instructor and Traders Coach