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Showing results for tags 'the disciplined trader'.
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Any experienced trader will tell you that being successful is, in large part, a matter of overcoming all the hurdles that get in your way. Now there are two basic types of hurdles: the physical ones and the mental ones… and actually some- times they get intertwined. Let's look at a few of them: ** A big thunderstorm causes an electrical surge or outage. You're in the middle of a trade, and you're scrambling around groping for your cell phone so that you can call the floor directly and have them be your eyes and ears. That's stress, man. ** You've got your eyes peeled on the charts, waiting for the signal so you can pull the trigger. A phone call comes in about something other than the trade you are concentrating on. You know you can't talk, but you don't want to be rude. Well, being polite just may cost you. Trade missed. You've waited all morning for everything to fall into place and you missed it. You're angry. ** Today's a good day. Your primary trade is going well. You're getting close to your target but the RSI seems nowhere near a peak. You don't want to take the profit quite yet even though you're right on top of your price target. Hey, let's let it ride a little and we'll just trail it with a stop. Surprise news and “el dropo” and the market blows through your stop. You feel like a jerk. As you know, I could go on forever. So, what's my point? Distractions to following your system come from outside (lightning and phone calls) and inside (your “feelings” about what could happen). It's your job to MAKE THE COMMITMENT to follow your tested trading system. You've got to be deadly serious about it. Get caller ID so that you take only the calls that you HAVE TO take. Have a contingency plan when the lights go out. Note: I knew a trader that held to the concept of “mental stops”. He was lucky for a while, but when a power outage hit in his part of New York City, he couldn't get through to the floor. The lights went back on in about 15 minutes but by that time he had lost a bundle. His “mental stop” turned to “mental anguish”. After that, he put his stops in… but just for a week and he was back to his old habits. He doesn't trade anymore. The sad part is that the guy had talent. Trading is a business. Treat it like one. You've worked hard to arrive at a system that you can trust… well then, do everything in your power to stay focused on the ONE TASK of following that system to the tee. To do otherwise is to be out of control. Maintain your Focus. Maintain your Discipline. At all times. My best, Norman Hallett
What would you rather have the perfect trading system or the perfect soul-mate? Don't answer that out loud! I would venture to say that most traders are so “into” their trading that they would hesitate when pondering that question. By the way, the answer is the perfect soul-mate. That's because there is no perfect trading system. The perfect trading system is the right system for you. Let's assess. Are you the Impatient Type? Let me stress here that by impatient, I mean that you don't like the notion of waiting more than, say, a day, to see your trade results. You use logic like “I don't like to stay in a trade overnight, because that's where the risk is… anything can happen in these crazy times.” Or.. “My signals are just as valid with a 60 second chart as they are with a weekly chart and I'd rather be able to keep adjusting.” These things that you say to yourself (valid or not) come from your inner-self trying to move you to comfort. Are you the Position-Trade Type? You say, “The market can be controlled short-term, but eventually the fundamentals come home to roost.” Or..”I'm not looking to eat up my capital in transactional costs. As far as I'm concerned, the trend is your friend and I'll stick with a trade.” Are you the Where The Action Is Type? You tend to think, “A signal is a signal, whether it's on a 2-minute chart or a monthly. When my signal sets up, I GO!” You add, “Sometimes I don't even know which commodity I'm looking at. That really doesn't matter to me. I just care about the technical pattern.” I won't bore you with more types, because they are unlimited. In my coaching of traders for years, these above types were the predominant ones. There is no right and wrong type. There is only assessing which type you are comfortable with perceiving yourself as and then committing to a trading system that reflects that type. There are plenty of winning trading system, of all types, that can be very successful. The best way to have a good system work for you is if you can follow it's signals without hesitation. You are more likely to follow your trading signals if the system “agrees with you.” Now look inside yourself. Then commit to following what your tested system tells you to do! You must win the BATTLE WITHIN YOURSELF first, before you can win with the markets. My best, Norman Hallett
It occupies a chapter in just about every trading book ever written. It's been preached by every lecturing market guru since the Aden Sisters danced to the music of the gold market. Go ahead and hire a personal trading coach and likely the second thing he or she will utter will be these chosen words (right after “Futures trading is speculative and only risk capital should be used.”)… and those words are, “Limit your losses and let your winners run”. OK. We've been told. But you didn't have to tell us. It makes perfect sense. “On a roll”… “Go with the flow”… “Ride the wave”… “Get out while the getting's good”… we've heard both sides of those golden words massaged in numerous different phrases. We get it. During my trading and coaching days, I would re-visit students that I trained weeks or months previously and low and behold I would discover that many of them were actually doing the opposite... letting their losses run and limiting their gains. After a while I wasn't surprised… I would go into a refresher visit EXPECTING to see “limit/run rule” repeatedly ignored. I would ask the students “Why?”... There were many different stories but one main theme… all the traders, in some way, had gotten out of emotional control. During their trainings, I had made sure that they did extensive back-testing on their systems and I did that because I knew that the more they tested and saw that their system would have been successful, the more they would TRUST in the system and have the strength the follow its signals, especially through rough periods. Apparently simply back-testing and seeing “would-have-been” results wasn't enough to keep these traders in emotional control. What I had been missing was that these traders were taking the losing PERSONALLY! These new traders had been seeing losing trades as reasons to let negative thoughts into their heads. A loss would mean that all the articles they read about “gambling” futures traders may be true. All the family accusations that they were crazy futures traders … well, that could have some merit! This kind of negative thinking (as well as other forms of futures-related negative thinking) makes it so you don't want to take a loss. If you take a loss, maybe your that much closer to that idiot futures trader that you've been accused of. So you enter a trade (after, say, coming off a losing trade)and it starts to go south. As the market heads for your stop, you start looking around at the news, or a chart of a “sister” commodity that's showing strength, searching for an excuse to make it OK to lift your stop. Found it. “Hello… Cancel Bean Ticket 4154.” Stop Canceled. If the market comes back, you'll be the smart guy or gal that made the right move and turned a loser into a winner. What you really just did, however, is turn a potential winner into a potential loser.. YOU. You may have had a winning trade, but you will lose in the end. It's not about YOU. It's about THE MARKET. If you don't take your emotions out of it, you don't have a shot. You must see yourself as a trader not someone who is becoming a trader. There's very little room for mistakes in your trading. Leverage makes sure of that. If you are going to play in the Big League, you have to do act and do what the Big Leaguers do… right from the beginning. Do all you practicing on the paper-trading playing field. Once you put your money up, you either do what your tested system tell you to do or pick a different profession. If you're not training mentally, you're not giving yourself the best chance laughing in the face of your relatives! My best, Norman Hallett Subconscious Training Corporation