Skip to main content

Limiting Your Winners and Letting Your Losers Run?

It occupies a chapter in just about every trading book or blog 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 “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 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... (october registrations are open )

 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.  (so again mentoring them on this obviously , that the whole purpose of mentorship training )

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” market traders may be true. 

 All the family accusations that they were crazy traders … well, that could have some merit! 

 This kind of negative thinking (as well as other forms of trading-related negative thinking) makes it so you don’t want to take a loss. If you take a loss, maybe you’re that much closer to that idiot trader that you’ve been accused of being. 

 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” market or share that’s showing strength, searching for an excuse to make it OK to lift your stop. 

 Found it. 

 “you open your zerodha | trading view setup and ” … 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, was 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 Leagues, you have to do act and do what Big Leaguers do… right from the beginning. 

 Do all your practicing on the paper-trading playing field. Once you put your money up, you either do what your tested system tells you to do or pick a different profession.  

 If you’re not training mentally, you’re not giving yourself the best chance to laughing in the face of your relatives and whosoever laughs at your profession !!

TO PRE REGISTER FOR OCTOBER WHATSAPP 9773770675 

PLEASE FOLLOW THE BLOG FOR THE MENTAL FITNESS TRADER SERIES (SOURCE )

LAST BLOG IN THIS SECTION WAS  - you've got great trading system so why do you lose ?



Labels:
Location: Kerala, India

Comments

Post a Comment

Popular posts from this blog

Questions and Methods for Price Action Analysis

 Winners and Losers in the Market a. Who is dominating the current swing, bulls or bears? b. Are they correct? c. If they‟re wrong: i. Where is this move likely to stall? Where is the opposite order flow likely to enter the market? ii. Where will these traders have positioned their stops? d. If they‟re right: i. Where are these traders targeting? Where are they going to take profits or lighten their position? e. If they‟re in the right direction, but late: i. Where is the worst place to be entering late in this move? Where will the late traders be stopped out? Trapped Traders a. Where is the last group of trapped traders? b. Where are they hoping to get out? How will that affect price? c. Where will they give up and bail out? How will that affect price? Expectations - Most Likely Price Movement a. What do you expect the market to do from here? i. Why do you expect that? ii. How would price have to behave prior to that move occurring? iii. Is price behaving this way? b. If the most ...
Post a Comment
Read more

Understanding Gaps in the market and trading them !!

  Common Gaps Sometimes referred to as a trading gap or an area gap, the common gap is usually uneventful. In fact, they can be caused by a stock going ex-dividend when the trading volume is low. These gaps are common (get it?) and usually get filled fairly quickly. "Getting filled" means that the price action at a later time (few days to a few weeks) usually retraces at the least to the last day before the gap. This is also known as closing the gap. Here is a chart of two common gaps that have not been filled for while but now filled up . Notice that after the gap the prices have come down to at least the beginning of the gap? That is called closing or filling the gap. A common gap usually appears in a trading range or congestion area, and reinforces the apparent lack of interest in the stock at that time. Many times this is further exacerbated by low trading volume. Being aware of these types of gaps is good, but doubtful that they will produce a trading opportunities. Brea...
Post a Comment
Read more

THE 25 - POINT MANTRA DISCIPLINE FOR DAY TRADING

The Wheel of Success in Trading  There are three spokes that make up, what I call the Wheel of Success as it relates to trading.   The first spoke is content Content consists of all the external and internal market information that traders utilize to make their trading decisions. All traders must purchase value-added content that provides utility in making their trading decisions. The most important content being internal market information , which is simply time and price information as disseminated by the exchanges. As we are making our trading decisions in present time based on time and price, In order to "scalp" the markets effectively, we must have the most live up-to-date information . The second spoke is mechanics Mechanics is how you access the markets and the methodology that you employ to enter/exit your trades. You must master mechanics before you can enjoy any success as a trader. A simple keystroke error can result in a loss of thousands . A trader can ruin his e...
Post a Comment
Read more