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One of the amazing things about novice traders is that they have not taken the time to write a statement on how they perceive or how they will trade the markets! They might be able to tell you. However, they have not given thought to writing it down. Unfortunately for them, there is a huge difference between being able to tell someone why you did something and writing the reasons down beforehand. |
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Here is another amazing thing. All the successful traders I have ever met or talked with have written down (in one manner or another) how they see the markets and their exact trading methodology. The rules they live and die by are written down! |
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I can hear some of you saying, "Yeah, I would too if I could figure everything out." A variation on that sentiment is, "If I had the resources these other traders have, I could write down everything." As you should know by now, you will never figure everything out, and you can never have enough resources. These are excuses that are limiting your profitability. They are limiting beliefs. |
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Since most traders lose all their trading capital within a fairly short period of time, and since most traders start trading before they have ever written down their views and methodology, doesn't it behoove you to do what all the "other" traders are not doing? If you are currently trading, and you do not have a written plan on how you will play the game of trading, then stop trading. Do not start trading until you have taken the time to clearly spell out how you perceive the market, what must happen for you to enter, where you will place your stop, what has to happen for you to exit, and most important what your risk management rules are. |
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Why is this so important? Simple, when you take the time to sit down and write out how you see the market, you are accepting the possibility that you might be wrong. You are beginning to accept responsibility. Once you write down how you perceive the market, the only conclusion you can arrive at, if the market does not behave according to what you wrote, is that your perception was wrong. By writing down that you will enter the market only if certain events transpire, then you are eliminating any possibility that you can blame the market. You are forcing yourself to have consistent discipline. |
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In other words, if you have taken the time to determine that if the price of a given commodity creates a certain bullish pattern, and your technical indicators do certain bullish things, then you will go long. Should these events occur, and you do not go long, it is obvious that your virtues need to be strengthened. Perhaps the most critical virtues are discipline and integrity. If the trade performs as your research indicated it would, and you |
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