Discipline
Discipline is not actually part of a game plan. But in order to succeed you better have it, as it is the glue that makes it everything come together. First of all, you need the discipline to make a trading and game plan and more important is that you need the discipline to stick to your plan. Once you start deviating from a plan, it’s easy to start losing and making emotional trading decisions. You’ll start making trades you shouldn’t, you’ll overtrade, you’ll risk too much, hold too long, and overall make poor trades.
It is easy to lose discipline whether you are on a winning or losing streak. When winning, you may think you are better than the market and don’t have to follow a plan. When losing, you may try anything in desperation. Both cases are asking for disaster. You really should never allow losses to change your trading plan. If you’ve had a few losses, continue following your plan (as long as you know it’s sound). Don’t change your trading style, become more aggressive, or stubborn. You need to understand that a loss is just a cost of doing business, ignore it and move on to the next opportunity. The worst thing that you can do is to start trading heavier to make back losses. If you are continuously losing, stop trading until you’ve examined your trading plan, as it may be the cause. On the other hand, don’t lose discipline and ignore your trading/game plan after a winning streak. Many traders get too cocky after a good streak thinking they are invincible and will make carelessly thought out trades with too much size, then one or two losses can quickly wipe that smirk off their faces. If you have been trading well it might just be the plan that got you there; don’t ignore it.
One last thing I wanted to mention is that similar to discipline, staying focused is crucial to making the trading and game plans work. You can have a great trading plan, but if your mind is scattered throughout the day, you will not be able to carry out your game plan. If you are busy changing diapers, writing a book, planning a 700-person New Year’s Eve party, opening up a bar/restaurant, remodeling your apartment, or accidentally stumbling upon the abundance of free porn on the Internet for three hours a day, your trading will suffer. If you don’t have the proper time to dedicate to the market, you will need to change your trading and game plans to trade less and hold positions longer or take a break from trading .
Discipline is not actually part of a game plan. But in order to succeed you better have it, as it is the glue that makes it everything come together. First of all, you need the discipline to make a trading and game plan and more important is that you need the discipline to stick to your plan. Once you start deviating from a plan, it’s easy to start losing and making emotional trading decisions. You’ll start making trades you shouldn’t, you’ll overtrade, you’ll risk too much, hold too long, and overall make poor trades.
It is easy to lose discipline whether you are on a winning or losing streak. When winning, you may think you are better than the market and don’t have to follow a plan. When losing, you may try anything in desperation. Both cases are asking for disaster. You really should never allow losses to change your trading plan. If you’ve had a few losses, continue following your plan (as long as you know it’s sound). Don’t change your trading style, become more aggressive, or stubborn. You need to understand that a loss is just a cost of doing business, ignore it and move on to the next opportunity. The worst thing that you can do is to start trading heavier to make back losses. If you are continuously losing, stop trading until you’ve examined your trading plan, as it may be the cause. On the other hand, don’t lose discipline and ignore your trading/game plan after a winning streak. Many traders get too cocky after a good streak thinking they are invincible and will make carelessly thought out trades with too much size, then one or two losses can quickly wipe that smirk off their faces. If you have been trading well it might just be the plan that got you there; don’t ignore it.
One last thing I wanted to mention is that similar to discipline, staying focused is crucial to making the trading and game plans work. You can have a great trading plan, but if your mind is scattered throughout the day, you will not be able to carry out your game plan. If you are busy changing diapers, writing a book, planning a 700-person New Year’s Eve party, opening up a bar/restaurant, remodeling your apartment, or accidentally stumbling upon the abundance of free porn on the Internet for three hours a day, your trading will suffer. If you don’t have the proper time to dedicate to the market, you will need to change your trading and game plans to trade less and hold positions longer or take a break from trading .
MA provides the market's current direction and strength.
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