World Full of Opportunity and Abundance
(This post is a reprint of one that I did several years ago.)The following 3 tips about trading were taken from a book I read many years ago.
1) It’s not about who’s right.
Winning traders are concerned about making money, not about being right every single time. We are a product of our upbringing and our environment.
When you were in school the focus was on getting good grades and you have to be correct on the answers on tests to get good grades. Right?
So if you wanted an “A” you usually had to get 90% of the answers correct. So many traders are constantly thinking that if I’m not getting a very high percentage of these trades “correct” then I’m failing.
Well it doesn’t work that way in trading. The most important thing is that you have a plan and you stick to that plan. You are not going to be correct on every trade.
Depending upon your trading approach you may be correct on 60-70% of your trades and make money, or you may be correct on 40% and make money. An important key with both approaches is to keep your losses small.
2) Forget the past.
Stop worrying about the mistakes you’ve made. Always keep a journal and log you trades and the plan for each one. Log the result.
You should go back and analyze past trades to learn from them, but if you are following your plan, don’t beat yourself up for a loss or for several of them in a row.
Statistically I remember reading somewhere that it is totally possible to have 10 losing trades in a row, yet you are still putting on good trades.
“The recent past is no more important than any other historical time period; it only feels that way. The ability to avoid recency bias is an important component of successful trading.”
3) Avoid the future tense.
Stop trying to predict the future. Neither you nor anyone else knows for sure whether a given trade is going to make money.
Focus on your process, your discipline and the trading results will take care of themselves.
“Trading is filled with uncertainties. You do not know whether a trade is going to make you money. The best you can do is be confident that the rewards will outweigh the risks over the long run.”
No matter what approach you take in trading, you must take responsibility for your trades. Learn from any mistakes and move on. Remember it’s a world full of opportunity and abundance.
These 3 tips came from a book that may surprise you. “Way of the Turtle” by Curtis M. Faith.
Curtis was one of the original Turtles in a special trading group created by Richard Dennis and his partner William Eckhardt. The quotes used above were taken directly from the book.
It doesn’t matter whether you are trend trading commodities like the Turtles or trading a much shorter time frame, the emotional qualities needed to be successful trading, apply to all traders.
