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It is easy to become so obsessed with adding to our trading arsenal with knowledge, books, chart patterns, indicators, moving averages, and gurus, that we forget to analyse what we need to remove from our plan. One of the biggest things that determines whether a new trader ends up as a winning trader, is how well they can filter out what does not help them make money. Traders can’t follow every indicator, trade every method, and endlessly add to their trading methodology. As traders, we have to make choices, and we must know what makes money and what to remove from our trading strategy.
Give up your need to be right: The market is always right, do not strive to be right in your predictions and opinions. Strive to go with the flow of the market.
Give up control: No matter how long you watch a live stock stream, you have no power over the movements. Save your emotional energy by not trying to cheer on your positions and get wrapped up in every price tick.
Give up blaming other factors for your losses: There is no mysterious ‘They’ causing you to lose money. Your choices cause you to lose money, or your system just had a losing trade. It is a free country and free market.
Give up beating yourself up for losing trades: If you followed your trading plan, then there should be zero regrets involved in a losing trade. If you did not follow your plan and lost, then money was the tuition and you paid to learn the lesson. You must move on to the next trade.
Give up your own opinions: If you took a trade based on your own opinion, you have to give up your opinion and get out if the trade moves to a place that proves you were wrong.
Give up your inability to change your mind: The more you believe a trade just can’t miss, the more dangerous it is. It will cause you to trade too big and stay in too long. You have to always be ready to be wrong.
Give up your past trades: Each trade is a new trade. Do not hold grudges against stocks and think they ‘owe’ you for past losses. Do not fall in love with a stock and hold it as it falls lower and lower.
Give up letting your trading define your self worth: Do not let your trading define you. Diversify your life with friends, family, hobbies, and other interests. It is not healthy to become overly obsessed with the markets.
Give up on losing trades quickly when your stop is hit: Your best trades will be the ones that are profitable from the start. If they immediately go against you, be prepared to be stopped out. You can destroy your trading account when you start the “It will come back, I just have to wait” chant in the midst of a death spiral.
Give up on price targets let your winners run as far as they will go: In the right market conditions trends can go on to unbelievable levels. The big wins during these trends can make your entire career. If you set a predefined profit target, you will not miss the opportunity when it comes. Let a trailing stop take you out.
Instead of giving up on the markets, give up on these bad habits instead.
Trading in the stock market is like being in a Monopoly game. If there are ten people playing, one person is likely to take everyone else’s money.
Trading functions much the same way, with 10% of traders becoming profitable, while the other 90% lose or break even. After studying successful traders like Livermore, Darvas, O’Neil, Covel, and Jack Schwager for many years, I have compiled a list of what separates them and their followers from the 90% that come up short. To check my own accuracy, I sent these principles to John Boik, Alexander Elder, and Chris Kacher and many others. After receiving their support, I am happy to share these shortcuts to trading success.
New Traders are greedy and have unrealistic expectations. Rich Traders are realistic about their returns.
New Traders make the wrong decisions due to stress. Rich Traders can manage stress.
New Traders are impatient and look for constant action. Rich Traders are patient.
New Traders trade because they are influenced by emotion. Good Traders use a trading plan.
New Traders think they can stop learning. Rich Traders never stop learning about the market.
New Traders act like gamblers. Rich Traders operate like a businessperson.
New Traders bet the farm. Rich Traders carefully control trading size.
For New Traders outsized profits are the #1 priority. Rich Traders know that managing risk is the #1 Priority.
New Traders try to prove they are right. Rich Traders admit when they are wrong.
New Traders give back profits by not having an exit strategy. Rich Traders lock in profits while they are there.
New Traders give up. Rich Traders persevere until they are successful.
New Traders hop from system to system when they lose. Rich Traders stick with a winning system even when it is losing.
New Traders place trades based on opinions. Rich Traders place trades based on probabilities.
New Traders try to predict. Rich Traders follow what the market is telling them.
New Traders trade against the trend. Rich Traders follow the market trends.
New Traders follow their emotions to their disadvantage. Rich Traders follow systems that give them an advantage.
New Traders do not know when to cut losses or lock in gains. Rich Traders have an exit plan.
New Traders cut profits short and let losses run. Rich Traders let profits run and cut losses short.