Saturday, 18 January 2014

Some Rules for Living Applied to Trading

By Ruth Barrons Roosevelt
I ran across these rules for living, and thought they apply beautifully to the process of trading successfully. 

They are as follows:
1. Show up.
2. Pay attention.
3. Live your truth.
4. Do your best.
5. Don’t be attached to the outcome.

Show up. Woody Allen has said 90% of the story is showing up. And I think that can be true for trading. Showing up means being prepared and ready before the market opens. It means getting your entry and exit orders in the market in a timely fashion. You’ve done your research, and you’re clear about your intentions.

Pay attention. Watch the price action. Be cognizant of what your chosen indicators are saying. Know what news is breaking, and watch the market’s reaction to the news. Be alert to twists and turns in market direction. Don’t wander off mentally or physically.

Live your truth. Your truth could be fundamental or technical or a combination of the two. But if you don’t trade in accordance with your guidelines, you can get yourself on the wrong side of the situation and yourself. Be who you say you are as a trader. Are you honest, perceptive, courageous, steady, and disciplined? Are you trading in the manner you have chosen or committed to trade.

Do your best. Honestly, all you can do is your best. But your best can get better as you practice and learn. Learn from your mistakes, and forgive yourself past digressions. Each day is a new day, and each day brings new opportunities. It’s your job to capture what you can of the opportunities even as you rigorously protect your capital.

Don't be attached to the outcome. This is the hard part, and this is the essential part. The results of any given trade or trading day are really not indicative of whether or not you will be profitable. One trade or day is simply not the measure of success, and is really irrelevant. If you’re showing up, and paying attention, and living your viable truth, and doing your best, you can accept whatever outcome develops. Of course, if the outcome is disastrous over time, you need to go back to the drawing board and develop better methods.