In recent weeks, I’ve had correspondence with several subscribers who have been struggling – not so much in their overall profitability, but in their own personal confidence level in the markets. Things such as…
Taking trades. To shoot straight with you, good trading does not boil down to perfection or anything close to it. So if fear of taking a losing trade is holding you back, get over it! You’ll be wrong at times, just as you’ll be right at times. However, when good opportunities arise for you to put capital in the way of risk with a favorable outcome, do not hesitate. So long as you have a defined exit on an adverse move (stop loss) and the play has potential to move on the profit side in some multiple of what you’re risking, it’s likely a play worth taking.
Trusting setups. The fact of the matter is that no setup should be trusted. Stocks shouldn’t be trusted, because they might move in your favor or they might go against you from the outset. Stocks are neither out to help you nor out to punish you, so it all comes down to your management of trades. This goes hand-in-hand with the previous point of taking trades, as you simply have to identify plays which look to have good potential with limited risk and go with them. And even once a trade starts to work, trust is never quite there, because favorable moves should be used to book profits and tighten stops along the way.
Leaving positions alone. In all honesty, I struggle with this too. Like you, I know the frustration of playing it too tight, getting stopped out, and then seeing the move occur without being on board. That’s part of trading. But when it comes to leaving positions alone, the fine line comes when you find yourself micro-managing trades to the point that they have no real chance to work. If you’re making adjustments based on your P&L in a trade rather than the price action, it’s your signal that you aren’t leaving the trade alone. You’re likely too big in it as well, because the purest trades will be when you’re in the position because of the chart and not the green or red numbers in your P&L column.
This post isn’t about getting on your case. Sometimes I just sense the need to conduct business and get some of this out in the open. And why not right now as we head into the 2nd half of the year?
I’m here to challenge you to push yourself…to get beyond your limitations….to grow past the fears that are holding you back and start realizing some of your trading goals.
I’m here to help you. Use me as a resource. I want you to share your ideas here…leave comments, get 2nd opinions and see if there’s something you might be missing before you send out that next order. I’m here to encourage you and teach you what I can.
Finally, I want to challenge you openly to make the remainder of 2012 a period of growth – not just in your account, but in your skills and abilities. Get them if you need them. Hone them if you have them. Put in the work and see where it leads. Getting to the next level won’t just happen to you – you have to go get it.
