Today's Quote: “A successful person is one who can lay a firm foundation with the bricks that others throw at him.” David Brinkley

In this section all of the Trade for Life™ Daily Trading Letter you have been able to read about a variety of educational topics. Some of these topics are technical in nature; some of them are psychological. If you notice, most every topic in trading has both a technical and a psychological component. Think about discussions regarding targets. Notice that the topic of targets is an excellent example all of this fact.

You need to understand technical analysis to know where a target should be placed. You need to know when the chart pattern will allow you to go for a big target, and when it is best to take any money you can and leave. You need to know from a technical viewpoint if it is necessary to adjust targets along the way or to leave them alone. However as most of you probably realize, once you understand these technical topics, it does not solve all of the problems in getting to targets.

Most of the problems after that come from a failure to achieve the targets you have chosen. That failure could be because improper targets were chosen, but more often than not, that failure is due to psychological reasons. How many times has your trade hit the target you expected it to hit, but you were no longer in the trade? If you actually analyze why this happens you may find you simply exited due to the fear of losing the profits you have built into the trade already. You need to follow a management plan that does not have you exiting early without a valid reason. Their plan needs to include some sort of policy for getting the stop closer to the target as you approach the target, unless your policy is to trade in an "all or nothing" manner. It must also specify if there will ever be a time that you exit early and how to identify that situation.

There is nothing more valuable to you than your old trades. Reviewing your trades, to see if the strategies you used were valid, and if your management plan was accurate, is the most valuable time you will spend. Unfortunately, most traders do not take advantage of this. There is gold lying in your old trades, do not pass up the opportunity to uncover it.