Today's Quote: “Undertake not what you can not perform, but be careful to keep your promises.” George Washington.

There are several good books out there about trading that should be on every trader’s must read list. If you were forced to choose one and only one, the only possible pick would be “Tools and Tactics for the Master Day Trader”. We are going to run a series of excerpts from the best selling book for the next series of lessons. Now in the words of the master trader himself, Oliver L. Velez…

LESSON #10: USING THE POWER OF PROMISES

Recently, I took the mandatory tour of my daughter's new elementary school. She starts kindergarten this upcoming September. What an experience it was. I was amazed at how much things have changed since I was in kindergarten. No hard wooden rulers used to make little knuckles into big knuckles. The rulers I saw at my daughter's school were made of a much softer material. No teachers were trained in the art of jujitsu to apply on mischievous students. They seemed kind, wise, and very nurturing. The books were all new, and every instructor, including the teaching assistants, spoke two or more languages, fluently. I must admit all of this dazzled me to no end. Shoot! I was sold as soon as I saw sponge rulers. But what struck me the most was how simple, yet wonderfully effective some of the new teaching methods are today. In passing through one class, I happened to glance up at the wall. It was plastered with personal promises made by each child in the class. Jimmy said, "I promise to use my hands for only good things." Mary said, "I promise to use kind words." Betsy said, "I promise to ask permission before taking things.” And my personal favorite came from Joey who said, "I promise to keep my mouth to myself." Oh, there were many, many more. But this simple method of teaching correct behavior struck me, not only as a father, but as a trader. Why? Because trading successfully ultimately comes down to proper behavior. And as an instructor and teacher of traders, it is necessary for me to find ways to promote the right behavior in my students.

How many of us have made promises to ourselves, real ones, about our trading conduct? How many have actually written down things like, "I promise to never chase a stock more than 3/8-" "I promise to always adhere to my predetermined stops." And, "I promise to never place a market order before the open." What about this one. "I promise to always consider the risk before going after the reward." And let's not forget these. "I promise to accept responsibility for each one of my trades." "I promise to write down the lesson learned from each losing play." "I promise to keep tabs on my two biggest shortcomings as a trader." As strange as it may seem, there is a power that accompanies personal promises, especially if they are written down. Somehow, the soul seems to recognize that a crime against the self has been committed when a promise is violated. They work. Why not make some today? Write them down. Look at them each day. Why? Because knowing what's right is not always enough. Sometimes it takes making a "blood" promise to yourself that you will do what you know is right. Knowing and doing are often two entirely different things.