As promised last week, this week will be a follow up to last week’s psychological topic of discipline. While these topics are not as breathtaking as the ‘money making’ chart patterns, they are often much more important. Many traders find the patterns, but fail to take home the money at the end of the day.

This week’s title is deceiving. The title unfortunately ends in this way; “Some of your best qualities may be hurting you.” Yes, it is true. Trading is unique in many ways. It is not by accident that many of the people who are drawn to trading are successful people from other walks of life. After all, to trade you need some free capital. Many obtain this from running or selling successful businesses, or from high paying professions. The problem is that trading is unique from most other businesses…

Most of your previous successes in life will likely not be able to help you in trading. The things you have learned are often not transferable to trading. Worse than that, they may be harmful. Take the successful Doctor. Every time his stop hits, he decides to add more shares. Why? To the skilled trader, this is a crime. To the doctor, this is a way of life; it is bred into his system. What is he thinking? He is thinking about ‘saving the patient’. He is taught that the object of his attention must be saved at all costs, at all measures. To trade he has to adopt the philosophy of ‘killing the patient at the first signs of ill health’. This appalls him at some level.

Consider the skilled lawyer. Taught to make a case and an argument for any possible situation. As his stock begins to fall, he can come up with dozens of ways to justify the position. He is skilled at ‘making the case’ and he does so for the stock as it begins to fall. ‘They just had good news, the fundamentals are excellent, this is just a shake out, the market makers are playing games’. He will use a thousand different arguments to stay with a loser.

Consider any successful businessman. Often in the beginning, success came by simply working harder. Putting in more hours, taking on more personally. Doing what ever it takes. Unfortunately, ‘trading harder’ is not even a working concept. Consider the accountant. The accountant is a perfectionist with numbers. The thought of having ‘red ink’ on a trade can be hard to take. It forms the need to not take small stops, hoping that the ledger can show all winners today.

Even consider the professional athlete. Losing is not an option. Unfortunately, in trading, losing is mandatory. Losing the right way is what matters, small amounts on appropriate trades. Once a trade has stopped, it is a loss and the trader moves on. The trader knows that what matters is a process that delivers winners over a period of time. Not what happens on one trade. To the athlete, losing is not acceptable. It must be avoided at all costs at all levels.

So what is helpful? Learning the whole process of trading. Learning from those who have been through it, or having the ability to learn and adapt quickly as you go. Having the mindset of having a plan, being able to adjust that plan, and carrying out the plan until the results are reached. Then constantly evaluating the process, eliminating mistakes and being mindful of the need to change and be flexible. Like last week, here is another quote you may enjoy. It has applications that apply very much to trading. It is below:

"Nothing in this world can take the place of persistence. Talent will not; nothing is more common than unsuccessful people with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan 'press on' has solved and always will solve the problems of the human race."
-Calvin Coolidge

This is a good warning to all. Many talents you may have may not directly contribute to your trading. An open mind, coupled persistence and determination in your goal are keys to trading. We hope you are enjoying these lessons and that they add to your trading profitability.