Lessons From A Penny Pro

It’s All in Your Head

Nothing in trading is as important as your mindset… The psychological aspect of trading is extremely important and so often overlooked.

As a trader, you are dealing with money… only a few things in this world carry heavier feelings than money… 

Therefore it’s very easy to get caught up in the emotions relating to making and losing money… very real and powerful emotions that can wreak havoc on your P&L.

For me, the first day of October was a doozy… so how did I keep from letting this affect my trading as well as my personal life?

Easy… or not so easy… by having the proper mindset.

 

The Power of the Mind

 

Your thoughts have a powerful influence on your life, and most of us go through life neglecting this force.

All too often when a trader goes on a losing streak… the momentum of the losses is what causes it to become a streak… Why?  Because it’s in their mind… 

The more losing trades, the more they are focused on losing and the mind just carries it forward…

How does this happen?

Well directing your thoughts towards the desired outcome propels you towards that outcome… so if you are focused on failure, you attract failure… and in the midst of a losing streak, you can subconsciously be focused on losing… simply out of fear…

Thus, the key is to focus on success and the belief that your trades will be winners

Losses happen… Bad trades happen… that’s part of the game, so you have to be mentally prepared for that, or you will find yourself in the midst of a losing streak.

A streak that will likely keep you from ever making money…  you’ll make it and then you’ll lose it… constantly breaking even, or worse.

To keep my mind right, I have worked out the emotions related to trading… the primary emotions being fear and greed…

Understanding them can go a long way toward overcoming them.

 

Fear

 

So what is fear?

It’s simply a painful agitation in the presence or anticipation of danger…

When it comes to trading… the keyword here is anticipation. I am not in any real danger when trading… Danger of losing money?  Only sort of… 

You see, if I follow my system I know when to take a loss and move on… a loss I accepted before I entered the trade I mind you…

It’s the anticipation of losing that creates fear in trading… not the actual loss itself.

This anticipation often leads to anxiety and loss of courage… 

Which then keeps us from taking on the next trade no matter how good it may be. So the reaction and steps we take to keep from losing money… are actually causing worse damage.

 

Greed

 

Bulls and Bears make money, but pigs get slaughtered. This adage refers to greedy investors trying to squeeze the last dime out of an investment, only to see it disappear completely… 

We live in a competitive society based on financial insecurity… thus all people become greedy when it comes to money… at least to some extent. 

That’s why no matter how much money we have in our bank account, we are never fully satisfied. We worry it might run out one day, so we constantly strive for more…

What if a major accident happens, or a financial collapse?  Most people want to retire knowing they will have enough to survive… and sometimes, we simply want to compete and do better than the people around us.

Whatever it is… greed can be devastating to trading because it keeps you from taking profits as well as cutting losses… and in the end, the pigs get slaughtered.

The real way to reach those lofty goals is to take the money and run, there should always be money left on the table… get what you can and get out before it’s too late.

With losing trades, I use the same thought… cut and run to prevent further losses. Hoping with get you nowhere. When you are wrong, you are wrong.

This is part of the mindset you must have when trading. It’s good to be greedy when you are taking profits while you have them… it’s not when greed is what keeps you from doing so.

 

So what do I do?

 

Neither of these emotions is easy to overcome, so it’s important to develop a trading plan based upon rational business decisions.

To get my head in the right place… I have created rules… so when making trades, when emotions can get in the way, all I have to do is follow my rules… there is no emotion in my rules.

I have guidelines based on my risk tolerance… I have a very defined system, so I know what I am looking for in a trade… 

… and I know exactly what I want to do with each trade, when to enter, when to exit, when to take profits, and when to cut losses…

You would be surprised at how well this takes the emotion out of trading…

Another thing I do is review my trades, and see if I stuck to the rules or if emotions played any role…

This assessment helps me correct mistakes and change bad habits… allowing me to make more money.

In the end, my success comes from my ability to follow a proven system

Great traders are simply excellent system followers. Consistently profitable traders have found an edge and they exploit it repeatedly.

This is how I became a multi-millionaire… I have a system that I developed over the years that works… and I exploit it on the daily

You won’t make a living taking random trades.  

I only take trades I have taken thousands of times, getting into and out of them like clockwork, zero emotions involved… Don’t take a trade outside of your system… no data = no edge.

So when the first day of October was a doozy… did it affect my trading?

No Way! In fact, my very next trade was at the end of that same day, and what happened?… I woke to profits on the second day of October.

And I continued to trade and trust my system… what followed were big gains… right back on track because I didn’t let fear cloud my judgement…

 

 

Click Here to Learn My System… and take the emotions out of trading

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