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You Can't Become Rich In Your Pocket Until You Become Rich In Your Mind | ||||
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He decided he wasn't going to let the market take his moneyNed started using these new methods to trade and was actually doing quite well for a couple of days, but then he made a serious mistake. He had a losing trade and got very angry. He had gotten stopped out of a position that he was sure was going to be a big winner. As soon as he got stopped out, the market went his way almost 600 points in 15 minutes. Ned decided he wasnt going to let the market take his money. He proceeded to do three more trades. He let his emotions get the best of him and made the near fatal mistake of trading without stop orders. At the end of the day, Ned had lost over $7,000. His broker had forced him to get out of a position that was over 1000 points against him. Ned wanted to stay in the position overnight to see if it would recover. Ned swore at his broker before he hung up on him. This time Ned did throw his coffee cup across the room. It shattered against the bookcase and made a deafening crash. His wife ran into his office to see what was wrong. What happened? she asked, What was that noise? Ned didnt need to answer as she looked over at the bookcase and saw all the broken glass on the floor. She told Ned she would get the broom. JUST LEAVE IT!!!! Ned snapped at his wife. He couldnt remember ever using a tone like that with the woman he planned on spending the rest of his life with. Without uttering another word, she walked out of his office. Ten minutes ago, Ned thought he couldnt ever feel worse than he felt at that time. Now he felt worse. James gave his two-week notice to his employer and began to get set up for his off-thefloor trading career. Hed gotten his real-time quotes and charts set up. He had opened a trading account and, in about two weeks, he would be ready to give his endeavor a try. James continued to visualize himself reaching his daily, weekly, and monthly goals. In his minds eye, he kept seeing himself finding opportunities in the market and taking advantage of them. He kept seeing himself trailing his stop orders to lock in profits and avoid having winning trades turn into losers. He kept seeing these images in his mind until they became crystal clear. He visualized his equity continuing to rise in his account. Not at lightening speed, but more at a slow steady rate. He felt if he could just get himself to make $250 each day, it would be a great way to start. He realized that trying to make thousands of dollars each and every day was just not realistic for him. James began trading on Monday. He had his goal in mind. He had spent a lot of time over the last couple of months visualizing what he would do and how he would react in as many possible situations as he could. In fact, he saw these things in his mind so often that he felt like they had actually happened for real. That really gave James a lot of confidence. Even though hed not ever traded before, he felt like he had traded thousands of times. It showed in his results. James very first day was a success. Hed made only one trade and made $275. He considered trading more, but then remembered that his goal was to try and make $250 a day, and doing another trade could make him more money, but it could also cost him the money hed already made. He decided to just paper trade the rest of the day and keep his attained goal intact. One of the most important lessons James had learned from other traders he knew (both on and off-the-floor) was the reason people were successful in this business was because they were able to find the ability to act in their own best interest. He knew that hoping and praying the market would move in a certain direction certainly had no bearing on whether the market actually did move in that direction. No, the thing that made people successful at trading was when they did what was in their best interest to get winning trades and avoid losing trades (or at least to keep the losing trades small). For instance, James may have wanted to make 250 points on his next trade, but if most the market is offering at the time is only 150 points, then its obvious no matter how much you want 250 points in this trade, the most you can possibly attain is 150 points (and probably not even that much). You can t force the market to do something. You cant control the market to do what you want. So you must control yourself to do what is in your best interest. Because of James exposure to so many traders who understood that idea, it wasnt very difficult for him to act that way too. It wasnt easy, but it was probably easier for him than it would be for most others. Because of that fact, James trading did very well over the next several weeks. He consistently made between $600-$800 a week for his first month. Sure, just like anybody, James had some losing trades and made some mistakes. When James did have a losing trade, he would visualize in his mind what he could have done differently to make the trade a success or to make the loss even less. He would see in his mind what he should do the next time the situation presents itself. He would do this with his winning trades also. He would think of ways he could have managed the trade better, and then see that picture in his mind over and over again. Consistently doing these things helped James to make over $15,000 in his first six months of trading. He kept his goal clearly in mind and did what was in his best interest to keep moving towards the goal. Did it work perfectly? No, but it worked well enough to get him on pace to making the same amount of money he was making at his old job. But now he was doing it the way he wanted to do it, by trading for a living from home. Ned was not as lucky as James. He was not exposed to people who could teach him the lessons that James had learned. Because of that, Ned decided that trading was not going to work out for him. Hes now back at the printing business again. He still dreams of trading. He probably could be successful at it if he only learned to act in his own best interest. But he never did. ACTING IN YOUR OWN BEST INTEREST You will see this theme throughout this book. It is the most important concept you can learn in order to be a successful trader. If you can master this skill, you can be very successful in this business. But without it, you are destined to fail. It really is that simple. If you can learn to act in your own best interest, you will make a lot of money trading. If you dont learn to act in your own best interest, you will lose a lot of money trading. You see, the (futures) markets work in a very different way than almost everything else in life. There is more freedom in this business than probably any other business in the world. You can do what you want, when you want, pretty much any time the market is open. The only thing that will hold you back is running out of money. Other than that, you have all the freedom in the world to do whatever you want in the market. Trading really is different from everything else we do in life. In the everyday environment, you can have control (at least somewhat) by taking actions that affect the environment. For example, if you wanted to listen to some music, you would have to turn on the radio. If you push the power button on the radio, music will come out of the radio. If you dont push the power button, the radio will not turn on. Another example would be if you wanted to start your car. If you put the key in the ignition and turn it, the car will most likely start because you did something to affect that change. If you dont turn the key, the car will not start. You must change the environment (by turning the key) to get the car to start. Everyday we all do things to affect changes on the environment. We put our bankcard in the money machine to get cash out. We push the button on the coffee maker to make coffee come out in the morning. These are all changes that we can consciously make happen. But heres the difference: In trading, you cant control what the market will do. No matter how much you want the market to go in a certain direction, there is nothing you can do to make it go in that direction. There is no affect that you can cause on the market to make it do what you want it to do. We cant push a button, we cant turn a key, nothing we do will make the market do what we want it to. Nothing at all! So, if we cant control the market and what it will do, then the only thing that will make us successful is if we can control ourselves. And thats easier said than done. But it is the reality of successful trading. Again, you cant control what the market will do, so you must control what you will do. Ive met hundreds and hundreds of traders and, unfortunately, many of them fail at trading. Most never learn the proper skills they need to be successful. Most of them focus so hard on finding the perfect technical method or mechanical system, and very few people realize that is much less than half the battle. A person with good self-discipline but a poor trading method will outperform a person with poor self-discipline but the best trading method currently available. Being able to act in your own best interest is much more important than finding the perfect technical method. As I often say, A person with good self-discipline but a poor trading method will outperform a person with poor self-discipline but the best trading method currently available. It will work like this every time. Quite frequently, I talk to people whove had very large profits in certain trades. For example, I remember a time when a person called me and told me he had 800 points in a three lot trade in the S&Ps (worth approximately $6,000). But even with that big profit, this particular trader still lost money on the trade. When I asked why he didnt trail his protective stop order to lock in some profit, he told me he was looking for the big home run. Right then I knew this person didnt have his best interest in mind. Sure, we all want those huge winning trades. But one thing we must all remember is we cant control what the market will do, so we must be prepared for whatever it does do. Thus, a person who gets 800 points in an S&P trade (not an easy thing to do) must have his best interest in mind and not allow all of that profit to evaporate, even if that means missing out on the big winner. This book is broken up into three sections. The first section is called Skills You Do Need, and is made up of all the skills I believe you must have to be successful in the trading environment. These include ideas like setting and accomplishing goals, being an active winner and loser, flawless execution of your trades, etc. The second section is called, Skills You Dont Need. Included in this section are chapters on wishing, hoping, and praying. Also included is a chapter called Revenge Trading. Another chapter is called Emotions: Fear, Anger and Greed. This section will help you to know the things you must stay away from to become successful with your trading. The third and final section is made up of ideas originally put together many, many years ago by the famed Dr. Maxwell Maltz, who coined the term Psycho-Cybernetics. This section is called How To Improve Yourself. The chapters in this section will give you background on how Psycho-Cybernetics works and how you can use it to greatly improve your trading results. This section contains the most important part of this book: step-by-step exercises to teach you how to act in your own best interest and deal best with the emotional side of trading. These exercises are all based on the works of Dr. Maxwell Maltz and Psycho-Cybernetics. |
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