What do you do to make sure that you stay with a winning position to exploit the longer-term
trend? How do you avoid the temptation of taking profits prematurely?
The best way I know to learn discipline and patience is to think through a trade thoroughly before putting it
on. You need to develop a plan of your strategies for various contingencies. That way, you won't get swayed by every
news item that hits the market and causes prices to move up or down. Also, it helps greatly to have a long-term
objective that you have derived by really doing your homework. You combine that
long-term objective with a
protective stop that you move as the position goes your way. Alternatively, you could use a trend-following system to
signal when you should get out of the trade. By having thought out your objective and having a strategy for getting
out in case the market trend changes, you greatly increase the potential for staying in your winning positions.
Why do most traders lose?
They overtrade, which means that they have to be right a lot just to cover commissions.
What are the traits of a successful trader?
The most important is discipline—I am sure everyone tells you that. Second, you have to have patience; if
you have a good trade on, you have to be able to stay with it. Third, you need courage to go into the market, and
courage comes from adequate capitalization. Fourth, you must have a willingness to lose; that is also related to
adequate capitalization. Fifth, you need a strong desire to win.
Those elements seem fairly straightforward, except for the willingness to lose. Can you expound
on that?
You should have the attitude that if a trade loses, you can handle it without any problem and come back to do
the next trade. You can't let a losing trade get to you emotionally.
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