| If you want to be a successful trader, you must | | | | You may have allowed your ego to get the best |
| make sure you do not deny reality in any phase | | | | of you and you are no longer humble. I've named |
| of your trading. You cannot deny losses, price | | | | just a couple here. I challenge you to think about |
| direction, mistakes you make, being | | | | the many things that can distract you from |
| undercapitalized, or a whole host of things you | | | | seeing when market conditions have changed. |
| would rather not think about. | | | | Make a list of those things and confront them. |
| Many traders think the best way to deal with | | | | The second aspect of the problem stems from |
| unpleasant ideas, events, or personal character | | | | inconsistency. Here again, you should make a list |
| flaws is to shut their eyes and pretend they don't | | | | of those things that cause you to be inconsistent. |
| exist. | | | | "Perhaps I was a good trader at one time, but |
| Let's face it, trading can be difficult, at times very | | | | the market conditions have changed and I may |
| difficult and it's essential that you focus on reality. | | | | not be able to keep my reputation up." This is an |
| Denial takes your focus away from the very | | | | issue that all traders face at some point: keeping |
| thing you need to be concentrating on-the action | | | | up their reputation. When one makes big profits |
| of prices-regardless of time frame. Your mind | | | | trading, it's tempting to tell neighbors and friends |
| must be clear so that you can look at the market | | | | how well you are doing. It's great when you're |
| and see what is really there. | | | | making the big profits, but keeping up |
| The way I learned to handle denial was to simply | | | | appearances is often the downfall of even the |
| write down and confront all possible ideas I had | | | | most astute trader. Again, denying your need for |
| trouble accepting. Some thoughts I could fix and | | | | fame and glory, or pretending that you can |
| others I just had to accept. But facing the truth | | | | maintain an unrealistic reputation, will use up your |
| of what and who you are is the only way to deal | | | | psychological energy and interfere with your ability |
| with denial. You have to realize that for the most | | | | to concentrate. Huge profits tend to go to the |
| part the only things you can change are in | | | | humble, so try not to build up your reputation. |
| yourself. Other things you just have to accept. | | | | Admit that you will have difficulty keeping up |
| You have to accept the reality of slippage, for | | | | appearances and just quit doing it. |
| example. You have to realize that indicators often | | | | One fact that traders wrestle with continuously is |
| give false signals and that there is no magic | | | | the notion that, "Trading is not a legitimate job." |
| moving average nor is there a magical oscillator. | | | | Many traders struggle with the legitimacy of |
| You have to realize that some winning trades are | | | | trading. Some traders find that they can simply |
| just lucky trades and had nothing to do with your | | | | remind themselves, "Trading provides liquidity and |
| skill as a trader. By the same token, you will also | | | | helps control prices." Other traders, however, |
| experience the bad luck of having prices make a | | | | think this isn't good enough and need to find more |
| sudden and unexpected move against you. | | | | meaning in their daily trading activities. For |
| Rather than wasting your time in denial, | | | | example, they may focus on how trading helps |
| concentrate your mental energies on improving | | | | them provide for their family, or may plan to |
| yourself and improving your trading skills. Work at | | | | donate some of their profits to charities they |
| improving your abilities to observe. Realize that | | | | view as personallyvaluable. The point is, don't deny |
| you have to survive the markets in order to | | | | the possible truth to such ideas. You will be better |
| benefit from the experience of the markets. | | | | off acknowledging and working through them, and |
| There is really only one true problem with your | | | | then just moving on. Denying they exist, on the |
| trading-that problem is you! However, the problem | | | | other hand, will use up time and energy. |
| manifests in two ways: 1. Market conditions have | | | | Unacceptable beliefs tend to lie in the back of |
| changed and you haven't. 2. You are no longer | | | | your mind. They remain there, lurking, and when |
| doing what you did when you were winning. You | | | | you are vulnerable, they can powerfully influence |
| have drifted. You are not consistent. | | | | your outlook. So acknowledge unacceptable ideas, |
| The first aspect of the problem is due to poor | | | | and once you admit the possible validity of such |
| observation. The market has changed and you | | | | ideas, you will neutralize their potential influence. |
| haven't changed with it. Poor observation stems | | | | This will free up limited psychological resources, |
| from a variety of lesser but very important | | | | allowing you to focus all your energy on trading |
| problems. You have married a market, or a trade. | | | | profitably and consistently. |