I have successfully given up two unhelpful behaviors,
one was smoking which I stopped 10 years ago; and the
other was drinking alcohol, which I gave up last year.
Most people these days agree that smoking is a bad
habit, but equally most people still consider drinking
to be perfectly healthy in moderation. I no longer have
that opinion about alcohol, but I have no interest in
attempting to change anyone's view about either
drinking or smoking.
I bring this subject up because I think there are
parallels to trading. If we go back to basics we know
that to be successful trading we need to cut our
losses and let our profits run. I think everyone agrees
on this, it is stated in virtually every trading book
ever written. The fact of the matter is though, that
we all seem to be hard wired to do exactly the opposite.
If you look at your trading results over any period
of loss, you will see that your losses come from trades
that you did not cut. It is unlikely that your losses
are attributable to a large number of small losses, far
more likely that they came from a few large losing
trades, i.e. trades that you did not cut. If this is
the case for you, then success in trading will not
depend on you finding the right trading system or idea,
it will depend on your ability to learn to ruthlessly
cut your losses. The question is why is it so difficult?
I smoked from the age of about 12 until I was 25. During
that time I made many attempts to quit, like most smokers,
but it was far too difficult, so I never succeeded. That
was until I read a book called "The Easy Way to Stop
Smoking" by Allen Carr. Allen Carr's book got me to
consider whether I actually enjoyed smoking and I
discovered that I didn't at all. Once I made this
discovery I stopped smoking, I stopped smoking and have
never had the desire to smoke again. It really was easy.
The reason that I had found it so hard to quit before
was because I was under the illusion that I enjoyed
smoking and that there were benefits to be had from
smoking. So even though I was also aware of all the
negatives of smoking I couldn't give up because I was
giving up something that I loved doing (or so I thought).
What has this got to do with trading?????
Well what I have learnt from my experiences of giving up
smoking and drinking is that I only do things that I am
motivated to do, i.e. I only do something because I think
there is a benefit to me in doing it. As soon as I realize
that there is in fact no benefit whatsoever, I stop, without
a single thought. I found this to be the case with both
smoking and drinking, when I realized that the benefits I
thought I was receiving were in fact illusory, I just stopped
having any desire to drink or smoke.
With trading I realize that when a trader finds that he
repeatedly lets his losses run and cuts his profits short,
it is because (perhaps on an unconscious level) he believes
that it is beneficial for him to do so. Next week I will
discuss what possible benefits a trader might believe he
will receive by not cutting losses.
Kind Regards
Malcolm Robinson
_______________________________________________
Learn How To Trade The Futures Markets
The Online Course Is Now Available!
BUY NOW at http://www.TheMasteryOfTrading.com
_______________________________________________
one was smoking which I stopped 10 years ago; and the
other was drinking alcohol, which I gave up last year.
Most people these days agree that smoking is a bad
habit, but equally most people still consider drinking
to be perfectly healthy in moderation. I no longer have
that opinion about alcohol, but I have no interest in
attempting to change anyone's view about either
drinking or smoking.
I bring this subject up because I think there are
parallels to trading. If we go back to basics we know
that to be successful trading we need to cut our
losses and let our profits run. I think everyone agrees
on this, it is stated in virtually every trading book
ever written. The fact of the matter is though, that
we all seem to be hard wired to do exactly the opposite.
If you look at your trading results over any period
of loss, you will see that your losses come from trades
that you did not cut. It is unlikely that your losses
are attributable to a large number of small losses, far
more likely that they came from a few large losing
trades, i.e. trades that you did not cut. If this is
the case for you, then success in trading will not
depend on you finding the right trading system or idea,
it will depend on your ability to learn to ruthlessly
cut your losses. The question is why is it so difficult?
I smoked from the age of about 12 until I was 25. During
that time I made many attempts to quit, like most smokers,
but it was far too difficult, so I never succeeded. That
was until I read a book called "The Easy Way to Stop
Smoking" by Allen Carr. Allen Carr's book got me to
consider whether I actually enjoyed smoking and I
discovered that I didn't at all. Once I made this
discovery I stopped smoking, I stopped smoking and have
never had the desire to smoke again. It really was easy.
The reason that I had found it so hard to quit before
was because I was under the illusion that I enjoyed
smoking and that there were benefits to be had from
smoking. So even though I was also aware of all the
negatives of smoking I couldn't give up because I was
giving up something that I loved doing (or so I thought).
What has this got to do with trading?????
Well what I have learnt from my experiences of giving up
smoking and drinking is that I only do things that I am
motivated to do, i.e. I only do something because I think
there is a benefit to me in doing it. As soon as I realize
that there is in fact no benefit whatsoever, I stop, without
a single thought. I found this to be the case with both
smoking and drinking, when I realized that the benefits I
thought I was receiving were in fact illusory, I just stopped
having any desire to drink or smoke.
With trading I realize that when a trader finds that he
repeatedly lets his losses run and cuts his profits short,
it is because (perhaps on an unconscious level) he believes
that it is beneficial for him to do so. Next week I will
discuss what possible benefits a trader might believe he
will receive by not cutting losses.
Kind Regards
Malcolm Robinson
_______________________________________________
Learn How To Trade The Futures Markets
The Online Course Is Now Available!
BUY NOW at http://www.TheMasteryOfTrading.com
_______________________________________________
