The toughest part of trading is controlling one's emotions and being disciplined. If one is constantly wondering whether to buy or once in a trade whether to sell then it is not sytematic trading. It is random. It is like entering a casino and playing one round of black jack and then going to the next slot machine and trying one's luck there. Blowing up one's precious capital is guaranteed- its a matter of when.
How does one conquer one's emotions - trading a systematic plan. Have clear rules which are not written but carved in stone. The rules should be like this
Go Long: Condition 1
Stop Loss: Condition 2
Exit: Condition 3
Go Short: Condition 4
Stop Loss: Condition 5
Exit: Condition 6
Position Sizing/Money management: Condition 7
Such a system needs to be back tested, forward tested and traded live to build confidence.
Once one develops such a system the comfort level is immense. Trading will be more stress free than relaxing on the beach.
Happy trading!!
Friday, March 6, 2009
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