Updated: Nov 26, 2020
Thanks for taking the time to read today's blog post in here we have a guest blog post from SunriseTrader from fintwit (financial twitter). He's one of my favorite traders to follow and brings a wealth of free information that he provides in his feed for day trading and long term trading. Please be sure to read the disclaimer on our site before moving forward and let us know if you like the information we provide in the comments below!
Emotion, Patience and Discipline
First, understand that trading is a marathon and not a sprint. It takes time to learn and become proficient at the craft. Our world is made up of instant gratification and 'have to have it now' thoughts. This mindset will destroy your account and your dreams of becoming a trader. If I could tell you one thing that will help you improve your trading and get you started in the right direction it would be: SLOW DOWN.
Trading takes time to learn, there is no holy grail and no perfect system. If you can spend time on learning a system, gaining an edge and perfecting money management/risk management skills you will be miles ahead in your trading career.
Let’s define a few words to get you on the right path before you ever put a dime in the stock market.
Emotion: a state of mind derived from one’s circumstances, mood, or relationships with others.
Emotion is one of the leading factors that causes new traders to fail. Trading emotions include: fear of losing, fear of missing out, fear of being wrong, greed, frustration, hope, anticipation, boredom and the list goes on. You are going to feel many of these emotions during your trading career what you must learn is how to put them in check and control them. When a trader starts to see positive results on a consistent, longer term basis emotions tend to subside and the trader becomes more robotic in their actions. Stay in touch with your emotions but don’t let them get the better of you. Learn to calm your body and mind.
This brings me to the next word in the list.
Discipline: a specific branch of knowledge, learning or practice. It is action or inaction to regulate human behavior.
Discipline requires a trader to have a trading routine. Start by making a check list to help you develop and stick to a routine.
Discipline forces you to take responsibility of your state of mind. Discipline helps you stay in the here and now, the what is. It puts you in the position to succeed. It is not a barrier to what you want to accomplish it is your vantage point.
Patience is the ability to endure, accept, preserver and tolerate delay. All while staying calm and positive.
Trading is probability, you identify the pattern or reason to take a trade with the belief that the higher probability of one thing is likely to happen over the other. If not, you sit and wait. Successful traders execute their trading strategy they don’t just trade.
Don’t define trading or having on a trade with working. Some of your best trading will come from ‘no’ trading. Patience teaches you that it is OK not to have a position. It tells you it is best to study and prepare for the next opportunity.
Once in a trade, patience helps you to stick with the trade if it is making you money and the reason for taking the trade are still valid.
“All you should care about is whether the position you have is still valid or not.
You only need to know where the current price is, and where your stop is.
For each position I place my stop where the trend is invalidated, so each day I ask myself one question:
Is it still in an uptrend for my timeframe?
Yes = Do nothing
No = Exit
Trade your position, not your P&L”
~ Jon Boorman (@JBoorman)
How do we tie the three words: Emotion, Discipline and Patience together to become our best trader?
We have a well-defined methodology, a strategy; built on rules and a plan we follow for each and every trade. We build confidence in our ability as traders by following these rules and plan no matter what. Wash, rinse and repeat. Think big, plan carefully, execute perfectly.
Once in the trade NO noise. Come to the trading table from a place of calm. Trade in a state of grace. Be at peace with the outcome.
Be safe, be well,
Essex's Trading Quote of the Day (QotD)
"Trade your position, not your P&L."
~ Jon Boorman (@JBoorman)