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February 5, 2007

In this week's free newsletter, we'll examine  3 Realities Every Trader Must Accept.

You've heard the phrases before..... "That's Life"...... "What can you do about it now"...... "It was meant to be" ....... those statements that seem to remove any possibility that something could have been prevented, avoided, or even seen coming.

Trading can feel the same way for those who don't anticipate common occurrences.  Their phrases might sound more like "I can't believe this market" ....... or "Never fails that as soon as I get in, my trade goes down" ....... and at times something like "WOW, everything I touch is golden!"

It's a fine line that we walk as traders, but I want to run down 3 simple but important realities that can smooth out not only your equity curve, but also your emotional swings as a trader.  A determination to stay in control in at least some facet of your trading will put you miles ahead of those who feel victimized by every tick against them.

3 Realities to Accept:

1.  Accept that there are days you can do no right!  This is something we've each encountered in the past and we'll go through it again in the future.  A willingness to accept it on those days or weeks when you feel this way will help you set your ego aside so that you can get more selective and reduce your position size, allowing you to preserve capital during these tough stretches.  Again, don't fight it, because that will only make things worse and widen the gap between where you are and where you want to be.  Trade smaller and less frequently until you see the light at the end of the tunnel again, and you'll be so glad you did.

2.  Accept that there are days you can do no wrong!  Yes, I said it.  You'll be the Golden Child at times and the best thing to do is just accept it and ride it.  You'll see things so clearly that it will make you curious how you could have possibly lost money in the past!  Trading CAN be very fickle, so embrace it when the tide turns your way and ride it as far as you can, whether that means a few great trades or a phenomenal series of months.

3.  Accept that sometimes there is no action to take.  With cheap commissions, high-speed internet and sophisticated trading platforms, it's never been easier to trade actively.  However, that doesn't change the fact that the market just isn't conducive to activity at times.  There will be days and even weeks when the best thing to do is sit on your hands or clean out the garage or go play golf - anything but force trades.  Forcing trades under messy conditions will only serve to confuse you, so accept there will be times to do nothing - you'll know when it's time to get active again.

Things are always easier to deal with when they're expected.  Accepting these 3 realities will make it much easier for you to respond the way you need to when they happen.  Trading can get you where you want to be if you approach it the right way over time.  Take what the market throws your way and decide to rise above it.

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Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com

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