In this post I’m quoting from Pit Bull: Lessons from Wall Street’s Champion Day Trader, a popular trading book written by Martin “Buzzy” Schwartz to highlight the importance of removing your opinion from a trade. Sounds good? Please read on.
The Book:
The book is the true story about Schwartz’ journey as a trader. It highlights many of the ups and downs of trading… things all of us, as traders, have to deal with. In the book he shares trading methods that worked for him and all the lessons he learned along the way.
The book is full of stories and it’s a fun and engaging read; plus there’s a lot of great lessons to be learned for traders, new and experienced. What I quote here is just one of them, the book has many more.
The Quote and an Explanation:
I’ve said it before, and I’m going to say it again, because it cannot be overemphasized: the most important change in my trading career occurred when I learned to DIVORCE MY EGO FROM THE TRADE. Trading is a psychological game. Most people think they’re playing against the market, but the market doesn’t care. You’re really playing against yourself. You have to stop trying to will things to happen in order to prove that you’re right. Listen only to what the market is telling you now. Forget what you thought it was telling you five minutes ago. The sole objective of trading is not to prove you’re right, but to hear the cash register ring.
The above comes down to the following:
- Hope, fear, pride, dreams, anger, anxiety, doubt and frustration – we all experience them. They are what drives bad trading decisions, and they are caused by our egos. Learn to understand and work with your ego if you want to get better.
- Having a strategy with an edge is important, but executing it through winning and losing streaks with patience and discipline is more important, i.e. the psychological part of trading. The solution to successful trading is already inside of you, not somewhere out there in another strategy.
- Your strategy and rules should determine when and how you enter, risk and exit your trade according to the moves of the market. Take whatever the market gives you and move on. Follow your rules. Don’t try to control the market.
- Focus on what the market / price is doing now – the present. The past gone and you can’t predict the future. If price says get out now, then get out now. Otherwise, stay in and manage the trade according to your rules.
- You will never be right all the time. This game is not about being right, it’s about making money. You can fight the market and be miserable and lose money, or you can accept what the market gives you and be happy and make money.
Finally:
From many of the most successful and prominent traders you’ll hear the same thing over and over: Don’t try to fight, predict or control the market. Listen to what what the market is trying to tell you, have a plan and follow the plan. Expect losing trades and cut your losses.
Thanks so much for reading. I trust you found this post helpful. I wish you all the best with your trading.
Thanks and Regards,
Trading SOS SOS
