Series: Mental Roadblocks of Day Trading
If you are anything like me, you hate to be wrong. In my humble opinion, I think this is a nasty side affect of usually being right!
One of the biggest problems in the early years of my trading was the strength to step away from a bad trade because I was wrong. “But I wasn’t wrong,” I would reason with myself, “maybe the trade will turn around and prove how right I was!” You can guess how this kind of trading worked out for me. It was humbling for a man who is pretty sure he is always right to learn that the market will win every time. It doesn’t matter how right I think I am, the market is the boss and I am its humble trader, just trying to keep up. Sure, the market is fickle. Sure, it is unpredictable. And yes, it changes its mind on a dime and says one thing but does another. But very much like a husband who has finally learned the way to a peaceful marriage, I want to share what I have learned. Repeat after me… “You were right, and I was wrong.”
1. Learn to be flexible without being fickle. There are uncountable reasons why any given trade can completely change direction. But your system is your system and you must live and die by it. Your system is only a reactionary mechanism to the market. This means that if the market changes, your system re-calibrates and you, as the ever-disciplined follower of your trading system, react to the change. I see two major mistakes when the market changes… 1. A trader looks at another system to see if it justifies his position or 2. The trader adheres so strongly to his original premise that he cannot see the trigger to change position.
2 What would I teach someone else to do? Suppose you were standing over someone’s shoulder, teaching them to trade. This same trade setup and your bright-eyed student (I think of looking at myself many, many moons ago), looked to you to tell him what to do. How would you lead him? I think this exercise is so beneficial because it reminds you that you are still the “young grasshopper” and can still be wrong and still be learning.
3. Don’t let the feeling linger. If there is one thing that traders will have to get used to, it is being wrong. You will never be so good of a trader that you have winning trades every time. Never. Being wrong comes with pretty negative connotations but you must see it as par for the course in trading. With that said, do not beat yourself up. In fact, this is an important time for your “full-stop” we talked about in the Ready Set Trade Blog. Remember, each trade gets a clean slate. Every time. If you traded correctly, you succeeded. Period.