I received an email from a trader who is a superstar at reviewing his work. Below is an email he sent to me this weekend…..I need to slow things down and do exactly this:
1) [keep doing exactly what I’m doing, in preparation, in hard work, in planning trades, sharing ideas, and reviewing work]
2) have more patience so that you only trade each stock from the best levels — this will result in less volume overall and likely, fewer losing trades. Once you’re in a stock focus on just that one even if it means just waiting on it several minutes
3) just hit the sweep key if your price is .05 or more out of the money and you haven’t already got out on offer/(bid). Simple. Only way to kick this finally.
This was my response…….
3) You have developed bad habits when it comes to hitting out of stocks that trade against you. You need to form good habits. I would spend 15 minutes everyday on the demo working on hitting out of stocks. Pick an active stock, set an exit price, and if the stock hits this price then get the eff out. You must condition your mind to habitually hit out of stocks that exceed your exit price.
Also you should have a conversation with yourself. Why are you so interested in proving that you are correct with a position? No one cares about your opinion. No one cares that you think a stock will go up or down. No one.
Most importantly trading is not about being right. Trading is a game of math. It is about finding set ups that offer you a good risk/reward and pulling the trigger. Thirty to forty percent of these trades will result in a loss. This is the game. Dr. Steenbarger would call this a narcissistic desire to be correct.
You are trying to be right. Consistently profitable traders just make good trades. They accept that they cannot control the results. Think about it.
This trader must develop the habit of hitting stocks that trade against him. And he needs to do some drills everyday so that he develops this skill. But it is also important for him to understand himself better. Understanding that he has a psychological need to be right will help develop this skill. The reason he is not hitting stocks that trade against him is because he has not developed this habit. The reason he did not develop this habit, though most easily do, is because he has a psychological need to be correct. Understanding this will help him conquer this trading flaw.
We all have flaws. There are things we must all work on. Sometimes having a conversation with yourself can help.
Best of luck with your trading!
You can be better tomorrow than you are today!
Mike Bellafiore
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