It is easier said then done which is very natural and normal for any human being. To easily admit to be wrong and instantly reacting on it, is simply not built into the human nature, period. So if you are a new trader, and you are struggling to make any money because you are not consistent with obeying your stop losses, do not feel bad. It is very normal and very human.
Developing a discipline to admit that you are wrong and acting upon it, is not a skill you can obtain over night because you just decided to quit your job and became professional trader. Learning or defining certain rules to trade is the easiest part. Anybody can learn it by reading few books or even by just reading my blog. But why not everybody can make money trading? And why not everybody can simply decide to obey the stop loses and became successful trader instantly?
Learning is the easy part, but becoming successful trader is all about practicing what you learned by doing it over and over again by implementing a extremely high level of disciple. I am referring to such level that is equal to a professional athlete who keeps practicing constantly even at his pick performance.
How do you practice discipline? It is extremely difficult specially if you have no pointers which direction to take. Do you just decide and say: "OK I will be disciplined from tomorrow" and expect the magic to just happen... LOL
Here is one pointer that may help a struggling trader. I heard it long time ago from a master trader who shared this with me so I share now with you:
THIS IS A DRILL ON HOW TO LEARN TO EXECUTE those darn stop losses that you always plan to take but when the stock gets there you just simply change your entire plan and do something totally different, or stupid, which one day will cost you your whole acct.... if it hasn't happen yet it will happen guaranteed and you can take this to the bank.
Let's assume that you know to pick good entries, the easy part that everybody can learn quite quickly anyway..
For ONE WEEK YOU MUST IGNORE ANY THOUGHTS OR NEEDS OF MAKING MONEY !
Instead of focusing on "HOW MUCH I CAN MAKE" you will focus on:
"I WANT MY STOP TO BE HIT ASAP AND I CAN'T WAIT TO EXECUTE IT"
And every time you execute your stop you will give yourself one reward point. Your goal is to accumulate as many award points as possible by the end of the week. 20 would be a great number to achieve. However you must collect 20 points by consistently obeying all stops. If you disobey ONE STOP even if the price afterwards goes in your favor YOU FAILED ! Start from zero again. Remember: doing 20 in a row is of essence for a reason. The winning trades in between are just winners and you do not count them. I know it sounds scary on a first thought right? Wanting to lose on purpose? How crazy this is? Why would I want to lose on purpose??
"I WANT MY STOP TO GET HIT !!! " You WILL NOT ACTUALLY MOVE THE STOCK TO HIT YOUR STOP!!! You ARE NOT ABLE TO MOVE THE STOCK ANYWHERE!!!! Regardless of what you think, what you want , what you wish , what you think you can predict, or what you actually do, the stock price will move UP or DOWN and there is absolutely NOTHING you can do to change that. ( Unless you are Martin Shkreli and buy the entire float and move the price from $3 to $54 in one day )
By focusing on "I WANT MY STOP TO GET HIT !!! " you will ONLY MAKE SURE THAT IF THE STOCK GETS THERE YOU WILL 100% execute your stop simply because you set your mind to WANT TO DO THAT , and you will protect your acct from potential blow off.
After completing this exercise SUCCESSFULLY you will never be the bad old trader you always was: THE STOP LOSS DISOBEYING GARBAGE TRADER .
Now get this question into your mind : ":Do you really think that after you enter a trade just by WANTING TO LOSE ; THE STOCK WILL ACTUALLY HIT your STOP???
How often when you entered your trade, you WANTED TO BE A WINNER but it just went totally against you? How often it went to your planned stop loss area that you did not want to happen? And how easy was it for you to execute that stop loss that you DID NOT WANT TO HAPPEN?
This is very serious mental game no joking !
YOU HAVE TO WANT TO HIT YOUR LOSS SO YOU CAN EASILY EXECUTE IT RIGHT THERE WHEN or IF the price gets there.
If you DON'T WANT YOUR STOP LOSS TO BE HIT , and the stock goes there , DO YOU THINK YOU WILL BE ABLE AND YOU WILL WANT TO EXECUTE SOMETHING THAT YOU DID NOT WANT TO HAPPEN IN THE FIRST PLACE ???
How often when you entered your trade, you WANTED TO BE A WINNER but it just went totally against you? How often it went to your planned stop loss area that you did not want to happen? And how easy was it for you to execute that stop loss that you DID NOT WANT TO HAPPEN?
This is very serious mental game no joking !
YOU HAVE TO WANT TO HIT YOUR LOSS SO YOU CAN EASILY EXECUTE IT RIGHT THERE WHEN or IF the price gets there.
If you DON'T WANT YOUR STOP LOSS TO BE HIT , and the stock goes there , DO YOU THINK YOU WILL BE ABLE AND YOU WILL WANT TO EXECUTE SOMETHING THAT YOU DID NOT WANT TO HAPPEN IN THE FIRST PLACE ???
It is extremely hard to execute something that in first place you DID NOT WANT TO HAPPEN !!! Do you agree now?
SO YOU MUST LEARN TO WANT THE BAD THING TO HAPPEN SO YOU CAN EXECUTE your plan WITHOUT ANY SECOND THOUGHTS when it happens !!! Ok?
This is the $1,000,000 post that you may want to save print and read every morning before market opens.
Try for ONE WEEK to IGNORE ANY THOUGHTS OR NEEDS OF MAKING MONEY!!
Limit your size accordingly to the amount you "WANT TO LOSE" comfortably AND LETS SEE WHAT HAPPENS. Again, this is assuming that you already know what are good probable entries where you have an edge.
Happy Trading and if you want to drop a line how did this exercise go, that will be great to see .
AngelDan@DaChopa
