The New Sell and Sell Short: How to Take Profits, Cut Losses, and Benefit from Price Declines, Expanded Second Edition

YOUR MIND AS A TRADING TOOL

Your emotions, hopes, and fears have a direct and immediate effect on your trading. What goes on inside your head has a greater influence on your success or failure than any technology.² Your decision-making process must be transparent and unbiased to enable you to learn from your experiences and become a better trader.

Trading psychology is discussed in all of my books, but especially in Trading for a Living. Let’s touch on just a few key points:

• Solitude is essential

When feeling stressed, we tend to huddle and imitate others. A successful trader makes his or her own decisions. You need to isolate yourself while you make and implement your own trading plans. This does not mean becoming a hermit. It is a good idea to network with other traders, but you should not talk about your trading plans while a trade is still open. Stay alone with your trade, learn all you can, make your own decisions, record your plans, and implement them in silence. You can discuss your trades with the people you trust after closing a trade. You need solitude to focus on open trades.

• Treat yourself well

If your mind is a part of trading, you’ve got to treat it well. It only seems as though impulsive traders have fun—losers tend to be extremely harsh and shockingly abusive towards themselves. They keep breaking the rules and hitting themselves, breaking and hitting. Beating yourself will not make you a better trader. It is better to celebrate even partial achievements ...