I hope the little series of articles over the last three weekends provided some ways in which traders can cut losses and let profits run. The fellow who initially suggested I provide some information on the subject suggested it would be a cop-out to say that there are probably as many ways to cut losses or let profits run as there are traders, but as you could probably see if you read the articles, there are a wide variety of ways in which a trader can accomplish the goals. Much is dependent upon the creation of a plan that is specific to your own needs. In both books, "Trade Your Way to Wealth" and "Smart Investors Money Machine" I talk about the need for such a plan and in different ways show how an individual can construct a plan specific to his or her needs, age, station in life, goals, family situation, and financial status.
Discipline is a first key. Most would-be traders, I find, are unwilling to even engage in the discipline of learning how to create a plan let alone working on its creation. It's my guess that their likelihood of sustained success falls somewhere between slim and none and leans to the "none" side. Creating the plan, however, is only the first needed act of discipline.
As many of you may know, I just had the privilege of traveling through Ireland, an absolutely beautiful country. During our stay, we took the opportunity to tour the Jameson Irish Whiskey Distillery. In addition to learning how Irish whiskey is distilled, we learned how Mr. Jameson went to riches, then to rags as a result of world events totally beyond his control, but recovered to regain his riches. As a result, he was awarded a crest and a motto. The motto is: sine metu. It means without fear. That is how Mr. Jameson managed his ultimate success and the ongoing success of this now internationally renowned company.
Sine metu is a motto that all traders should take into account in my book. If we trade through fear, undoubtedly we will make bad trades. We will cut profits because we may be afraid of a pull back instead of having an exit strategy such as those I discussed in the last article in the recent series or we will let losses run because we are afraid to take the loss and move ahead. With a disciplined approach and a pre-determined exit strategy in place we have the ability to increase our chances of success and proceed sine metu.
As an aside, for any who have shown interest in private coaching sessions, I am now booked through the rest of the year. I take no more than one student a month so if you are interested, you might want to contact me for bookings in early 2010. I am continuing the one day reduced price special in Arizona for January, February and March. It is 1/3 off the regular price for a one day session.
by Bill Kraft, Editor
Copyright 2009, Makin' Hay, Inc.
All Rights Reserved
P.S. Save $50 PER MONTH on my subscription trading newsletters!
SAVE on my Under $10 Stock Trader Service!
SAVE on my Option Trader Service!
SAVE on my Trend Trader Service!
Technorati tags: stock trading stock market investing trend trading swing trading option trading stock options stock option trading Bill Kraft
To comment on Bill's article click on the "comments" link below.