Trading Software and Books Reviews

Become A Wise Trader

It is a wise person who recognizes his limitations, a courageous person who overcomes them, and a fool who does not recognize they exist.

Children arrive into this world with two instinctive fears, fear of loud noises and fear of falling. All other fears are a learned and conditioned response. B.F. Skinner pioneered operant conditioning in the 1930’s based on Pavlov’s experiments. Operant conditioning rewards positive responses and punishes negative responses.

If you possess fear of losing money, how and where did you learn it? Was it in the markets??

Futures traders are not characters in children’s stories, so few children grow up wanting to be futures traders. I know of know super heroes who trade futures. Certainly, Spiderman, Superman, Batman, and others like them are not presented as futures traders.

Ah! But you read Market Wizards! Is that where you came into the hero worshipping of futures traders? Tell me something: Did any of those wizards tell you how they became market wizards? Did they show you what they do? What did you learn from the market wizard books? Was there any proof that what these wizards told the author is true?

A person’s life is short and should be spent on doing what he truly wants to do without any financial incentives. If the fear of financial loss is greater than the potential rewards of trading, do not trade the markets. It is a wise person who recognizes his limitations, a courageous person who overcomes them, and a fool who does not recognize they exist.

Courage is not lack of fear, it is overcoming fear. The best traders are armed with the knowledge of what actions should be taken for any given market condition to provide the highest probability of a profitable expectation.

Being a stalwart hero is not a good idea for trading. Gritting one’s teeth and trying to ride out an adverse move, gains you nothing. I’ve seen countless traders go to their financial ruin trying to tough-it-out when prices were moving against them. Nevertheless, stubbornly hanging onto a losing trade is what is required of most system traders.

Anyone is allowed to make one mistake. When the same mistake is repeated a second time, caution should be noted. The third repetition of the same mistake constitutes self-destructive habitual behavior that must be reversed. All trading must stop immediately until the trader’s self-discipline is thoroughly examined. Once the reason for the repetitive mistakes is understood, usually fear, anger or guilt, it must be corrected before trading may begin again. Some traders lose money because they are atoning for guilt feelings or gifts they feel are undeserved. Such traders should donate funds to their favorite charities, not to other traders.

Any flaw in a trader’s character, like greed, hatred, dishonesty, revenge, arrogance, etc., will soon result in a loss of money. Traders must know the market as well as they know themselves. Negative feelings towards any person, or one’s self, must be replaced with the understanding that these feelings are choices the trader has made that will eventually cause personal and financial destruction. Negative feelings prevent the trader from realizing his maximum growth potential, because his choices for growth have been limited by his self-defeating thoughts. The mind’s electrochemical network sends energy impulses throughout each atom of the body as it thinks. Thoughts create feelings experienced by the trader. Traders should take trades based on scientific price action analysis, not feelings. Deschapelles, the French chess champion, would give his opponent a pawn before the game began. This action always provided the necessary excuse for losing. Give nothing away when trading markets; enough will be taken from you.

All the best in your trading.

Joe Ross, Trading Educators Inc.

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