The One Simple Idea That Enabled Me to Become a Full-Time Trader

I always like reading informative writing from traders around the world. I am able to expand my ideas and pick up valuable information from others in the field. I want to share a very interesting piece from Jim Neihart who graduated in 1980 from the University of Arizona with a degree in Finance. 

The One Simple Idea That Enabled Me to Become a Full-Time Trader

Trade To Trade Well, Not To Make Money! I have repeated this statement hundreds of times to my students. It seems like a contradiction but it really is not. Traders who routinely make enormous amounts of money trading don’t mentally count the dollars while they’re trading. They don’t keep a mental calculator continuously running in their head to constantly keep track of how much money they’ve put into their account. “Let’s see, I bought 1000 shares of Halliburton and it’s up one point, times one dollar a share, equals 1000 dollars!”

Nothing and I mean nothing, will blow your concentration and cloud your judgment faster than keeping that calculator running in your head, calculating the dollars you’ve made or lost each minute that goes by during the trading day.

Another booby trap is to announce to the world, your husband, wife or even your dog that you’re going to make a specific amount of money trading today. You’re setting yourself up for failure. Setting as specific dollar amount you must bring home each day, especially if you’re a beginning trader, assures that it probably won’t happen. This need to make a specific amount of money colors your view of the market and pressures you to open positions that are marginal trades because you have promised yourself or worse yet, someone else - that you’re going to bring home the cash! Your pledge echoes in your mind, so you force trades. Odds are, you lose money. Now you’re embarrassed with yourself and you start questioning your self-esteem, which automatically leads to more losses.

The cure for this illness: From this point forward, your goal is not to make money. Your goal is to trade to trade well! Money is a by-product of trading well. A very interesting thing starts to happen when you focus on trading well. Your profits will start to add up a lot faster than they did when making money was your primary goal. This is simply because traders who focus on trading well cut their losses and let their winners run. They protect their capital and leave unnecessary risks to others. They recognize a choppy market and sit on their hands and don’t trade. They make promises to no one, including themselves, about the money they want to take home.

Traders who trade well let the market come to them. They are extremely patient and disciplined. They wait for the perfect setup and entry point. If that perfect point doesn’t come along, oh well, they wait for the next one knowing that another chance is just around the corner. Once in the trade, they mechanically and methodically manage their position, taking profits at specific points, and moving their stop loss to protect their principal.

Traders who trade well don’t trade simply for the excitement of the trade because they have become addicted to the thrill. They don’t trade out of boredom or when they are sick or tired. They don’t trade especially if they have stress in their life that disallows their full focus on the market. Successful traders always abide by their trading rules and never stray from them. Traders who trade well are perfectionists and are very wealthy as a result of their unwavering discipline. You too should have this goal