Become Your Own Boss
I believe this one is one of the best pieces of advice for a trader who is willing to do what is necessary to become the most successful trader they could be. Sometimes it is hard for us traders to understand certain concepts or to follow our rules because either, they go against human nature or we just don’t feel comfortable following them.
I do not believe there is one trader, and certainly none we have spoken to, who has not gone through this. The difference between the successful and also-rans is how they deal with it
You have to be in charge of the trade – not the other way around!
Let’s illustrate this with a clear example:
Scenario: Trading with multiple lots
Sometimes it is hard for us to not to take partial profits, as we already know, when we take partial profits we are actually limiting our profits; the market went our way, we probably made a good decision and the key for better profits is to have more positions when you are right and less positions when you are wrong. But, there is always a but: this activity of not taking partial profits goes against human nature of: Always try to lock some profits.
So our dilemma here is: should we follow human nature (which is easier but in the long run it has a negative impact on our results) or follow our rules (which is not easy to do but in the long run it has a positive impact on our results).
Well, there are three ways to solve this problem:
1. Become your own boss – Lets take again the multiple lot example. Imagine you are the boss of a Capital Management company. You have a few traders working for you; they do all the trading from your clients but your own money. If you know that in the long run taking partial profits will have a negative impact in the return of the portfolio, what would you tell your traders? Obviously “Do not take partial profits” because your own money is at risk, and of course you want the best returns possible. And what are your traders likely to do? Not taking partial profits, otherwise they would get fired. And that is exactly what we need to do, we need to become our own boss, ask ourselves if we are doing the right things, monitoring ourselves will always help us get better results.
2. External Help – If you cannot be honest with yourself, then we can always ask someone else (we trust) to do the job. In this case you will have to let your wife, husband, mother, friend trader, etc. know everything about your strategy, what is good for you and what’s not. Each day or week (or whatever the time frame you both chose) your partner will review your journal and will judge your performance (how well you followed your rules). Just be careful they do not become a better trader than you.
3. Trading journal at a forum – You can always post your strategy and have a journal at a Forum. You will always find helpful advice from other members. However, in order to be helped, you need to post your complete strategy, otherwise we will not know whether you are in the right path or not.