My Grandmother was always filled with wisdom. Among the more common maxims, “Don’t run with scissors”, “don’t swim right after eating”, and “don’t play in the road” she also said things like “Come home early, nothing good ever happens after midnight” and “Letting the cat out of the bag is a lot easier than putting it back in. ” Here are a few snippets of trader’s wisdom you might have heard from your grandmother:
1) Don’t let your money burn a whole in your pocket.
So, you’ve got your trading account up and you’re ready to make your first trade. You’re fingers are just itching to click the “do it” button and make your first million (BTW, I’ve given up on my first million, I’m working on my second million now.) But STOP! Take your time. Be sure you pick a trade that meets all your criteria.
2) Don’t count your chickens before they cross the road.
OK, so I know that I can count them before they cross the road, I just gotta wait until they hatch. When you’re in a trade, you want to count up how much money you could make. Wrong plan. The only way to succeed in trading is to manage your risk. Keep your losses small and manageable. Never bet the farm. No trade is a 100% sure winner. Manage it, take some profit off when you get a reasonable amount.
3) Don’t cry over spilled milk.
So, that trade you were in went stall, spin, crash, burn, die? Well, it’s over – time to move on. You can’t allow emotions over a loss (or a win either, for that matter) affect your decision-making on your next trade. If you’ve got a proven trading system, follow your rules and forget about that last milk spill. The next trade is too important to be overshadowed by your last loss (or win.) Always, always, always follow your rules.
4) The early bird gets the worm, but the second mouse gets the cheese.
I just included this one because it’s one of my favorite distortions of old grandma sayings. You don’t have to be the first one in a move to be a profitable trader. There are a lot of winners who got in after the move started. Don’t try to pick tops and bottoms. You’ll exhaust your trading account in short order trying to do that. But, allow me to say this, don’t chase a trade that you missed and that is moving on. There is definitely a delicate balance here. That’s why you won’t have a million dollar account in your first six months of trading (unless you started with a two million dollar account. ;))
Listen to your grandmother. She’ll make sure you’re a profitable trader!
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