What about time commitment?

There is this overreaching human condition that makes us believe that we have to work huge hours to feel like we accomplished something. You need to break that habit, and break it fast. When it comes to trading it is not a measure of success if you put in eight hours today trading, or if you obsessed for three hours in the evening over your next day’s swing trades. You should approach your trading plan with the eye on putting forth the least amount of effort for the return. If you put in too much time and effort, forgetting the stress and strain, you’ll simply be left with a lower return for the efforts. Those of you who instead focus on key timeframes and have a specific strategy know that they will sit down for x amount of time, follow that plan and be done. Time to move on.

This is why we termed an important part of our money and trading management “The Power of Quitting.”

Typically in trading you do not want to use anything negative – and quitting certainly sounds negative. However, we have found that this is one of the most important factors between success and failure. In our day trading, we have come up with a plan that we follow, and we use this Power of Quitting concept and personally have set it at “two wins” – this means when we reach two wins in a trading day and are profitable we quit. We’re done. We even have markets where we call it after one win. The caveat is we keep going if we are negative. We want to give ourselves a way to dig out if the first few trades aren’t as cooperative. There are those who have added a losing side to this as well; they might trade the two win strategy but add in two losses as well – or three, etc… If they hit that, it is like a circuit breaker for the day to stop. We’ve found that for the most part, if we are using a strategy that has put the odds in our favor when we take every trade, that we can just focus on the Power of Quitting on the win side. For us, that works since we know when a trade is taken, the odds favor us it will succeed. That does not mean for a moment that we feel every trade is a lock for profits. Absolutely not.

You have to accept, right away, that trading is a game of odds. Not everyone likes to hear that because that might imply gambling but let’s call it an educated gamble. It is a gamble because as much as you want to believe that all of your chart and fundamental analysis has figured out the market or stock or commodity you are trading, the simple truth is that we are trading from within a glass booth, nobody can hear us, and we have absolutely no influence on what happens in the markets, none at all. It would be like going to a sporting event where you yell and scream for your favorite team, but you are sitting in the glassed-in luxury box. You can yell all you want at the glass and television but nothing you do will influence what happens on the floor one bit. Same goes for trading.

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