The thing is: we already know what we need to know to make money.

It’s how we put it all together that matters. One step at a time.

So, you want to be the best trader you can be. Let’s see what we can do to help. Firstly, let’s review the two most common downfalls of traders.

1. Pulling the trigger on the right stocks at the right time. Hesitate, hesitate!
2. Exiting, stopping a loss from getting bigger or, a profit from getting smaller. Hesitate, hesitate!

Don’t hesitate – Just do it.

What is it we want to do or what is it we want from the market? Do you want to be a hero in front of your mates at your investor meeting? Do you want to get frustrated from making the same mistakes time and time again or do you want to build equity for your family and your retirement? The answer is simple. We have to take positive steps towards achieving what we want and to that we need to learn how to trade ‘properly’. When we do, we feel good about ourselves and this builds self-perpetuating confidence. Liked I said step by step. Having the discipline to act according to your trade plan is key. You do have one, don’t you? Otherwise you are flying blind and you won’t succeed.

You have a choice

Our aim is not to be clever and ‘pick the market’ but to make money and be the best traders we can. We choose a target and shoot for it. Forget the ego and the glory that’s a very bad basis for decision making. Choosing to make the wrong decisions is a choice you make. My target is trends and I choose a systematic process to maximise their potential. We know the repetitive nature of trends. They don’t ever change.

But be careful not mix strategies as that is a dangerous and unworkable tactic.

Trends are a singular objective just as there can be many other valid trading objectives. We don’t make income an additional objective in our trend (growth) strategy. We may trade income-based stocks that dohelp improve returns, but the trend is the reason to get in and out not income. Don’t hold for a dividend (unless that’s your strategy), typically the growth component will dissipate while you wait. Don’t be overly smart and try and build and mix too many rules and exceptions into a trading plan it only breeds confusion.  Keep it very simple. It really is a case of ‘if it ain’t broke you don’t need to fix it’. This is where your expectations come in.

Expectations

This is very important and from my position as an analyst trader who tries to help and educate others via my website, I see a very clear picture. People put their hand up when they’ve made a mistake. It’s often too late, the damage is done. We often, unrealistically, expect too much of ourselves and our trading. So, when we trade trends, we need to understand two things very quickly. 1. We will never get the top and 2. We will never get the bottom. Be happy taking a ‘chunk’ and making a profit. That’s a valid expectation

That is common sense because our aim is not to predict but to follow. A trend must develop before we can follow it, and we do that because we know trends occur all the time, so we jump on a trend when we have the strong probability that there is one. That only happens when we have the evidence that prices are rising and they will already have had to have risen a certain distance. Thus, we are not ‘picking’ or ‘predicting’ we are only riding the trend and following it, as is the case when a trend ends.

At a stock high we have absolutely no evidence that the trend finishes there. It might be the top, or it might go higher, we simply can’t, or don’t know. We need it to fall some distance to increase probabilities we have a top in place and then risk management rules kick in triggering an exit a certain distance from the highs that protect our gains. That’s a rule. Let’s call these insurance gaps for surety of heightened probabilities – because that’s really what we are playing – a statistical odds game of one thing more likely to happen than another. Trends are probabilities, that prices will continue to rise, and price falls put that in jeopardy.

All I really know is that at some stage I have a profit to protect no matter how big or small. To maximise the opportunity, we let the trend develop to its extreme and wait for it to pull back a certain distance. We still don’t know if we’ve seen the top or not but at some educated ‘fixed’ point we have to take our profit and most importantly be happy with that and move on. This is the edict I follow in my newsletters and videos. I wear my heart on my sleeve and losses are a part of trading. It’s the cost of a ticket to play the game! To think it is possible to eradicate them completely is one of those unrealistic expectations. That doesn’t stop us from getting a little cross with ourselves sometimes and that’s OK just don’t beat yourself up too much but use it as leverage to keep striving to improve your trading with realistic expectations of what can and can’t be achieved.

Trends

They come in different shapes and sizes but are basically the same and will travel in a series of higher highs and lows. This defines a trend. We wait for the confirmation of a developing trend, so we give a bit up for the surety of a trend. Then as a trend develops, we protect the profit by raising the stop. The worst thing we can do here is watch it go down and we will if we don’t have a pre-set ‘get out’ or stop (losing our) profit trigger. Some trends will be big, but some will be small and not develop as we’d ‘hoped’. Treat each on its merits. Hope here is our worst enemy.

It is not about picking the market right because nobody ever does that, no, the focus is purely on protecting capital and generating a return on your capital. Shift your mindset.

How best to go about getting you mindset right so you can approach things differently and in a more positive and constructive way. The best way is a step by step process. You won’t achieve a big change overnight. It’s is done in incremental steps with each positive step along the way rewarding you and convincing you to move forward and eventually the confidence builds until there is no going back. You’ve made the jump. You’ve sent the light. This might sound like a motivational TED talk and it is. One positive step in building your focus and shifting your mindset puts you on the right path.