Make this October your trading Stoptober!!!

NOTE: THIS OFFER HAS NOW EXPIRED

Quite often, traders will have a method which could generate profits. They would be able to generate decent profits, if it wasn't for the fact that one or two trades get away from them, creating huge losses.

These initially can start out of as small losses, but any one of a number of factors or emotions can lead the trader to believe (hope) that price will turn back in their favour. Even worse, they could see a price drop as an invitation to buy more of the same stock at a lower price - the dreaded averaging down.

Market Wizard Paul Tudor-Jones with a clear message

Q. What's the easiest way to avoid big losses?

A. Take small losses.

To do this, you need a combination of:

• risking only a small percentage of your equity on each trade;
• closing losing trades once price moves against you, and hits a pre-determined stop level.

Some traders I come across have basically said they can make money, but then through either pig-headedness, ego, irrationality, or some other emotion they end up losing a significant proportion of their equity on a single trade. I've even heard traders say that they can't afford to take a loss on a trade!

Those types of decisions can ruin several weeks, months or even years of slowly compounding your money. The thing is, most of these people know what they are doing, and know what they should be doing, but they can't or won't do it!

Continually making errors in this manner creates self-sabotage issues, and will forever create a limit on what you will be able to achieve as a trader.

I’ve said it before, and I’m going to say it again, because it cannot be overemphasized: the most important change in my trading career occurred when I learned to divorce my ego from the trade. Trading is a psychological game. Most people think that they’re playing against the market, but the market doesn’t care. You’re really playing against yourself. You have to stop trying to will things to happen in order to prove that you’re right. Listen only to what the market is telling you now. Forget what you thought it was telling you five minutes ago. The sole objective of trading is not to prove you’re right, but to hear the cash register ring. - See more at: http://www.tischendorf.com/2009/05/12/trading-psychology-martin-schwartz-quotes/#sthash.ioE6tLAa.dpuf

I’ve said it before, and I’m going to say it again, because it cannot be overemphasized: the most important change in my trading career occurred when I learned to divorce my ego from the trade. Trading is a psychological game. Most people think that they’re playing against the market, but the market doesn’t care. You’re really playing against yourself. You have to stop trying to will things to happen in order to prove that you’re right. Listen only to what the market is telling you now. Forget what you thought it was telling you five minutes ago. The sole objective of trading is not to prove you’re right, but to hear the cash register ring. - See more at: http://www.tischendorf.com/2009/05/12/trading-psychology-martin-schwartz-quotes/#sthash.ioE6tLAa.dpuf

I’ve said it before, and I’m going to say it again, because it cannot be overemphasized: the most important change in my trading career occurred when I learned to divorce my ego from the trade. Trading is a psychological game. Most people think that they’re playing against the market, but the market doesn’t care. You’re really playing against yourself. You have to stop trying to will things to happen in order to prove that you’re right. Listen only to what the market is telling you now. Forget what you thought it was telling you five minutes ago. The sole objective of trading is not to prove you’re right, but to hear the cash register ring. - See more at: http://www.tischendorf.com/2009/05/12/trading-psychology-martin-schwartz-quotes/#sthash.ioE6tLAa.dpuf

"I’ve said it before, and I’m going to say it again, because it cannot be overemphasized: the most important change in my trading career occurred when I learned to divorce my ego from the trade. Trading is a psychological game. Most people think that they’re playing against the market, but the market doesn’t care. You’re really playing against yourself. You have to stop trying to will things to happen in order to prove that you’re right. Listen only to what the market is telling you now." - Marty Schwartz

If you are one of those traders who have fallen into this trap, the good news is that these decisions are based on your beliefs, are therefore are fully within your control. You can effect the changes you need to make.

Resolve that you will avoid this scenario at all costs in the future. If you are in such a predicament at the moment, get out and keep what equity you have - as soon as the markets open this week.

If price is going against you, its factual. You are wrong on the trade. A paper loss is a real loss. Don't trawl the internet or social media to find some justification from another trader (who may have a completely different mindset, appetite for risk, or timeframe) to stay in the trade - as they may be in the same boat as you! Just accept responsibility for your actions, get out of those trades, get your emotions back under control, limit the losses to what they are, and move on.

I've had traders tell me stories along the lines of  "The old me would still be in that trade now - I would have ridden it all the way down. However, I took the small loss based on your rules, kept my emotions in check, and only lost a small percentage of my equity. It's only one out of the next thousand trades. Next!"

STOP making those damaging decisions. START taking those small losses. Get your trading mindset under control. If you can do that, then you can START making money.

Remember, risk control and the taking of small losses are integral parts of a trend following approach.

This will allow you over the next couple of weeks to start familiarising yourself with what we do, how we do it and how we work together. Then, you can make this October your trading Stoptober!!!