Stock Investing Guide

The mental (emotional) aspect of trading is hands down the toughest hurdle between aspiring traders and consistent success. For sure our technical nuts & bolts portion is vital. It goes without saying that we need some type of method, system or approach for trade entry, management and exit parameters that create a defined edge. The truth is there are countless ways to create such a viable “edge” over the long-term, but human management of such is the weakest link in that chain.

Out there in the real world we are taught to set tangible goals. Timelines, limits, targets and objectives are all part of the path to success. Need a roadmap to get where you’re going in order to get there, right? At some point in our career we realize trading is a whole lot different than any other mainstream profession. Most of the rules that apply elsewhere are null & void in our world. Fiscal goal-setting is one of those. It’s natural for traders in general and day traders in particular to set structured daily goals. We work a defined set of hours in our given shift…

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Your psychology and beliefs will be a major determining factor in your trading results. Consider this example, where the same successful trading approach is used by a hundred traders and usually no two of them will trade it exactly the same way. Why? Because each trader has a unique belief system, and their beliefs will determine their trading style and their trading results. That is why even with a profitable and proven trading approach, many traders will fail. They do not have the proper belief system to enable them to trade well. In other words, they lack “The Trader’s Mindset.”

When you encounter psychological issues it is best to recognize the issues, just be aware of them and don’t deny they exist. In order to “fix” psychological issues, we must first become aware of the issues that are causing the problems in order to heal. This is much of what psychoanalysis is all about. The psychologist or psycho- therapist tries to get the patient first to recognize issues that are causing their problems. The patient must believe that these issues are causing the problem in order for the patient to heal.

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Active trading – particularly day trading – is highly intense and action-oriented. Day traders are glue to their computer screen for most of the market day, ready to pull the trigger when their system says to enter or exit.

In the stock market chart for a classis day trader, it has among the highest score for discipline, risk tolerance, volatility tolerance, reward expectation, and time commitment – and the lowest scores for patience and time horizon. Charting skill is necessary, in most cases, but quantitative skills are not really needed. A fair degree of investing confidence is needed to select a system and learn it well. Once you learn your system – and an active trader must have a system that he or she knows and can depend on – you must simply have confidence in your system and the discipline to follow the signals generated by the system. By far, t

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