Lessons from the Pros


The Calming Event

When we are putting our money at risk in the financial markets, it is easy to get nervous and excited. These common emotions can wreak havoc on our trading accounts if not put into check. I was teaching an All Asset Mastery Extended Learning Track course this morning and was reminded of one of the huge benefits of trading with a community of traders rather than alone.

I set up an intraday trade in the S&P 500 EMini futures.  According to my trading plan, I calmly analyzed the trend and the locations of the supply and demand zones.  I then evaluated the zones to see if there was a high quality trading opportunity.  Once I decided to take the trade, I planned out the exact entry, target, and stop levels.  I even talked the students through the strategies I would use for protecting profits by moving the stop to breakeven and also trailing.  Finally, I set the orders into the computer and watched as my trade played out.

es trade pic

The comment that stood out the most to me was when a student said, “It is so calming trading with you.”  Trading, when done correctly, should be a boring, methodical process.  As you saw from my example, I planned the trade and executed it according to that plan.  Before I even put my money at risk, I had calculated the amount of loss I could receive and the potential gains from the trade.  There was nothing for me to feel nervous about.

bwendell 20130409 - xlt-aam

I realized that many newer traders are not as confident in their trading abilities.  They may have had mixed results in picking quality supply or demand as they are gaining experience.  Another reason why some students have problems with fear is improper planning for their trades.  So what is the solution for this problem?  An apprenticeship with an experienced trader.

The Extended Learning Tracks (XLT) offer traders the ability to view professional traders employing the same tactics that they also use.  The added benefit of the XLT is that you are trading with many other students who are experiencing the same issues and successes you are also enjoying.  This becomes a support group and can greatly reduce the apprehension you feel while trading in isolation.

People often ask me why I teach trading when I can obviously make a living just trading for myself.  While it is true that there is a great feeling that comes from helping students become successful traders and achieve their goals, that is not my only motivator.  I also need the accountability of others trading with me to maintain my own personal discipline in trading.

It is easy to stray from the path to trading success and become impulsive.  Impulsive trading: not planning trades, chasing price, using mental stops, is a road to trading ruin.  Even when I am not trading in front of students, I still ask myself, “Would I want my students to see this trade?”

To keep yourself in check, you can ask yourself on every trade, “Would I want to share this trade with my instructor or fellow traders?”  In fact, you can even share your trades to get input on your progress.  The XLT programs also feature special Student Trade Review days where the instructor and class examine other student’s trades and help each other learn what to do and what to avoid in trading.

Calm down!  Relax and plan your trades.  Join an apprenticeship to trade with a peer group instead of alone.  You may just find the calming effect for yourself.

DISCLAIMER This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.

Join over 170,000 Lessons from the Pros readers. Get new articles delivered to your inbox weekly.