February 14th 2008
Trading Like I Don’t Care
Want to know how I trade the same setups day in and day out? How I consistently execute my trading plan? I trade like I don’t care.
It’s really easy to do. All you need to do is trade small.
So you say, “Well wait a second, I need to make money”.
If you can’t consistently trade your plan, you are never going to make money. If you are learning, you need to trade the smallest lot your broker will allow. It shouldn’t be about making money. It should be about learning. How can you make any money, if you blew your bankroll before you knew what you were doing?
So you say, “The commissions will eat into my equity!”…Big deal, call it tuition. I’d rather pay my tuition in commissions than losing trades.
You might say, “That’s boring”. Exactly! Trading should be boring. The only reason I have been able to trade over the long term is because it has become boring. I don’t get excited from the risk or price movement because no one trade will make or break me. I do get excited from the research and from talking about it, hence the blog about trading ideas.
Imagine yourself trading one share of stock each day for a year. You might end a couple pennies down or up each day. But over the course of a year, the fluctuation in your account is minimal. I don’t know anyone who would give a damn about making or losing a few pennies. When you’re learning that’s how it should be. You become emotionally detached from your trading and you don’t blow your account balance.
I do want to clarify one thing. Trading small doesn’t mean being careless. A trader once told me that I should be the hardest boss I’ve ever had. It’s true. I spend an inordinate amount of time on research and analysis. Trading like you don’t care doesn’t mean slacking off. Even though one bad trade may not break you, a hundred bad trades will.
You become a good trader with experience. You get experience by staying in the game. If you’re not getting the results you need to stay in the game, you need to trade small so you can.
