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Not Prediction, But Self-Control

One of the successful commodity futures trader out there, Linda Raschke, said this once:

"The most difficult task in speculation in not prediction but self-control. Successful trading is difficult and frustrating. You are the most important element in the equation for success."

That's one of the reasons why the Trading Buddy System exists, to help each other learn the most important element in the equation of trading success: ourselves.

It's important to have market knowledge and experience the ups and downs that take place. It's important to know some fundamental and technical analysis. It's really important to define your edge, identify your expectancy and define and refine your rules. But, if we don't figure out what's going on inside our own brain, develop good habits and character, and maintain self-control when emotion starts to take over reasoning, then no matter how great your trading system, plan or edge is, you won't be as successful.

Ms. Raschke's spot on, in my opinion.

Let's emulate this level of Self Control

The question arises then: "How can I apply this?" Self control as it relates to trading could take many forms. You know you are exhibiting self control when:

1. You quit trading for the day when you've hit your loss limit.

2. You quit trading for the day when you've hit your daily targets.

3. You don't revenge trade when a trade goes against you, after you put in a ton of analysis.

4. You consistently take the same set-up trades, day in and day out.

5. You follow your trading rules, without exceptions. (Always trade with stops, proper position sizing, etc)

6. You don't "load up" when you "know" that a certain trade will work in your favor.

7. You don't hold on to losing trades longer than your trading rules allow.

8. You are more happy about following your plan than you are about the results.

There are definitely more out there, but you get the picture. Don't despair if you have trouble with these. Like any skill or ability, most take time to develop. Setting goals to do so, deliberate practice, measuring performance and accountability reporting will speed up that process.

This is one of the things the Trading Buddy System is helping us to develop.

Until next time, happy self-control trading!


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DISCLAIMER Options, Futures and Forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. This is neither a solicitation nor an offer to buy or sell futures, options or forex. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed here. Past performance is not necessarily indicative of future results. 

CFTC Rules 4.41 - Hypothetical or Simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, because the trades have not actually been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs, in general, are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. 

Testimonials appearing may not be representative of other clients or customers and is not a guarantee of future performance or success.

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