"Limiting Your Winners and Letting Your Losers Run?"

"Limiting Your Winners and Letting Your Losers Run?"

It occupies a chapter in just about every trading
book ever written. It's been preached by every
lecturing market guru since the Aden Sisters
danced to the music of the gold market. Go ahead
and hire a personal trading coach and likely the
second thing he or she will utter will be these
chosen words (right after “Futures trading is
speculative and only risk capital should be
used.”)… and those words are, “Limit your losses
and let your winners run”.

OK. We've been told. But you didn't have to tell
us. It makes perfect sense. “On a roll”… “Go with
the flow”… “Ride the wave”… “Get out while the
getting's good”… we've heard both sides of those
golden words massaged in numerous different phrases.

We get it.

During my trading and coaching days, I would re-visit
students that I trained weeks or months previously
and low and behold I would discover that many of
them were actually doing the opposite... letting
their losses run and limiting their gains. After a
while I wasn't surprised… I would go into a refresher
visit EXPECTING to see “limit/run rule” repeatedly
ignored.

I would ask the students “Why?”... There were many
different stories but one main theme… all the traders,
in some way, had gotten out of emotional control.

During their trainings, I had made sure that they did
extensive back-testing on their systems and I did
that because I knew that the more they tested and saw
that their system would have been successful, the more
they would TRUST in the system and have the strength
the follow its signals, especially through rough
periods.

Apparently simply back-testing and seeing “would-have-
been” results wasn't enough to keep these traders in
emotional control. What I had been missing was that
these traders were taking the losing PERSONALLY!

These new traders had been seeing losing trades as
reasons to let negative thoughts into their heads.
A loss would mean that all the articles they read
about “gambling” futures traders may be true. All
the family accusations that they were crazy futures
traders … well, that could have some merit!

This kind of negative thinking (as well as other
forms of futures-related negative thinking) makes
it so you don't want to take a loss.  If you take
a loss, maybe your that much closer to that idiot
futures trader that you've been accused of.

So you enter a trade (after, say, coming off a
losing trade)and it starts to go south.  As the
market heads for your stop, you start looking
around at the news, or a chart of a “sister”
commodity that's showing strength, searching for
an excuse to make it OK to lift your stop. Found it.
“Hello… Cancel Bean Ticket 4154.” Stop Canceled.

If the market comes back, you'll be the smart guy
or gal that made the right move and turned a loser
into a winner.  What you really just did, however,
is turn a potential winner into a potential loser..
YOU.  You may have had a winning trade, but you will
lose in the end.

It's not about YOU.  It's about THE MARKET. If you
don't take your emotions out of it, you don't have
a shot. You must see yourself as a trader not someone
who is becoming a trader.  There's very little room
for mistakes in your trading. Leverage makes sure of
that. If you are going to play in the Big League,
you have to do act and do what the Big Leaguers do…
right from the beginning.

Do all you practicing on the paper-trading playing
field. Once you put your money up, you either do what
your tested system tell you to do or pick a different
profession. If you're not training mentally, you're
not giving yourself the best chance laughing in the
face of your relatives!

RECOMMENDED: TradingMind Softwarehttp://www.directyourmind.com/scripts/tradingmind.php?10162

My best,

Norman Hallett
Subconscious Training Corporation
6606 NW 66th Avenue
Parkland, FL 33067
954-427-4640