“The difference between stupidity and genius is that genius has its limits.”
When you are entering into the world of trading for the first time, you may feel elated with the process. There may be many different possibilities you want to take advantage of, and choosing between them can be difficult. This desire can drive some newcomers to make rash decisions and spread themselves thin. They refuse to acknowledge the need for limitations and know none. The stock market is no place to leap in headfirst, pushing caution aside. You must learn to control impulses and keep the beast at bay.
A skilled, experienced trader got that way because they were disciplined.
They understood that good things come in time. They focused on the long term rather than the immediate short term. They were able to keep hold of their enthusiasm without completely losing it. While this may sound easy enough, it may be much more difficult than you think. A new trader wants to experience it all and get there money out there so more is coming back to them quickly. That desire for fast gratification does not leave much room for discipline and caution.
Once you can control yourself, you can get down to the meat and potatoes of trading. This involves a lot of hard work, effort, and patience. It also requires determination and motivation. That does not mean you should view each transaction as a dire, intense experience. Hold on to your enthusiasm and excitement. However, apply them at the right times in the right quantities and never allow them to decide for you.
Do you know how well you can control yourself in this situation? Review yourself with an unbiased eye. It is ok to admit you are impulsive, as long as you make an effort to change. It is when a trader refuses to see this shortcoming and take action to correct it that they run into serious problems. Do you:
- Jump from one strategy to another on a whim?
- Immediately quit after experiencing difficulty or pain?
- Frequently act on a sudden impulse?
- Give in to cravings without a second thought?
- Often find yourself in the clutches of temptation with no will power to resist it?
If so, you are most likely an impulsive trader.
Even if only a few of the above apply to you, you may need to develop your self-control.
Educate yourself on the market and create a plan that works for you. When creating your plan, make sure you have outlined it in detail and left nothing up to chance or question. Then make sure you stick with it and frequently evaluate your position.
These activities will help you stay on track. Take your time and make good choices about your investments. Never lose sight of your long term goals and you will succeed.