Another key to successful trading is mental independence. This is the ability to free yourself from concerns that might distract you from trading. It doesn’t mean you should ignore your friends or family; it simply means you should avoid putting yourself in a situation where financial fear from friends and family gets between you and your trading program. Be very mindful that neglecting your current situation is not going to get you results in the long run.
One of the most dangerous mistakes new traders make is failing to admit when they’re wrong. This is not so with savvy, wealthy winners; they try to take losses while they’re still small, then wait for a better day. They knowingly accept “the L”, no matter how big or small, they take it and learn from it. How can you learn if you won’t admit to yourself that you were wrong?
Unless you hit your take profit, or your trailing stop has closed the trade, don’t just get impatient and take your money until you have a valid reason to cash in. Successful traders let profits run until they see some indication technical, fundamental or both that it’s time to liquidate the asset only because profits are available. They only close out a profitable position when they see and end in sight.
At the same time, the 1% of the 5% of successful traders will only enter a position with an exit strategy. If you don’t have a clear exit strategy, don’t place the trade. If you do, you’re right back to the beginning, with no lesson learned.
Trading decisions based on price moves or news releases that occur during the trading day are usually poor ones. Traders who make decisions based on such news are often whipsawed back and forth until their trading accounts are in tatters. This is because traders are no different than people, we are the last to hear about any major news release.
Generally speaking, developments that are powerful enough to move market prices have a longer-term effect that will provide several profitable windows of opportunity beyond the start of the move. Think about how the market has to correct itself from these big moves. So if you think a particular piece of news will move the markets, back away from your position and take a fresh look before re-entering. Even professional traders focus more on how to trade after a major news event as opposed to focusing on how to trade current news events.