Specific Topics – Taking a punch in your Trading
Can you to take a punch – that is to say accept the stop loss? Whether you’re interested in becoming a proficient fighter or you just want to be able to defend yourself in a street fight, knowing how to take a punch could mean the difference between winning and losing, or even life and death. Just like a fighter, a trader needs to be able to take a punch. Too many traders just hate to lose and simple refuse to take the hit on their account by taking the stop when the trade goes bad. Using this analogy, I like to provide some tips to mentally accept the stop loss in your trading. The following steps will help you roll with the punches in a fight and more importantly for us traders take your stops in your Trade Plan:
- Relax mentally – if you have done your Trade Plan correctly, you should know that approximately 4 out of 10 trades will hit your stop. Relax its normal to get stopped out.
- Practice taking a punch – further more if its normal to take a punch, you should feel good about it, as it tells you that you are disciplined. If your not taking or practicing taking punches/stops continually through out your trading day, you probably are a loser.
- Strengthen the area to get hit – like a fighter that stiffens up to take the punch, your stop point should be calculated carefully. Either at a specific logical point in your chart or at a calculated stop/profit ratio in your Trade Plan. The stop needs to be correct – not too little or not too much – this should be flushed out when reviewing your Trade Plan before you even start trading. This is the surest way to stiffen up to take the punch.
- Protect your vulnerable areas – that is to say to ensure that your stops preserve capital at all times. Live to trade another day.
- Try to roll with the punch – once the stop is hit, get back up after the emotional failure and look for the next trade a fresh, in accordance to your Trade Plan.
One note. Are you one of those that moves your stop when the price gets close to your stop. Thinking, if I just give it a few more pips I can recover? I will give you one more analogy to get you to get rid of this bad habit. Stop movers are nose pickers. Yes you heard me – nose pickers. There is nothing more gross than a nose picker. Digging your finger up your nose picking out puss. This is really gross. Get a handkerchief and blow your nose properly. Nose pickers are gross lazy people that can not do things properly – its not professional – i.e. you need to be following a Trade Plan properly. Are you a nose picker?
Finally, being able to take the stop is one of the key ways Blue Point Trading can decide if you are a good trader. If we see that you can not take the stop correctly, there will be no way we could ever allow you to become a long term trader for Blue Point Trading.