This Section is Made to be Used as Part of Your Daily Trading Preparation.
Bookmark it and use it to Embody The Optimal Trading Mindset!
There are specific reasons why the best traders consistently outperform everyone else...Mainly? They think differently from the rest.
—Mark Douglas
Mindset Shifts
What is a Loss?
A necessity of the trading game.
An expense of your trading business.
Already accounted for.
Part of the probability within your edge.
A normal part of trading and the cost of making profitable trades in the future.
What is a positive PnL?
>> The natural outcome of rigorously trusting in and following the trading rules that optimally leverage your chosen Edge in the market.
Do I need certainty that a trader will be a winner before placing the trade?
>> Absolutely not! All I need to know is that my edge is present, and risk is managed properly before placing a trade...
Can I be certain that a trade will be a winner?
>> Whether one trade or the next is gonna be a winner is always unknown, and definitely unknowable! The power of a consistently profitable trader, lies in the trust they've built and have on their EDGE, and their religiously following of their trading rules.
Build yours through back testing! The fastest way to build that necessary trust, is to see your Edge working its magic after 20, 30, 100 trades.
When should I exit a trade?
Reaching your profit target: This is the ideal scenario where you exit with a profit. Once your predetermined profit target has been reached, it's essential to take profits off the table and secure your gains.
Hitting your stop loss: Your stop loss is your safety net that protects you from significant losses. If the market moves against your position and hits your stop loss, it's crucial to exit the trade to minimize potential damage.
Market conditions change: Sometimes, the market environment shifts, making it necessary to reevaluate your trade. For instance, if the volatility increases or decreases significantly, you might need to adjust your position accordingly. For instance, entering a trade based on a 15-minute chart pattern but exiting when the 1-minute chart no longer supports the trade is an example of this situation.
Technical analysis: Keep an eye on key levels and patterns that indicate potential reversals or continuation. For instance, if a support level is breached, it might be wise to exit the trade to avoid further losses. Conversely, if resistance levels are broken, you may consider holding onto your position for potential profits.
Risk management: Always remember that risk management is crucial in day trading. If the risk outweighs the reward, it's essential to exit the trade and live to fight another day. For instance, making sure the potential profit is at least twice the risk on any given trade.
In summary, exiting a trade depends on various factors such as profit targets, stop losses, market conditions, technical analysis, and risk management principles. Always remember that being adaptable and flexible in your trading approach is key to long-term success.
📈 Day trading is a reflection of self-control and strategy. Forge your trading character through discipline, and watch your portfolio grow. 💪
A good trading day is one where we follow sound trading practices, from skilled execution to prudent risk management, some days will bring profit, other won't.
—Brett N. Steenbarger
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