Staying in a winning trade, steps 1 and 2

This isn’t the only way to get yourself to stay in a winning trade, but it’s the most effective of all the ways I’ve explored. It’s based on the principles of Behavioral Psychology. An easy-to-read description of the principles appear in chapter 6 of Awaken the Giant Within : How to Take Immediate Control of Your Mental, Emotional, Physical and Financial Destiny!

Step One: Get Clear About Your Exit

Clarify what your exit point looks like. Write out a precise description of what has to happen to lead you to decide to exit from a winning trade. For example:

Volume climax – volume is more than double the average of the last 20 days.

Range climax – distance between high and low of the bar (for whatever time frame you trade) is double the average of the last 20 days.

Moving Average violation – for example price has been consistently above the 20MA while profits have been accumulating and on the present bar price as crossed below the 20MA.

Step Two: Advertise

Write out an advertisement for yourself as to why you should follow the exit rules of your system. That advertisement must include the following:

What benefits you get for staying in a winning trade until your system’s exit rules say to exit.

What detriments you’ll suffer if you don’t stay in a winning trade until your system’s exit rules say to exit.

Make the contents of the advertisement appeal to your emotions. The stronger the emotions, the better. The contents don’t even have to be logical to be effective.

Play the advertisement in your mind at least once a day. Play the advertisement in your mind as you trade.

...continued tomorrow...

Copyright 2008 Raymond T. Lee. All rights reserved.
Leisurely e-Mini Futures Trading
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