New Year Resolution

Failing to stop a loss is a prevalent method of wreaking your trading/investment account.

BE IT RESOLVED that every time you open a position this New Year you will follow through immediately with a Stop Loss Order.

Resolving to do this is the first step. That alone will not bring into being the result you want, namely that of actually following through on the resolution. You must convert that resolution into a habit that you automatically carry out without thinking. In fact, you must make the habit so strong that you have to consciously think about what you’re doing in order to abstain from entering a Stop Loss Order immediately after you open a new position.

One way of turning your New Year Resolution (of always entering a Stop Loss Order immediately after you open a new position) into a habit is to physically practice it. Get a simulator. Open a position. And immediately enter a Stop Loss Order. Do that 50 times the first time you do it. Then do it 10 times every day on a simulator. Many brokers have free simulators that you can use. For example, Interactive Brokers has it and they provide it for free.

There are other ways of turning this New Year Resolution into a habit...

...cont'd tomorrow...

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Copyright 2008 Raymond T. Lee. All rights reserved.
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