Here’s the trick

What the crowd is doing and therefore will lose us money. 

The ‘crowd’ consider the potential win from hitting a target as money in the bank. They mentally add it to their account.

The risk and target of the trade represent £100, for example. As we (the crowd) enter the trade, we mentally add the £100 to our account. It belongs to us. It’s now our money, and we manage the trade accordingly – with fear.

Instead, flip it.

Discount the risk value of a trade once entered. It’s gone. Our actual account is our total less the risk of our open position.

Our goal of not losing money does not include the planned result of this trade. We don’t exit the trade because of fear because we have accepted the risk.

Unless we make this mental leap, it is too easy to exit a trade thinking we can’t lose what we have.

Published by Day Trader

I flew fast jets for 30 years of my life. I've traded full-time, more or less, for the last ten years, initially from fundamentals and over the last few years as a dedicated day trader. I live on the North Norfolk coast.

Leave a comment

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: