March 13, 2008 at 1:37 pm | | Comments 9

Don’t Be a Hero

Every time the market gets volatile for a few weeks, the stories start to come out of the woodwork of traders who made it or lost it big….

“So-and-so made $150k in that last selloff.”

“What’s-his-name lost 80 grand on that reversal.”

They’re impressive stories and often eye-opening when the numbers are considered in terms of real dollars, but to some traders these kinds of rumors might do more harm than good. Occasionally, a guy might hear a story like that and decide it’s time to start swinging for the fences and step up his size.

And of course we all know how that story ends!

Wanna know the secret to good trading? It isn’t found in some flamboyant trading style, and it most likely doesn’t require a major change in your method or taking massive swings in your account equity. The secret to good trading is to trade like you know how. Trade the way you know you should. Don’t trade like someone else, and don’t go overnight from trading for a steady paycheck to trading for riches. Take the setups you do well with, and pass on anything that doesn’t fit that mold.

When the market gets volatile, suddenly the urge to go big and catch a major turning point hits traders of all kinds. Those who want to catch the falling knife or short the top will usually pay for it several times before they finally catch a meaningful turn. The funny thing is that by then they’ve either shrunk their account or they’ve damaged their confidence enough that they might only recoup what they gave back in their first few failed attempts.

Don’t be a hero in the market. Leave that to someone else.

The best trades tend to be planned in advance and then simply executed well when the right factors fall into place. Take what the market provides, but don’t force big trades out of your desire to get noticed by your trading peers. Remember, the good thing about trading from the charts is that we don’t have to know where stocks are going (what a relief!)! Just keep working the charts and take the setups as they come, and know that bullish and bearish plays will present themselves at the proper times. That’s all we have to do, and there’s no need to be a hero!

Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service

[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]

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  1. Great article, it’s very true. I believe one of the key components you touched on was not needing to know what’s going to happen next. Trade your system, in the moment and don’t get caught up in the hype. It’s one of the most beneficial ways to control your emotions. I always remember money is just a by product of trading my system correct with proper risk control and money management. Thanks for the reminder of not trying to be a hero to feed my ego.

    Thanks again,

  2. Hey Ryan,

    Thanks for your comment. I totally agree that the money is just a part of your method, and it comes with making good decisions which are grounded in your experience and trading style. It’s good to see you here and I appreciate the comment!

    Trade well,


  3. I love your posts. I read every day.

    I am studying options. I am curious about your opinion of options and the advantage they provide to the trader.

    I am very interested in the topic of expectancy and trading with a system proven to provide a positive expectancy.

    I recently ran across this blog that discusses a positive expectancy option system: (link removed)

    What is your opinion?

  4. Hey Bill,

    Thanks for the comment and glad you enjoy the blog! I think options can offer some nice advantages for certain traders, provided that they stay disciplined and employ strategies which have a defined risk. I won’t give my opinion on another blog which I have never read, but there are a number of good resources out there so keep an open mind and do your own research to be sure that what is being discussed is accurate in your own experience.

    Trade well today and thanks for stopping by!


Trackbacks: 5  |  Trackback URL

  1. From Patient Progress | on May 22, 2008
  2. From More on Learning from Trading Disasters | on Jun 26, 2008
  3. From First Can Hurt! | on Oct 6, 2008
  4. From Managing Gap Risk | on Jul 28, 2009
  5. From Lessons From a Life-Long Speculator | on Jan 26, 2011

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