In trading as everything that you do in life, it pays to be your own man. It is fine to stand on the shoulders of giants that have paved the way in this fine profession that is trading. I find myself out of my depth many times. I continue to make mistakes. What I have taken to heart is to always be accountable to yourself for these mistakes. Once we find ourselves pointing to some outside source for our shortcomings we permanently foreclose on the helpful lesson that the market is teaching us. There are three common denominators that I have found in all successful traders:
1- They manage risk
2- They have their own method
3- They are disciplined
Allow me to explain in detail:
(1) We as traders take calculated risks. We put ourselves in harm’s way with the size of our exposure. The number#1 lesson that all aspiring traders need to learn or the market will take care of putting you out of business is to manage risk. To manage risk means not to be risk averse. Instead, it is to know at what point of validity (this term is coined by Raghee Horner) you are willing to close that losing position and save the body by cutting the rotting leg. It also means at what point of profit you are choosing to close out a winning position to protect it from a reversal. Nobody ever went broke by taking profits.
(2) And the only way these successful traders get to be where they are is by having a method. A structure to the trade where they have certain parameters which if the setup meets then they execute. Mind you, these set-ups would be risky to the layman. What increases their chances is that this method is one devoid of emotion, and it is consistent. They know their entry or the point to which the setup triggers their trade; their size, or the risk they are willing to expose themselves to; and they know their exit, the time they close or manage risk.
(3) And if you think this is too stringent and not very liberating, and devoid of any excitement, well you are right. To successful traders, this way of trading becomes mundane. And the reason is because they have a successful method, but the only way this method allows them to succeed is because they adhere to this method and rarely veer away from it.
So, if you would like to be part of this elite cadre of traders, then you need to be your own man. You need to learn these three crucial and self-regulating facets of a successful trader. And the only way to do that is by learning slowly to manage risk: putting an entry, size, and exit before the trade. Half of the battle is already won if you take the time to think about these elements of a trade. This will eliminate the many other pitfalls of trading. Slowly but surely you will start to build your own method by examining what went wrong and right in previous trades. And slowly but surely you will start to see the reason why you need to adhere to your own method to be successful: the only way to know that the method is successful is to take away the variable of you not following the method.
So, go out there and start your journey. Be your own man and take responsibility for your trading as you do everything else in life. Without it you are robbing yourself of the possibility to improve your craft!