Discipline
"If my head is not 100 percent into it, I'm not trading at peak performance. It's better just to go home. Focus and concentration are critical. I'm successful when I'm concentrating and know exactly what's going on. When I'm not doing well, one thing that helps me out of my rut is I get smaller and take one trade at a time. I try to get the pendulum back in my direction, looking to make just one winning trade. When you get frustrated, you need to take a step back. Maybe I'll go for a walk just to clear my head. I calm down, regroup, and get back into the battle. I trade smaller positions, and I take my profits. Then I'm not losing money anymore, I'm making it."
-Electronic Day Traders' Secrets, by Friedfertig and West, p.35
Feature Article
Reward Yourself
The dot-com craze produced quite a few instant millionaires, but many of them lost it almost as quickly as they’d made it. These days, perhaps some of them wish they had spent a few of those dollars on things they could still enjoy. I am reminded of a high school classmate who held 550,000 insider shares in a company he helped found, a maker of internet hardware.
The company went public at around $16 a share, and then moved steeply higher over the next several months to a peak of around $120. At that price, our friend was worth roughly $66 million -- on paper, that is. You’d think he’d be retired and playing golf three times a week, but in fact he works a 9 to 5 job like most of us. Nearly all of his shares were restricted for sale during the stock’s meteoric rise and fall, so he was unable to realize the kind of capital gains that might have allowed him to retire rich.
The only evidence that remains of his fleeting wealth is a $5 million home in the Boston suburbs that he bought for cash. He makes enough now to maintain the home and pay the taxes on it, but he could not afford to buy it today if it were on the market. The lesson here is that the fantastic profits that can be made in the stock market are just a lot of ones and zeroes on a computer’s ledger sheet if we don’t spend them. Some traders evidently think that’s what the game is all about – amassing lots of ones and zeroes to keep score. But those who think this way are apt to become bored quickly if the electronic profits do not keep piling up at an ever-increasing rate.
If you are trading profitably, consider rewarding yourself now and then with something you can truly enjoy -- whether a box of Cuban cigars or a vacation with your spouse in Rio, or a new Aeron chair for your office. It will help to remind you that all those trades you sweated bullets over were worth the anxiety. |
