KNOW YOUR LIMITATIONS
What did Clint Eastwood say? ” You got to know your limitations” (of course, this goes for a woman as well). You’ve simply got to be realistic about what you are capable of. I hate to say it, but some people are just not cut out for trading. However, self-evaluation can sometimes be very difficult. It kind of falls into the category of “nobody thinks they are a bad driver”. Obviously, if you didn’t think you were able to be successful at day trading, then you probably wouldn’t be reading this page 🙂 However, just because you think you will be successful at trading, doesn’t make it so.
So for those of you that are unsure if you are cut out for it or have difficulty with self-evaluations, here’s my surefire way to determine if you are a good trader:
Look at your bank account.
If your account goes up, then you are doing well. If it goes down, you are not doing well. If in a couple of years you have more money than you started with (without adding more funds), then you are off to a good start. If you have less, then you are making mistakes. If in five or ten years you are consistently making money and/or have entered the big leagues of trading, then you probably are cut out for it. If in five or ten years you are broke or having to fund your trading from other profitable areas of your life, then you probably aren’t cut out for it. At the same time, you are only a failure if you quit. My philosophy has always been never giving up. If the person that became successful on the 20th attempt had stopped at the 15th attempt, then they would have been a failure.
Trading can be a very hard road; you don’t learn this stuff over night – it takes months, even years to become even a half way decent and savvy trader. No one walks into this business and learns it over night. It’s like anything else in life – it takes time, it takes practice and it takes the ability to learn from your mistakes. If you find you tend to blame your mistakes on everyone else – forget it – stop while you still have some money and get a day job. I’ve never met a good trade that pointed a finger at someone else. At the end of the day, nobody forces you to enter the trade. No matter what advice you follow, what service you use – the buck ultimately stops with you – as it’s your decision to follow through with the trade in the end. One thing you will never hear a successful trader say is “I lost money, but it wasn’t my fault”. Every good trader I know takes full responsibility for every trade they make and every action they take.
If you cannot say to yourself “I messed up that trade big time and I’ll never make that mistake again!” then you have selected the wrong business to be in. You simply have to be able to stand back, look at what you are doing and honestly evaluate what is working and what is not working. If something you are doing is not working, then you must make changes. Trading is a highly fluid type of business, it’s always changing and you must adapt and change with it. What you must do, ultimately, is learning what works for you – not what works for everyone else – what works for you. Part of that is to know your limitations.
Read Top 8 advice for Traders as well.