DOW MINI TRADE OF THE DAY

Over the past few centuries, Western cultures have been very good at creating general prosperity for themselves. Historian Niall Ferguson asks: Why the West, and less so the rest? He suggests half a dozen big ideas from Western culture — call them the 6 killer apps — that promote wealth, stability and innovation. And in this new century, he says, these apps are all shareable.

The implementation of that simplicity is extremely difficult.

There are only three simple steps to profitable trading. Yet over 90% fail. Those three steps are:

1.) Finding a strategy that works
2.) Implementing that strategy repeatedly without deviation, modification, or interference.
3.) Repeat step two as many times as possible.

As with most simplicity in life, the major impediment is human nature. In the case of trading, the two emotions fear and greed along with the human psyche’s need to be right are the culprits.

The most difficult realization for a trader is that finding a strategy that works is not the most important or difficult step. They fail before they have begun climbing the learning curve, by getting caught up in the process instead it the implementation. They focus on the quest for the Holy Grail of the Magic Indicator Trading Strategy. There is no such indicator or strategy. There are many methods or strategies that can be developed or purchased that will allow a trader to reach their goals, if only they would implement those stratigies repeatedly without deviation, modification, or interference, then repeat.

When a trader has that epiphany of the simplicity of trading and begins the process toward constant trading profitability, the first emotion that rears its ugly head if they encounter profits is that of greed. The inner voice speaks up. “That is easy, so if that works then if you tweak this or change that, or maybe enter the trade in a little early or later; perhaps exiting the trade earlier or later will get that last extra profit.”

That inner voice of greed must be ignore at all cost. Just as if losses are encountered, the trader must have the self control to ignore the voice of fear supported by the need to be right.

The casinos in Los Vegas know; it’s all about staying power and the static advantage of the long run profit strategy implemented repeatedly without deviation, modification, or interference.

It is boring, however, over and over and over again sure is profitable.