Dec 27, 2009

Take the Name out of the Game

Written by Katie Gomez

Why is trading so difficult for so many people? For myself and the millions of others who engage in the market the quest to be a good trader is an elusive one. Countless books could be dedicated to answering this first sentence. To get to the point consider other professions where you can make millions of dollars. In sports for example, you are competing all the time and only the best of the best get to the ranks of professional. It is similar with medicine and other accounting and law. You have to get qualified before you are paid for your services.

In trading that is not the case. If you have capital you can play. That is the lure as well as a pitfall. Something so attractive brings with it all of the psychological baggage that professional traders know all too well. The fear and greed. We are all afraid to lose and at the same time afraid to miss the move.
Unlike in other professions like sports where you specialize in offense or defense, or law where you are a prosecutor or contract specialist in trading people often have no idea what they are or why they are in the trade and simply become swept up by the excitement.
We buy Apple and all of a sudden decide we are an Apple investor. Trading and investing are completely different animals. You have to be able to distance yourself from the affection you feel for any company if you are to be a good trader. There ample opportunities to trade Apple on the long and short side.
So one of the best exercises I can show you in becoming a successful trader is as follows. Next time when you are in a few positions simply shrink the “symbol” column so you cannot see the name of the stock. Don’t trade the name, just trade the money. This is one of the best ways to get yourself into the trading zone.