Risk Control Guidelines, Handling Losses, Discipline  

Posted by Book Eater

1.) All it takes is a moment of emotional frenzy.

2.) He lost money, so no matter what happened later, he was wrong.

3.) The single most common cause of failure is the inability to cope with internal conflicts.


4.) Many fail to recognize the limits and tolerance for risk resulting in loss of equity.

5.) Success in trading requires more than just a comprehensive study of technical and fundamental analysis; it requires the careful orchestration of risk management, discipline, and patience, and keeping tight control of the emotions of greed and fear.

6.) Risk is present in our willingness to accept mistakes and failure, with the intent of moving forward toward the possibility of success.

7.) The qualities that make up a good gambler are also evident in a good trader. They are always in control of their emotions.

8.) Successful traders will admit to being wrong and accept a small loss.

9.) But luck is only one outcome of probability, and it plays an inconsequential role in the consistent success of a trader.

10.) The discipline in controlling risk is not to wager more than you can afford to lose.

11.) If you’re a day trader, using intraday dollar cost averaging in a market that is running against you is like piling on more pillows in front of a locomotive. You will still get run over and you will lose more money.

12.) Set stop losses and higher stops as the position goes in your favor.

13.) Once the position is in your favor, reduce the risk by locking in part of the profit early, and letting the rest of your winning position run. (Should have sold half of positions awhile ago...)

14.) Trading is a profession based on consistency, preservation of capital and equity building.

15.) If you have difficulty taking small losses, the inevitable end would be the pain of large losses.

16.) A string of losses can cause serious damage not only to a trader’s account, but perhaps more importantly to a trader’s confidence- your ability to believe in yourself. You will become a prisoner of your own trades.

17.) The hallmark of a successful trader is his ability to accumulate equity. – Dr. Alexander Elder

18.) Doubling down? All this will do is increase the risk in a losing trade and perpetuate the destruction.

19.) Take the losses, swallow your pride and come back to trade another day.

20.) The endeavors of most novice traders to succeed are cut short by their inability to sustain longevity and preserve their capital.

21.) f(objectivity)= discipline

Discipline and Objectivity

22.) Discipline goes beyond the basic interpretation of rules of conduct.

23.) Discipline is the ability to maintain self control and to exercise the management of risk.

24.) Discipline requires commitment, motivation and the willingness to struggle in the pursuit of your goals.

25.) Discipline is NOT AN INNATE QUALITY. It can be cultivated.

26.) The market is not your foe, you are.

27.) Get educated before you trade.

28.) If discipline does not make you take losses, then the depletion of your capital will.

29.) Being wrong is not a measure of failure.

30.) Refusing to admit to yourself when you are wrong and eventually being forced out of the game is what constitutes failure.

31.) All the profitable traders had confidence in their ability to trade.

32.) The market will always be there.

33.) Confidence was restored because he focused on his trading ability and reduced his concerns about losing money. He saved not only his career, but also his sanity.

34.) Risk capital should be money that can be lost without destroying your life.

35.) When you consider yourself ready, do not hesitate.

36.) Fear of losing money destroyed his confidence and potential.

37.) Needing to make money soon is equivalent to hoping for it.

38.) In the stock market, there is no room to hope, only room to act.

39.) Too much movement in and out of trades can lead to overtrading.

“A person with good self-discipline but a poor trading method will outperform a person with poor self-discipline but the best trading method currently available.”

41.) Must have his best interest in mind and not allow all of that profit to evaporate, even if that means missing out on the big winner.

42.) They are all very goal-oriented.


1) Your goal must be realistic.

2) Your goal must be attainable.

3) Your goal must be measurable.

43.) “Just as important as setting specific goals, you must visualize yourself successfully reaching those goals each and everyday. If you can’t see yourself in your mind’s eye as a success, there is no chance you will become successful. It just won’t happen!”

44.) Just like anything, you’ll want to start small and slowly make your goal larger.

45.) One of the lessons he teaches his students is to make $250 a day for 20 straight days in a row.

46.) Once they reach the attainable goal, they can strive to have a somewhat larger goal.

47.) If you’re going to be a successful trader, either on or off-the-floor, you will have to learn to love taking a loss.

48.) What that means is it does not bother you to have a losing trade. Don’t get me wrong, you’re not going to be happy to have a losing trade, but you should be happy to be out of the market when the trade no longer represents a profitable opportunity.

49.) Successful traders confront the possibility of being wrong, and thus, when the time comes to take a loss, they do it without hesitation.

50.) “Your losing trades do not diminish you as a person. You are not your losing trades. You are also not winning your trades either. They are simply by-products of the business that you’re in.”

Mark Douglas, author of The Disciplined Trader states, “Execute your losing trades immediately upon perception that they exist. When losses are predefined and executed without hesitation, there is nothing to consider, weigh, or judge and consequently nothing to tempt yourself with. There will be no threat of allowing yourself the possibility of ultimate disaster. If you find yourself considering, weighing, or judging, then you are either not predefining what a loss is or you are not executing them immediately upon perception, in which case, if you don’t and it turns out to be profitable, you are reinforcing an inappropriate behavior that will inevitably lead to disaster. Or, if you don’t and the loss worsens, you will create a negative cycle of pain, that once started will be difficult to stop.”

“Just because the market gave you $1000 in profit in 2 minutes, it has nothing whatsoever to do with whether the market is going to continue in the same direction. Nothing whatsoever!!!”

Instead of being so sure that the market must do what you think it should do (continuing in your direction), you must be prepared that it can do anything.

If you don’t remain flexible and stay detached from your trades, you will not become successful in this business.

You see, to be a successful trader you need to be willing to change your mind quickly and easily. You certainly can’t be fighting with yourself back and forth when you’ve got an open position in the market.

“If I don’t get out of this bad trade (that has very little potential), it will eat away at my past and future winning trades. And obviously, I don’t want anything to eat away at my winning trades.”

Avoid at all costs getting caught in that trap. Doing a trade because you’re afraid of missing out on a big move is not acting in your best interest.

Again, the market doesn’t stop moving. If you weren’t able to get into the previous opportunity, look for the next one. Don’t let your mind play tricks on you.

You don’t need to buy the low and sell the high to make money in this business.

What flawless execution means is acting on an opportunity (either getting in or out of a trade) the moment you see that it’s an opportunity without hesitation.

You can’t be a risk taker and still get guaranteed outcomes.


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