June 3: Daytrading Is a Thinking Mans Game: WRONG

Most daytraders move from daytrading system to daytrading system, and over time, until they find one that suits them…one that is comfortable to run and tests well over (back-tested, then real) time.

Some daytraders never stop looking for the right daytrading system.

THAT is a problem.

There are many daytrading systems that can generate nice profits over time. To settle on a trading that`s right for you:

First, you have to believe in the process by which the daytrading system generates trades.

Who was Fibonacci, and how did he arrive at his methodology?

Does it make SENSE to YOU?

Maybe you`re a visual sort of person and you are drawn to Candlestick charting. Take the time to understand why the patters mean reversal and not just accept the picture.

Go deep.

Choose a guru that you will need to trust 100%.

If you choose to take your trades from a guru, understand where his or her godliness is coming from.

This can be a dangerous choice in that you are giving up control to another. Choose wisely.

Second, whatever daytrading system you decide to go with, Back-test it.

In today`s modern world of software, there`s no excuse not to run all the back data you can through your daytrading system and see what the results would have been.

Although back-testing is no proof of future performance, at least you can see the logic of your daytrading system at work.

Third, test your daytrading system in the real time.

Take a VERY small amount of risk capital and trade live.

This could be the most valuable phase. Although you won`t have fully-invested emotions tugging at you, you will feel something, and you can learn to control your emotions as you allow your daytrading system to do its` work.

The bottom line to all of this is that if you don`t have TOTAL CONFIDENCE in your daytrading system before you start trading it, you will doubt your daytrading system`s ability to perform with every losing streak.

Thinking about your daytrading system and its` validity while you are trading it will spell doom.

Do all your thinking in the pick a daytrading system stage.

Now, when the daytrading day is over, you should be reviewing your trades…but not your daytrading system.

Did I follow my daytrading system correctly?

Did I weaken in my resolve to follow my daytrading system?

How can I (not my daytrading system) improve?

Nobody is saying that you should be sticking to a daytrading system that is losing in real time.

What I`m saying is you should only judge your daytrading system over the long term…not on a daily or even a weekly basis.

THINK long and hard about what stock or futures or forex speculation is and whether it fits your investment objectives.

THINK about the daytrading system you are choosing and why it`s right for you.

THINK about the results you get from your back-testing and your real-time testing of your daytrading system.

BE A MACHINE (DON`T THINK) when you are trading your daytrading system.

This is why I dedicate myself to the mental training of daytraders.

Unless you can control yourself, you can never control your daytrading system.

And in order to control yourself and your emotions, you have to believe totally in your daytrading system.

Do the work.

Think.

Then don`t think.

By Norman Hallett

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