This loss level is quickly breached and the market claims yet another would be trader. The sad thing about this story is that our Phase 2 trader was so close to success, yet could not bridge the mental gap between technical knowledge, and psychological application. This trader has total confidence in the power of money management, and is willing to take trades that are against the crowd. Stops no longer cause mental anguish, they are seen as a normal part of the trading day. This trader seeks extremes in the market, buying stocks that are selling hard into support levels, and is willing to aggressively bid for shares rather than waiting for perfect confirmation on every trade.
Experience is so important to success.
Having made many of the classic mistakes many times over, the successful trader can now predict where illogical moves are likely to occur as other traders make the classic mental and tactical errors. The successful trader also knows how to filter personal moods and feelings. Being able to identify when you have gotten up on the wrong side of the bed can save you from taking a number of stops, and will really increase your rate of return. The journey to success can be an exciting one with many lessons, and boundless possibilities. Or it can be a depressing struggle, as the market kicks you around until you quit in disgust.