ACTION!

A – Accept all the possible outcomes

You have to accept all the potential consequences of something before the results are known. Making plans is part of life and, as you have seen, it is also a part of trading. What we can do, as traders, is to build good, clear and simple plans, where each aspect is well defined and followed scrupulously. Regardless of the outcome of a trade, remember that losses are part of trading; you have to accept them serenely while sticking to your plans.

Losses cannot and should not make you change your plan. If you have planned everything correctly, a stop-loss will not cause you problems, and your trading account will not be damaged. So, accept a losing trade serenely.

C – Centre your mind, body and spirit

Before you are a trader, you are a man or a woman. You are a physical, emotional, mental and spiritual being. A wise man once told me: “think of your body as hardware, your mind and spirit as software.” To trade, you need everything to work well. I know traders who pray or meditate before they start trading. Others follow particular diets or practise particular breathing exercises. You saw this outlined in a previous post.

When you trade, everything in you has to work correctly: your body needs to be healthy and fit, your mind free of thoughts and worries, and your spirit needs to be in harmony with what you are doing. Otherwise, you will not be in the ideal conditions to trade, which will almost certainly cause you to make some mistakes.

T – Trust your plan, work your plan

As you have seen, in trading it is vital to have a plan that has clear and simple rules. A plan to follow without exception. A plan to believe in firmly, even though it sometimes leads to a loss. Your “job” is to follow your plan to the letter because your plan is the secret to your success.

It is essential in every field of life to be organised, and trading is no exception. “Plan your work, work your plan” is an old saying, in use since at least the 1880s, and these were also the encouraging words of a professor in the department of accountancy at Miami University in Oxford, Ohio, in the 1970s.

I – Improve, improve, improve

George Santayana, a Spanish philosopher, essayist, poet and novelist, once said: “Even the wisest mind has something yet to learn.” Regardless of how much experience you have or how large your knowledge base may be, in trading (as in life) there will always be room for improvement and growth.

The saying “once you stop learning, you start dying” is often attributed to Albert Einstein. Here comes the concept of humility. Success can lead to the sin of presumption; rather, you should analyse it, and have the ability and will to keep growing and evolving into an ever more complete and prepared trader.

O – Only trade what you see

Another concept you saw in the previous post: you have to have the capacity to trade only on what you see in a chart (or what is suggested to you by fundamental analysis).

Look at each trade objectively. Do not “marry” your opinions, but learn to recognise the difference between what you see, what you feel and what you think. Then, throw away what you think, and do not consider the comments and opinions of others when you make a decision.

Do not distort reality: do not listen only to what you want to hear or look only at what you want to see, but always be objective and honest with yourself (and the market).

N – Never think about a trade after it is over

Once you have completed a trade, it is over. You have to forget it and move on. Worrying, having regrets, or holding onto stress and nervousness is useless. Once you can no longer do anything about it, you have to focus on your next trade. The market does not wait for you.

What you have to do is, after finishing the day, re-analyse the trade to see whether you have followed the plan correctly and, if not, understand your mistakes.

The six phrases above make up the acronym ACTION. They are a gift that, several years ago, I received from an American trader and dear friend of mine, who has contributed decisively to turning me into the trader I am today.