ACTION!

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, they are also a part of trading. What we can do, as traders, is to build good, clear and simple plans, where each aspect is well-groomed and followed through scrupulously. Regardless of the outcome of a trade, remember that kisses are part of trading; you have to accept them serenely whilst 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.

Centre your mind, body and spirit. Before you are a trader you are a man or a woman. You are physical, emotional, mental and spiritual beings. Once a wise man 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 practice 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 devoid 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.

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 always believe, 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” are the encouraging words of a professor in the department of accountancy at Miami University in Oxford, Ohio, in the 1970s.

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 may have. As large as your knowledge base may be, in trading (as in life) there will always be room for improvement and growth.

Albert Einstein once said, “once you stop learning, you start dying.” Here comes the concept of humility. Successes, which is the sin of presumption, rather, you should analyse have the ability and will to keep growing and evolving into an ever more complete and prepared trader.

Only trade what you see. Another concept you saw in the previous post: you have not o have the capacity to only trade based 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 made a decision.

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

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 operation to see whether you have followed the plan correctly and, if not, understand your mistakes.

The above six phrases 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.