{"id":247,"date":"2008-12-10T17:15:59","date_gmt":"2008-12-10T22:15:59","guid":{"rendered":"http:\/\/www.smbtraining.com\/blog\/?p=247"},"modified":"2013-02-05T12:37:40","modified_gmt":"2013-02-05T17:37:40","slug":"catching-yourself-before-disaster-hits","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/catching-yourself-before-disaster-hits","title":{"rendered":"Catching Yourself Before Disaster Hits"},"content":{"rendered":"

I picked up a copy of the new Malcolm Gladwell book Outliers<\/a><\/em> this weekend and read something that caught my attention. Gladwell points out that a typical airline accident involves seven consecutive errors. The errors by themselves rarely have an impact on the overall safety of a flight, yet the combination of them consecutively usually lead to disaster.<\/p>\n

I started to reflect on my trading and those around me and found some striking correlations to how traders get killed. Below is a list of typical mistakes:<\/p>\n

1. Not taking a small loss knowing you were wrong.
\n2. Losing focus and not paying attention to the small details in the level II.
\n3. Trading while on an excited\/frustrated mindset.
\n4. Trading without an edge<\/a>.
\n5. Not waiting patiently for a price\/setup.
\n6. Not cutting your tier size when you are not feeling the market.
\n7. Increasing your size dramatically on a play that is not on your size-up list.
\n8. Trading without a detailed plan<\/a>.<\/p>\n

Most of the mistakes above are costly. But making these mistakes sporadically will not necessarily get you stopped out for the day. Making a couple of them in a row won’t amount to a disastrous loss just yet. But think about what happens when you make three or more in a row. Most likely it will force others in that list to get triggered.<\/p>\n

Think about this for a second. You’re having a so-so day and you’re not feeling the market and yet you continue to trade with your full size. Right away you make another trade that doesn’t work out and you take your loss. In an attempt to make the money you just lost, you impatiently put in another trade and lose again. Then you jump into another stock without a plan and end up with a pretty substantial loss. Anxiety and frustration starts to kick in and now you size up on a position you have no business in and you get smacked once again….and it just keeps getting worse and worse. Does that sound familiar? I know, I’ve been there. It all starts with making a few mistakes in a row and then the momentum kicks in.<\/p>\n

I rarely get stopped out but I do find myself in a hole from time to time. Looking back at my bad days I can clearly see now that it all got started with a mistake that escalated to near disaster. Now that I am a bit more conscious of this, I have created a list of my typical mistakes and keep that sucker right next to me. I have also thought about the most likely causes for these mistakes so that I can work mentally to correct them.<\/p>\n

Hope this helps for those of you looking for ways to avoid those large losing days. Happy trading!<\/p>\n","protected":false},"excerpt":{"rendered":"

I picked up a copy of the new Malcolm Gladwell book Outliers this weekend and read something that caught my attention. Gladwell points out that a typical airline accident involves seven consecutive errors. The errors by themselves rarely have an impact on the overall safety of a flight, yet the combination of them consecutively usually lead to disaster. I started … Read More<\/a><\/p>\n","protected":false},"author":94,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,9],"tags":[197,36,18],"class_list":["post-247","post","type-post","status-publish","format-standard","hentry","category-general-comments-2","category-gilbert_mendez_gmans-blogs","tag-bad-trading-days","tag-gman","tag-smb-capital","no-post-thumbnail"],"yoast_head":"\nCatching Yourself Before Disaster Hits | SMB Training<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.smbtraining.com\/blog\/catching-yourself-before-disaster-hits\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Catching Yourself Before Disaster Hits | SMB Training\" \/>\n<meta property=\"og:description\" content=\"I picked up a copy of the new Malcolm Gladwell book Outliers this weekend and read something that caught my attention. 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