Julia Ellinghausen

You… Your Trade… And The Best Relationship Advice Ever Given

It’s a scene directly out of Sex and the City.

You can picture it now. Sarah Jessica Parker’s character has just suffered another relationship setback. Right on cue, Kim Cattrall’s character offers another pearl of relationship wisdom. ‘Whoever cares less, wins.’

Maybe not the best philosophy for a marriage or long-term relationship. But for a trader who’s evaluating a trade? It’s perfect.

Now, if you’ve never seen the show (or the movie), let’s just say that Kim’s character has a somewhat detached approach to relationships. It kept her (character anyway) from getting too close, and getting hurt when things went south.

The same exact mentality applies to trading…

Breaking up with your trade the second you get filled

Breaking up is hard to do. But the second you enter a trade, that’s exactly what needs to happen. The careful thought, evaluation, moments of second-guessing are all in the past – you’re committed the second you get filled.

Yet for millions of traders, that’s the exact moment when all reason goes out the window. Everything they promised themselves they wouldn’t do – they dive in and do. Decisions get made. Stops get pushed back. Accounts get cleared and lives are changed.

It’s the tale of every blown account out there. You can take a step forward simply by caring less and being able to cut bait.

This is especially the case when dealing with trades that are tied to breaking news of any kind. Being detached from both the news and your potential position is critical if you’re going to accurately evaluate the conditions.

Equally important, only exposing small portions of your capital will help limit your risk, but not necessarily your upside.

In other words: Do the exact opposite of what most day traders and investors do every minute the market is open.

No doubt, there are opportunities that surface every day.

The worst emotional trading roller coaster you can ride

No trade is more emotional than breaking news. You might think that it’s the breaking news that causes all the heartache – but scheduled news events wreak just as much havoc on blood pressure levels around the world.

This is because traders enter their trades with a preconceived notion of what’s about to happen. The worst trade formula ever known on earth. Making matters even worse? The talking heads on TV do nothing but egg you on.

The recipe for total heartbreak and a cleared account. Trading during a live news event with the belief that you know what’s about to happen.

The recipe for total heartbreak and a cleared account. Trading during a live news event with the belief that you know what’s about to happen.

Before you know it – you’re entering a trade full of conviction and emotion. Completely blind to the risk that you’re taking. Completely unequipped to manage the trade – regardless if it goes in your direction or against you.

The key is knowing where to start.

Tearing a page out of an institutional trader’s diary

With the thousands of breaking stories, announcements, tweets (and tweets about tweets), it can be impossible to know where to start. Adding to this is the urgent stress that comes with every screaming headline, that makes you feel like you need to act immediately.

Under those circumstances, it’s hard to see how anyone would make a profit.

Institutional traders understand this. They’ve been trained to tune out the noise. They could CARE LESS what the headline is. They’re looking for very specific headlines that meet their breaking news strategy criteria.

Once they find the right news event, they zero in on the market conditions they need to profit. These conditions are created by the market’s reaction to the news. This allows them to MAKE MORE.

Imagine an armored truck filled with cash racing towards a cliff. You can either try to catch it and head over the cliff with it… Or you can simply wait at the bottom and scoop up the cash after the crash.

One approach is emotionally-driven – and causes you to chase the market. The other is a cold, calculated response to just another event. Take a look over the cliff. Those guys scooping up the cash? They’re institutional traders.

Here’s the good news. You don’t have to be an institution or a hedge fund to profit. The conditions they’re looking for are as easy to spot as an armored truck heading over a cliff.

You just need to care less. Start detaching yourself from your trades a bit more and you’ll find the freedom you need to succeed!

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