“Winners do quit all the time, they just quit the right stuff at the right time.” – Seth Godin
Quitting is not always the wrong thing to do. There is a time when you have to decide what you want and go get it, there are times to stop if you hit a dead end on the way to your goals. Also if you are heading in the wrong direction. You don’t stop your journey to your destination but you are flexible with path discovery. People that eventually make it to their goals learn to know the difference, to have a filter, and know when to press harder and when to reverse direction. There is a time to press through temporary pain to achieve long term success and a time to quit wasting your time and energy as you receive diminishing returns for your effort.
Sometimes a marriage can not be saved through counseling it is just not going to work for many reasons, there are times when divorce is the solution as the mistake was made on your wedding day and all other marriage decisions were doomed to failure. Sometimes a restaurant owner has worked 70 hour weeks for three years for the privilege of losing money and they are deeply in debt six figures and still there has been no improvement in cash flow, they are better to go get a job and at least get paid. No matter how much Ford Motor company believed in the Edsel or Chevrolet believed in the Volt they were making a mistake by continuing to produce them.
Cutting losses short is smart in all areas of life because it frees up resources to be used more wisely whether it is time, money, or energy.
Here are ten things that traders should stop doing where perseverance is the wrong thing to do.
- Quit letting trades go through your original stop loss, you were wrong, get out. When you start hoping and stop managing your stops you are opening up the potential for big losses. Your stop has to be placed at the price level that shows you that the entry was invalid.
- Quit over trading, only take the very best entries and trade the very best trading vehicles in your system. You want a great risk/reward ratio or a high probability of winning.
- Quit making up stories about why you decided to hold your position instead of taking your stop when it was hit. Trade your plan.
- Stop trading your opinions and trying to make predictions and start trading what the price action is saying.
- Stop following people in social media that cause you to trade badly and lose money. Find those people that make you a better trader. Look for people that teach process not predictions. Traders that focus on right psychology not ego, and risk management not a get rich quit scheme.
- Stop looking at CNBC for trading and investing advice.
- Stop trading so big that your emotions are more involved in your trades than your mind.
- Disconnect your ego from your trading. You determine your risk size and entry the market chooses whether you win or lose.
- Quit riding an emotional roller coaster, your emotions should stay level when winning and losing. If not trade smaller.
- Quit buying falling knives and shorting up trends too early, wait for confirmation and reversal before entering.
Sometimes in life what you stop is more important than what you start.
