c18 JWBT016-Busby September 30, 2008 15:3 Printer: TBD
Psychology and Discipline: The Winner’s Edge 181are important, but trading also requires a great deal of discipline and psy-
chological balance. Without discipline, you will trade too much and not
follow any established rules or tested strategies. You will not manage your
money or limit your risk. Being a good trader involves more than knowing
how to trade. It requires carrying out the plan or strategy effectively and
consistently.
In addition to discipline, to be a winning trader you also must have a
psychological edge. You must have confidence in yourself and your abili-
ties, but you must not have too much confidence. Most of us are bit players
on a big stage. Our financial resources are too limited to control the mar-
ket. All we can do is identify how the market is moving and join the move.
Arrogance when dealing with the markets will not put money in the bank.
The biggest emotional dilemma that traders face is balancing greed and
fear. We all want to make money, but being greedy generally results in poor
judgment and losing trades. Fear keeps us out of trades or pushes us into
accepting unnecessary losses. The bottom line is simple: make money, but
do not be greedy. Respect the market, but do not be fearful of it.