Millionaire Traders

Millionaire Traders

up simply getting stopped out or worse—margined out of their
positions. Ashkan’s point, that it is far easier to go in the direction
of price flow rather than against it, is something that most traders
would be well advised to remember.

Two Losses in a Row and You Should Stop

There are only two reasons why trades get stopped out—either the
trader is not in sync with the market or the market environment
has changed so dramatically that the traders’ analysis is simply
wrong. In either case, taking a break from the market at that point
is usually the best course of action. Ashkan’s rule of turning off
the computer after taking two stops in a row on any given day
would probably save countless dollars of lost capital if most traders
followed it. Typically, the greatest point of vulnerability for any
trader is right after a losing trade. The need to “get it back” is one
of the strongest and most destructive impulses of human nature.
Study the history of any blowup from that of the tiniest of retail
speculators to the phenomenal flame outs of massive hedge funds
such as Long Term Capital Management and you will see that the
ruin is always triggered by the desire to recover losses quickly. This
impulse typically devolves into random, seat of the pants decision
making and ultimately utter destruction of capital. A physical pause
in activity is one of the best ways to avoid the very unpleasant
consequences of “revenge” trading.

Take It Seriously

Often success does not belong to those with biggest talent but
rather to those with the greatest persistence. As with all other
endeavors in life, talent can only take you so far. In the end skill
is a function of effort and experience. Ashkan’s suggestion to take
trading seriously speaks directly to that idea. Many novices regard
trading as either an electronic version of a slot machine looking to
hit a quick and easy payout or some form of passive income stream
like a vending route or a McDonald’s franchise. The reality, of
course, couldn’t be more different. Would any rational person