Taking Precautions
Have you ever had one of those days when everything went wrong? Of course you have, everyone has had such a day. Maybe a string of losing trades, a bad dream, in any case, you’re on edge in the morning. When you are on edge and anxious, it seems like everything can start to go wrong. Suddenly, you’re unable to regain your composure and trade in a focused, logical state of mind. At times like these, the only way to recover quickly is to take precautions to prevent a worst case scenario getting the better of you. In his book, “Mastering the Trade: Proven Techniques for Profiting from Intraday and Swing Trading Setups,” John F. Carter shares his office arrangement, and how he takes precautions.
The office consists of multiple computers. One dedicated to emails, instant messaging, and searching the Internet. This computer is more likely to be attacked by viruses and spyware, but since it is not used to execute trades, when it becomes disabled it has no bearing on execution. In addition there is a backup laptop, attached to a dialup modem connection. Should the electricity go out or the broadband Internet connection fail, he still has access to his accounts and price quotes. Mr. Carter represents the trader who is prepared for any circumstance. Should one of his computer systems fail, he has a backup system.
The motto, “be prepared” is tantamount to success, when it comes to trading, . While there are many things that can certainly go wrong, why worry about your computer equipment failing? When you concentrate intensely on how earnings reports, media coverage, or world events may ruin your trading plans, why spend precious time worrying about what you can control interfering with your trading?
The winning trader takes precautions to control the things that can be controlled, he/she therefore has enough mental energy to focus on events that cannot be controlled. What can you control? You can control your energy level by eating right and getting enough sleep. You can control your feelings of anxiety by avoiding caffeine and exercising regularly. And you can avoid serious losses by managing risk.
It may seem obvious, but many traders fail to take precautions. They trade by the seat of their pants and when something goes wrong, they blame it on anything or anyone but themselves. Take responsibility, you can’t control everything. It is however, critical to your survival to control what you can, and accept what you can’t. Taking precautions is a significant way that you can increase your chances of achieving financial success.
