Regardless of how much a trader thinks they can predict the future, how powerful their confidence is, or how much they believe, no particular trader or investor can dictate the outcome of a market unless they have sufficient capital to push that particular market. Traders have an exceptional disappointment that few other professions have, a shortage of real market influence.
A trader is unable to control:
- Price movements
- How a trade works out
When a trader enters the market, any following price movement is based on market participants’ collective actions not any individual’s own opinions, hopes, and beliefs. While a trader can manage a trade via position size and exit strategies, he can not determine whether his stop loss or profit level is hit. A trader is at the market’s mercy to choose the future of each of their trades.
But sometimes the trader does have some control…
A trader can control:
- When to enter a trade
- The use of a trailing stop if the trade goes their way
- When to hold all cash in the portfolio
- The technical indicators used for signals
- Price targets from which profit will be taken
- What lesson is to be learned from each trade
- Their watchlist and which markets and products they will trade
- The exit strategy and point of invalidation
- Position sizing for every trade
- How emotions are dealt with
You can’t control what price action will be, but you can control what you will do in response to the price action and how each trade plays out. You control how your position size and entry before you’re in the trade. You also control when and how you will exit the trade.
You cannot control the markets, but you can build the discipline to control yourself.
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