Mastering the stock market is more than just studying the technical aspects of trading.
To master markets you first need to master yourself, your own psychology and mindset. Few, if any, will tell you this.
It’s the mindset that you bring to the market which is so important. This aspect of trading often gets overlooked in all the technical books.
After a few mistakes, many traders start to get down on themselves. They then use the market as a vehicle to beat themselves up.
‘Those famous traders from yesteryear were special, but me, I don’t have what it takes to trade markets successfully.’
We’ve all been there.
However, there is another way of viewing setbacks and mistakes. Here’s a little of what legendary trader W.D. Gann had to say on the subject:
‘In getting my experience, I have been broke over 40 times, i.e., I have lost all my money, but there has never been a time yet when I lost my nerve…’
‘I studied very carefully, how I made the mistake and what the cause of the loss was. In this way, I profited by every mistake and loss…’
‘I always figured that I was a better man after each reverse, because I had acquired experience…’
‘Experience is the only school to learn in. Mistakes are all right and hard to avoid. They are good for us, because if we profit by them, they prove valuable…’
‘The man who makes a success and keeps his money is the man who, after years of experience, has profited by his mistakes and schooled himself against his weak points.’
‘With each experience I had, good or bad, I accumulated knowledge, and after all, knowledge is the greatest power of all…’
W.D. Gann, Truth of the Stock Tape
What a relief!
From the man himself, it’s OK to mistakes. It’s how we learn.
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You can read all the books you want about how to fix a car, but at some point you have pop the hood, get your hands dirty — and make some mistakes. That’s when the real learning begins.
Trading markets is emotional; in hindsight it can cause you to do strange things. At some point you have to get to grips with those emotions. This is where all the book learning falls short.
We learn by making mistakes along the way. The faster we learn from those mistakes, the sooner we acquire the knowledge to succeed.
In 2017, don’t be scared to make a mistake!
You have to admire the candour from W.D. Gann, to admit that he went broke over 40 times! This from a man who is regarded by many as the greatest trader of all time. It helps to put our own trading lowlights into some sort of perspective.
Mistakes are really learning experiences, and we all have them. Each learning experience refines your trading technique and gives you new insights into trading markets.
Gann may have gone broke over 40 times, but he never felt like a failure. He never ‘lost his nerve,’ as he puts it. In fact he felt the opposite; he felt that every mistake was leading him to assured success.
Can you see that has absolutely nothing to do with charts? That’s a mindset.
There’s a lesson there for all of us.
This might be the moral of the biblical tale of Daniel in the lion’s den. The story relates that while locked in the lion’s den, Daniel turned his back on the hungry beasts with his vision turned only toward the light. The starved lions were puzzled, and did not attack him.
This psychological drama gives us clues in the art of freeing ourselves from the obstacles.
Most of us, finding ourselves in the lion’s den, would be concerned only with the lions (the mistakes, the losses).
But Gann wasn’t. Like Daniel, he turned his attention away from the lions and focused on being a successful trader.
If W.D. Gann had to go broke over 40 times before ultimately succeeding, then maybe there’s hope for you too, wherever you may be in your trading journey. The lesson is to have realistic expectations.
Many people come to the stock market expecting to make easy money. But markets can be a tough environment, especially if your mindset is not in the right place.
It’s unrealistic not to go through some learning process. If you want to get good at playing the piano, then you need to study and practice every day. Why should the market be any different?
You have to spend a little time in markets to come to some understanding of how markets work.
Like W.D. Gann, you can shut the door on all the setbacks and place your attention on successfully trading markets.
Despite the inevitable learning experiences, never lose the feeling that you are a successful trader.
Not ‘one day I will become a successful trader,’ for that only reinforces the fact you are not. Feel that you are a successful trader, and every learning experience only hastens your success in markets.
It worked for Gann.
It’s not all about charts. In 2017 spend time working on yourself, your mindset. That’s where the real work begins.
Like every year, 2017 will present many opportunities. Money Morning Trader can present some of those opportunities to you. I know you’ll get onboard some. I’m excited by the new year, and I hope you are too.
And as for the learning experiences, well they will come in 2017 guaranteed. Accept them as Gann did, each one a stepping stone to the summit.
And if you haven’t read W.D. Gann’s two in one book Truth of the Stock Tape, and Wall Street Stock Selector, I strongly urge you to do so. Make that your new year’s resolution. There’s more in that book than immediately meets the eye.
Lead Researcher, Cycles, Trends & Forecasts
From the Port Phillip Publishing Library
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