"You shouldn’t care about how you got to the current state but rather about what you should do now. A trader who trades differentially because of swings in confidence is focusing on his or her own past rather than on current realities." - Bill Eckhardt.
Key trading rule: Forget how you got here!
Do not let your emotion affect you. If you keep thinking about how you got to your current state, your emotion will affect your decision making. For example, if you are sitting on the paper gain of 10%, you emotion may want to urge you to take profit even though the current market trend is still at your advantage. On the other hand, if you are sitting on a paper loss of 10%, your internal urge is to ask yourself to hold on to it hoping that it will turn around even when the trend clearly tells you that it will continue.
Eckhardt clarified, “What this means is that once an initiation is made, it should not matter at all to subsequent decisions what the initiation price was.”
It is important to make decisions according to what it is now. Now what it was before!
Learning to live in the present is tough. Human memory makes us tend to think of the past and anchoring will occur when we make decision. This is something traders need to get rid of.
Exit is more important than Entry!
Stop worrying only about how you enter a trade. The key is to know at all times when you will exit.
Key trading rule: Forget how you got here!
Do not let your emotion affect you. If you keep thinking about how you got to your current state, your emotion will affect your decision making. For example, if you are sitting on the paper gain of 10%, you emotion may want to urge you to take profit even though the current market trend is still at your advantage. On the other hand, if you are sitting on a paper loss of 10%, your internal urge is to ask yourself to hold on to it hoping that it will turn around even when the trend clearly tells you that it will continue.
Eckhardt clarified, “What this means is that once an initiation is made, it should not matter at all to subsequent decisions what the initiation price was.”
It is important to make decisions according to what it is now. Now what it was before!
Learning to live in the present is tough. Human memory makes us tend to think of the past and anchoring will occur when we make decision. This is something traders need to get rid of.
Exit is more important than Entry!
Stop worrying only about how you enter a trade. The key is to know at all times when you will exit.
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