Weekly Lessons

Don’t do Anything… minsan

If you don’t know what to do, don’t do anything. How often as a trader have you been tempted to fidget with your position for no good reason? I would bet that if you looked back at some of your trades that did not work out, the answer would be “more often than not.”

This is usually when fear and greed set in and begin making your decisions for you. It is especially important at times like these to resist changing your trade if you do not have a good reason to do so. Anyone who has been trading for any length of time knows that the markets rarely make a straight line to their targets. The markets will usually advance for a few days and then “reset” themselves before most likely continuing in their original direction. It is during these times, when the market pauses, that you must exercise a great deal of discipline and only alter your original trade if you have a good reason to do so. This is very important. Many traders will change their position without having a good reason. The market moves against their position and they begin to panic. With the panic comes a feeling of having to “do something” to make it better.

However, we have a tendency to forget that the markets are beyond our control. We can not do anything to change what the market will do, but we can change our position. Herein lies the problem. In a desperate attempt to fix the trade, without having a good reason to do so, we end up changing something about or original plan which inevitably leads to less than satisfactory results.“If you don’t know what to do, don’t do anything” can prevent you from adjusting yourself right out of your position. I can not begin to tell you the number of times this piece of advice has kept me from losing money.Yes, it can be uncomfortable to watch the market move against you; however unless you have a good reason to change something about your trade, don’t.

The key then is to know what to do. This means understanding your trading system inside and out. You need to have the confidence to know that the decisions you are making are the right ones and that you are not merely making changes because you feel you have to.

Bear in mind that I am not saying that you should never adjust your trade. Far from it! There will be times when this is the correct course of action; however, you have to know what you are doing when you make the change.

Do not change your trade without knowing why. Do not change your trade simply because you feel you have to do something!!

2 Comments

  • canz

    Maraming salamat maam. Matagal na ako sa stocks pero ngayon ko lang na realized ng sobra yung mga mali ko. God bless po sa walang tigil na pagtulong sa amin.

  • IAN

    What a great reminder – this is something for newbies to ponder about. Since the newbie traders (us) have this tendency to keep trading even if we don’t have any idea what we are doing. When we exit at a loss, we fool ourselves by saying “Aaahh, ganun pala yun – sige charge to experience”. Don’t get me wrong, learning from these mistakes is totally fine, it becomes very alarming, when we keep risking our capital entering trades we have no idea how to handle (entry-exit).

    This is one of the benefits of having a place where you can learn for FREE.

    1.) There’s this existing path from where you can begin with (TabulaRasa) – which teaches you the essentials. Enough for you to stay away from entering a trade blindly.
    2.) It tell you what your next steps are (Transition Phase) – which then helps you practice and build a stronger foundation in terms of your trading psychology and proper trade plan execution.
    3.) Which sums up the first 2 points – it trains you to be ready to face the real trading grounds. This is like being equipped with the necessary armors before you face your own battles.

    I know – more than 60K na members naten sa FB group. I just wish those who just recently joined our family, tries their best to back read on these blogs. Because they are very educational.

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