Years ago, I got some advice from a fellow trader . He told me to never get married to a trade. Michael Douglas told Charlie Sheen to never get emotional about a stock (in the movie *Wall Street*). Those statements are much more than just pieces of advice picked up along the way. If you don’t remain flexible and stay detached from your trades, you will not become successful in this business.
Basically, what this means is very simple. No matter how strongly you feel about a trade, you need to be willing to give up on it at a moment’s notice. A very common occurrence for a trader is to get caught up in the particular trade they are in and put much more weight on that trade than it deserves.
For instance, I’ve talked to a lot of traders who’ve experienced a common feeling when in a trade. I’ve even experienced it myself, occasionally. You feel as though you have to be right on this particular trade. This causes you to be inflexible about getting out of the trade. Even if the market is showing you signs that it isn’t going to continue in your direction, many traders get so attached to their trades that they cannot be flexible enough to act in their own best interest, which is the only way to be successful.
Many times when this happens, the trader feels as though this is the last trade they’ll ever be in. Inflexibility will kill your trading in a hurry. You see, to be a successful trader you need to be willing to change your mind quickly and easily. You certainly can’t be fighting with yourself back and forth when you’ve got an open position in the market. It will be a disaster.
In the real world, having a large ego can sometimes be helpful. Many people who’ve got large egos and think they are usually right also have the ability to convince others that they are right. This works for many people. Those people with large egos don’t need to be as flexible in the real world. At least they do not have to be flexible with the people they can convince they are right.
But in the trading environment, being inflexible and unwilling to admit you’re wrong will do nothing but drain your trading account dry. Of course, nobody wants to admit that they are wrong. Who wants to be wrong?
I try to think about it a different way. I don’t think about it as being wrong in a losing trade. I decided to shift my thinking and instead of thinking of myself as wrong in a losing trade, I think about it this way: If I don’t get out of this bad trade (that has very little potential), it will eat away at my past and future winning trades. And obviously, I don’t want anything to eat away at my winning trades.
This helps me be more flexible and not afraid to cover my losing trades or trades where the profit is deteriorating. I’ve learned to be flexible in these situations because of how much I want to keep my winning trades intact. The less flexible I am about my bad trades, the more they’ll eat away at my good trades. I’m always trying to protect those winning trades because those trades are the ones that pay my bills each month.
Always remember, the more flexible you can be, the more successful your trading will be. In fact, the amount of money you make trading will be in direct proportion to how flexible you can be. If that is not a reason to learn to be more flexible, I don’t know what one would be.