Oscar Wilde once said, "When I was young, I used to think that money was the most important thing. Now that I'm older, I know that it is."
The goal and focus of every short term trader is profits. Entertainment, action, the thrill of victory, even the agony of defeat can be attractive and very enticing lures. But it is the potential to dramatically increase one's wealth that wets the palate and lights the fire of most market players. In short, it is making money that is the driving force behind the desire to trade and invest. But while profitability is, and certainly should be, the primary objective, once a trade is taken, traders must work to forget their profits. Sound confusing?
Constantly monitoring how much a trade is up or down is a destructive activity that has been robbing traders of big profits for years. This process is also referred to as dollar counting. This process, not only increases fear, it promotes moment to moment uncertainty and prevents one from focusing on proper technique. And it is proper technique that ultimately determines how profitable we become. How many times has the fear of giving back a tiny profit knocked you out of a stock just before it went on to score big gains? How many times has the paralyzing effect of a loss prevented you from cutting a stock loose precisely when you should have? Focusing too much on where you are, at the expense of what you're supposed to be doing, leads to knee-jerk reactions and quick responses that lack intelligence and reason. Make sure that your techniques are sound at every step; and if that is done properly the profits will take care of themselves.
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