Planning Your Dive and Diving Your Plan ? Trading!

A colleague of mine just returned from a scuba diving trip in Cozumel, which just happens to be one of my favorite places to dive. Anyway, she was telling me about an unexpected difficulty she encountered while swimming around the corral reef down about 85 feet. It wasn't anything serious but her story reminded me of something my scuba instructor used to say over and over again. "Plan your dive, and dive your plan".

When you're down about 90 or 100 feet the nitrogen acts on your body in a way that's not too dissimilar to having one dry martini on an empty stomach. It's called Nitrogen Narcosis, Rapture of the Depths, or Martini's Law. So the thing to do is get your planning done while you have a clear head, (i.e. on the surface). And then when you're deep into it, and you're feeling a bit euphoric, or nervous, you don't have to make any decisions about 'what' to do. You just follow your plan.

This holds true for trading as well. When you're feeling the euphoria or nervousness set in, remember to follow your plan. And, uhm yeah,, also have a plan to follow. Clear heads will prevail.

Years ago I had the good fortune of talking with a trading guru for several hours. This individual is world renowned for his trading saavy and skill. What he elaborated in that conversation had a tremendous impact on me. HE said that when he learned how to trade that his family enforced only one rule that he had to follow. KNOW WHERE YOU ARE GOING TO GET OUT BEFORE YOU GET IN. He felt that the problem that most traders had was that they felt that this simplicity did not apply to them. I remember sitting and speaking with him and thinking about my own mistakes, primarily letting hope take over in my decision making.

Many traders think that crying "UNCLE" on a trade and taking a loss is unacceptable. Since that conversation I have taken numerous losses on trades but it's funny how they don't have the STING that they used to because I PLAN MY DIVE and DIVED MY PLAN.

This is really simple and incredibly workable. Apply it to your own trading and investing.

-Downjonesfully,

Harald Anderson
http://www.eOptionsTrader.com

Harald Anderson is the founder and Chief Analyst of eOptionsTrader.com a leading online resource of Options Trading Information. He writes regularly for financial publications on Risk Management and Trading Strategies. His goal in life is to become the kind of person that his dog already thinks he is. http://www.eOptionsTrader.com.

---

Invest, Be Wrong, and Make Money in the Stock Market

I have been trading for several decades and was an... Read More

Duck

Duck! No I don't mean a quack, quack. I meant... Read More

Look Out The Window

Quick, look out the window. It's raining. No, the sun's... Read More

Whos Calling?

Its dinnertime and the phone rings. It's Joe Noname with... Read More

What is a Mutual Fund?

Ever wondered what is a mutual fund? A mutual fund... Read More

Red, Green, Yellow - or - Stop, Go, Go Very Fast: Which Describes Your Online Trading?

Ever notice how behavior in one area of life can... Read More

Whitewater Stock Market

Ever done any whitewater rafting or canoeing? Long periods of... Read More

Rebalance And Diversify

The stock market has not been very kind to your... Read More

The Shadow

The Shadow knows. There used to be a radio program... Read More

The POWER of a Proven Stock Investment Plan

When you invest in the stock market for ever-increasing cash... Read More

Trading Baskets II: The Crapolio, A Roll of the Dice in the Stock Market

In a previously written article, we expanded the use of... Read More

Intervention

Intervention. Now don't let that big word scare you. The... Read More

Market Timing?

The recent criminal fiasco in the mutual fund industry is... Read More

Precision Money Management

This article describes the model of a natural relationship between... Read More

The Value of Stocks of a Company

The debate rages all over Eastern and Central Europe, in... Read More

Stock and Fund Dividends

When is a dividend not a dividend?The latest thing "conservative"... Read More

Stock Analysis

I receive emails from Morningstar. This company provides statistics and... Read More

Protect Your 401K

Checked your 401K lately? Going back to about a year... Read More

The Golden Goose is Sick

It is finally catching up with them. The brokerage companies... Read More

What is the Most Important Indicator of All?

Most stock market traders have a favorite technical indicator.The one... Read More

Managing Investing and Stock Market Risks

Reduce your investing and stock market risks by:Setting your sights... Read More

Buy and Hold Investment Strategy

"Buy and hold" is one of the most heralded investment... Read More

You Don?t HAVE To Be Trading

As a novice trader, you'll often feel the need to... Read More

The Exclusive Club of Large Caps

Picture one of those clubs where only the real heavyweights... Read More

Pathways

During our travel down life's path we come to many... Read More

Are You A Stockaholic?

Today's society gives special recognition to alcoholics, sexaholics, binge-aholics, shopaholics,... Read More

Buying New Issues

Has your broker been calling you recently with the "great... Read More

Gold Fever

Right now there doesn't seem to be any "gold fever".... Read More

Gurgle Gurgle

Caught in a whirlpool and being sucked under. No life... Read More

The Skinny on Mutual Fund Investing

Mutual fund investing is a lot like Thai cooking. Everyone... Read More

Lifestyle Funds Provide Greater Security?

With the stock market stubbornly refusing to settle down and... Read More

No Load Mutual Funds: Investment Hype vs. Investment Help

With the internet such a huge part of our daily... Read More

Money, Insanity and Wall Street

Money: the most charged word in the planet. It means... Read More