Stock Trading - Daddy, Why Arent We Rich?

One Saturday morning, while he was sitting at his computer studying the market, David's 7 year old daughter came up, tugged at his shirt sleeve, and said, "Daddy, why aren't we rich?" He looked his child in the eye, and thought to himself, what a great question - Why aren't we rich?

As she stood there expectantly waiting for an answer, he struggled to come to terms with the realization that, although he had focused his complete attention on trying to create wealth for more than 10 years, he had never actually made any real headway.

He had bought and sold many Stocks and several properties over those years, but had never made any real money.

He looked at his daughter, and asked, 'What makes you think we aren't rich, darling?'

She looked at him and said, 'Because you said that if we were rich, you and mom wouldn't have to go to work any more, and you both still work all the time. You said we could live at the beach and play in the sand every day. I want to know what you are doing about that. When can we go and live at the beach?'

Nothing like a child to cut straight to the heart of the problem - and what was he doing about it?

'We're not rich because daddy made some mistakes,' he finally answered. 'What kind of mistakes, daddy,' she asked. 'Well, I bought some shares that were going down and then didn't sell them soon enough. Then I bought some houses but sold them again.' 'Why?' she asked.

He had to think about that. He had no reason to buy those shares in the first place. He had no reason to hold on to them when they kept going down. He had no reason to sell the properties either. Her logic was flawless - why?

He had to change his strategy.

He owed it to himself and his family to finally get his act together and make some changes - that was the day the pain of not living up to his potential made him sit down and write out his trading plan and his goals...his strategy and rules - his life raft.

He started by writing out his vision - what he wanted his life to look like when he became a successful trader and investor, then worked backwards from there - through the details of how he was going to achieve his dream.

He saw in his mind the 4 bedroom apartment on the beach, the red Ferrari 360 Modena, the plasma screen computer monitor in an office overlooking the surf beach 7 floors below, the family holidays in the Greek islands, the significant donations to worthwhile causes and children's charities.

He visualized all the tremendous benefits of becoming a successful trader.

He realized that he was afraid of losing, and that fear was just too expensive to let it control his life any longer!

He decided that he would no longer accept anything less than full compliance with his trading plan.

He decided that he would take every trade entry signal and follow his trading plan as if his life depended on it.

As if, after each trade was closed out, he had to stand in front of a Panel of his trading Mentors, and explain his actions to them - why he entered where he did, where he placed his stop losses, why he exited when he did.

And if they weren't convinced he followed the rules of successful trading, he would be taken out and shot!

This certainly focused his attention on only trading strong trends - trends where the price bars were trading above their respective moving averages for long trades, or below for short trades, and the Stock price was moving strongly in one direction.

He pretended that if he couldn't justify his trading decisions to his trading Mentors, he was dead...

That was the day he resolved to study his selected group of Stocks, the ones that had a track record of trending strongly, every day. He would then take every trade his system produced, put his stop loss orders in the market as he entered each trade it a place where the trend had to change to take him out of the trade, and he would hold every position until the trend changed.

He would act 'as if' he was a great trader, even though his record up to that point had been less than inspiring...

That innocent question from a child turned out to be the start of David's successful trading career.

He started to trade profitably and consistently for the first time in his life. He thought he was doing well, and indeed he was making money.

He knew from his wealthy mentors that rich people are different; they make rational decisions based on facts, not emotions. They understand the value of money - they respect it as a tool for building a better world. They buy well for logical reasons and hold until there is a valid reason to sell.

Then one day, he closed out a trade, and excitedly told his daughter, 'Daddy made a big profit in the market today darling, come and look and see what I did.'

His daughter came over to the computer and looked at the screen as he excitedly showed her where he had bought a Stock and then sold for a $3000 profit. She looked at him and said, 'But daddy, it's still going up, why did you sell it?'

His smile faded as the power of that question sunk in...why had he sold it? What was he doing getting out of such a strongly trending Stock just to take a profit? What would his trading Mentors say?

She was right...the market was still open, so he bought back in again. He had never been able to bring himself to do that before - he was becoming a great trader!

The rally continued and he kept buying more as it rallied. The trend finally changed, but his profit on that trade, when he eventually got a valid sell signal, was $14500!

His daughter's question 2 weeks earlier was worth over $11000!

That was the last time he ever got out of a trade based on his emotions. His fear of the market was gone - thanks to some simple questions from a 7 year old...

So now, it's your turn. Whenever you are preparing to place a trade, find a small child, even if you have to borrow one, and ask them what the trend is. Then don't trade the other way!

If your trading isn't as great as you know it could be, decide to create a trading plan now that will become your life raft.

Remember, fear is just too expensive.

If you are afraid of losing money, reduce your position size until your fear goes away.

Once you have made a series of small profits, you will be trading with the markets money and you can increase you position size according to your growing confidence and account balance.

If you have a series of losses, reduce your position size again until you get back on the right track. Stick to your trading plan - whether it's the one that Peter outlines for you on the website or something else you have tested by paper trading until you are confident that it works.

Then, just do it!

To Your Trading Success,

Tony Spann and the Team

Stock Trading Review is dedicated to helping you succeed as a trader by sharing with you simple and easy to follow tips and techniques.

Discover more insider secrets and the exact proven strategies to trade stocks profitably: http://www.stocktradingreview.com

Copyright(C)200 5 Stock Trading Review

---

Investing in Trash Company Stocks

Refuse is a serious issue in any society, about as... Read More

Bad News is Good News

For weeks, no, months we have been bombarded with nothing... Read More

How to Short Stocks? How to Make Money when Your Stocks Go Down by Shorting

The stock market can present you with a lot of... Read More

Oil Stocks CHK WLL - What Is Their Worth?

(1) CHK stock price $16.74, NAV $32.5CHK is my favorite... Read More

The Club

Yesterday I received my monthly issue of MONEY magazine. This... Read More

What Can Model Airplanes Teach You About Trading?

I was devastated!I just couldn't believe it. I was 10... Read More

Long Term Financial Vehicles

Investing in long-term financial vehicles give you the most gains... Read More

Precision Money Management

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

Oil Stocks As A Long Term Investment

The demand for world oil is increasing while world reserves... Read More

The Big Bad Bear

The big bad bear is stirring again. So far he... Read More

Discipline

One of the great "secrets" of successful people is discipline... Read More

Online Trading Strategy: Collecting Cash when Stocks Go UP - It PAYS to Know More than Others

When it comes to stock market trading it PAYS to... Read More

No Load Mutual Funds: Investment Hype vs. Investment Help

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

Dont Buy Worldcom! A Guide to Wise Bottom Fishing

Over the past few months, several investment professionals have brought... Read More

Your Job

There are so many kinds of work that needs to... Read More

On Line Stock Trading: Small Cap & Micro Stocks Go Up and Down - How Can You Profit?

Success in small cap & micro cap stock trading like... Read More

3 Components Needed for Beating the Market

Time to look back2004 is over, now we are in... Read More

The Holy Grail (of Investment)

Every year I go to the Money Show in Orlando,... Read More

Where Is The Beef?

Where is the beef? Or maybe it should be where... Read More

Forces that Move Stock Prices

Among the largest forces that affect stock prices are inflation,... Read More

Perfect Storm

Having lived aboard a sailboat for 2 years I was... Read More

Pathways

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

Forecasting the Stock Market

Every day I see in the financial section of newspapers... Read More

Analysts - Do They Really Know The Stock Market?

When you become interested in a stock or mutual fund... Read More

How (NOT) to Buy Mutual Funds

When it comes to mutual funds, there is a lot... Read More

Trading Tips No 8: Picking the Best Stock Market Price

Carefully thinking through your goal as a trader is of... Read More

Dont Lose All Your Money

That sounds like good advice doesn't it? Don't lose all... Read More

Shorting Stocks ? The Basics, Part I of II

What does it mean to short a stock?This means that... Read More

I Love To Lose Money

Well, not really. What I mean is I don't mind... Read More

Never Lose Money

Never lose money in the stock market again. Yeah, I... Read More

KISS Formula

There are formulas for just about everything, but it has... Read More

Attitude Is [Almost] Everything

I often play a little game with myself when I... Read More

Making Outsized Returns in the Stock Market - Using the Dow Theory

The Dow TheoryCharles H. Dow... Read More