Friday, October 31, 2008

Turning a Loss Into a Lesson - Doug Goeckel / Masters of Excellence

(QQQQ)(DIA)(INDU)(SPY)(SPX)

How To Turn A Loss into A Lesson

Every trade I trade does not equate into a profit. In that same thought, my high probability trades DO allow my profits to outweigh losses. This very simple math is how my trading account began to compound. If anyone tells you that all their trades are profitable, RUN TO THE HILLS! I have read through many Internet sites that have boasted that you can make millions, you will never have losses, do it their way because it is the only way to trade successfully. Now for the big one, they have the one and only secret to the stock market.

We know there is no holy grail. There are however, probabilities and mastery of trading that we CAN focus on. We CAN be profitable. We CAN develop the mind - set of a successful trader. We CAN learn from the market and make the necessary adjustments in our trading structure that will turn a loss into a lesson. The only possible loss is if I do not learn anything from a trade, and I learn from all my trades. So it is impossible for me to lose. That is where I would like to draw attention to this week.

I journal my trades, I write down all the set ups and where and when I take a trade. If the trade does not result in a financial profit, I then look back through the particular trade and I figure out what I need to learn. It can be as simple as that trade did not profit and was in the range of acceptable risk. There was no conclusive reason, but I validate that my risk/reward ratios are accurate. I now take it one step further. I review my trades that did not profit and analyze whether or not there is a theme that runs through all of those particular trades. If I find a particular HPT that is producing a financial loss more than the tested allowable percentage, I invest the time needed in my journal and find the similarities. At that stage of my trade journal analysis, I make the adjustments within the HPT itself. I have learned a valuable lesson, which resulted in a trade adjustment, and now I begin retesting the adjusted HPT until it produces a result of 60% or higher. Turn a loss into a lesson.

One the other hand, if I find that over the weeks I trade a particular High Probability Trade and that those trades result in significant profits on a consistent basis. Reviewing my journal has taught me another valuable lesson.

It is essential that you have a mentor or a teacher to learn from. I have stressed that from day one. It is worth every dollar spent. I have a mentor and I continue to learn. I continue to be supported on an ongoing basis. I also have my trading journal to reference and analyze. My 3 month class can take seasoned traders to a new level. My class can take new traders on a journey of possibilities. If you are interested in taking my class, please feel free to contact me doug@excglobal.com. It is a deep desire of mine to teach believers that there is a way to profit in this market. I trade a market where it does not matter whether or not the overall market is going up or down. I can teach you how to make money even in this market. If you do not take my class, I urge you to find a mentor or a coach that CAN teach you how to be profitable. I would not recommend “going it alone.” Set yourself up for success.

My last bit of advice is Journal, Journal, Journal your trades. It is a vital part of trading.

Best of Success!

Douglas Goeckel

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