Stock Trading - Daddy, Why Aren't We Rich?

By Tony Spann

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

(c) 2005 Stock Trading Review - All Rights Reserved.

About the Author: 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/stock-trading.htm

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