The Trader's Pendulum. Samuels Jody

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as “a usual way of behaving; something that a person does often in a regular and repeated way.” Force of habit makes us brush our teeth in the morning; it is what makes us crave food at around the same time every day; it is what sends us to bed before the clock strikes midnight.

      If these seem too trivial, what about the habit we developed to exercise three times a week so we keep in shape? What about the one that makes a worker arrive at the office on time to avoid reprimand from his supervisor, and finish his work at 5 p.m. so that he can enjoy some life after work? What about the habit that prompts a business owner to review the accounts and take note of irregularities every evening?

      On a negative note, habits are not always good. Overeating is one of the main causes of obesity; people who are mindless when walking (e.g., busy checking for Facebook or Twitter updates) could become victims of road accidents; those who habitually give up at the first encounter of failure are less likely to succeed in life.

      We are creatures of habit, and our habits shape who we are. I have shown you how Charles allows his good habits to guide him in his trading. But what you have seen is only what he does in one day – what you haven't seen are the habits that he has formed over 15 years, which dictate how he deals with this trading business as a whole and which keep him in good mental and physical shape for peak performance.

      Charles is not the only one who conscientiously forms and maintains habits. All of the highly successful traders do. In my years of association with the high flyers in this industry, I have seen over and over again that they are relentless in cultivating positive habits that will bring them success, and doing away with the negative ones that are in their way.

      Here are the important questions for you to ask as a trader: What are the habits that successful traders have in common? What can I learn from these habits? And how do I model them for my own success?

      You will find the answers in this book. But before we move on, let's take a look at the common pitfalls that most traders, including the experienced ones, fall into.

      Part I

      Introduction

      Introduction: Riding the Trader's Pendulum

      All traders ride on a pendulum every day. Unsuccessful traders ride the pendulum back and forth with no real idea of the pendulum's swing. Successful traders recognize that the pendulum swings and ride it mindfully; as a result, they make better decisions and better trades.

      The Futile Search for the “Perfect System”

      When Peter, one of the clients that I coach, showed me how well versed he had become with his trading skills, I was impressed. Although he was a part-time trader (aspiring to turn trading into his full-time profession), he had gone through the grind to learn about price action, Fibonacci, support and resistance areas, chart patterns, moving averages, and other technical indicators.

      Looking at how he understood price action and maneuvered these technical tools, I saw how good he was at reading his charts. His skills were on par with most professional traders; maybe better. Especially considering how busy he was with his day job, I knew he must have burnt the midnight oil on his evenings and weekends to learn them.

      However, I could not help frowning a little when he asked me, “What techniques am I still lacking? Do you have a better strategy for me?”

      These are typical questions asked by traders. It showed that Peter did not understand what he needed to do to succeed. Or perhaps he was just misguided.

      From my experience, most traders are like Peter. They think trading is all about mastering as many technical skills as possible to apply them to analyze chart price data and make intelligent buy/sell decisions, so they will continuously bring in heaps and heaps of money day after day.

      To them, the key to winning big in trading is landing a powerful technique or strategy that is guaranteed to work. That's why they spare no effort to find tips to improve their technical skills even though they may have all they need to do well. They are keen in trying “hot off the press” software and jumping from one website to another to look for the next life-changing piece of advice.

      In short, they keep looking, looking, looking, in hope to find that “perfect system” that will transform their trading into a business success.

      Unfortunately, this is never going to happen. The search for a fail-safe system in trading will lead them nowhere, because the Holy Grail simply does not exist. Worse, it will trap them in the Technical Trader's Trap (more about this in the following chapters), limit their potential to achieve greater outcomes from their trading career, and even cause them to lose their hard-earned money.

      The Real Transformation Starts within the Trader

      As a professional trader and educator for the past 30 years, I have had the opportunity to closely observe the top performers in the industry. What I've noticed is that although most of them have expert technical skills, technical knowledge alone does not make them high flyers. Learning entrepreneurial skills and cultivating the right habits does.

      These successful traders are Entrepreneurial Traders who treat trading as a serious business, and embrace an entrepreneurial style in running and managing their trading business. Entrepreneurial Traders set goals, plan for their business, constantly review their plans, execute them, and improve themselves. Success can be expected.

      On the other hand, average traders are “technical junkies” who trap themselves in the Technical Trader's Trap, obsessed with feeding on new technical knowledge or trying out new trading systems, at the expense of making a consistent income. How can they move their trading into the passing lane of the highway of success? They don't know or they think they can get there by gathering more information.

      I have a plan that will help Peter transform himself from a “technical junkie” into an Entrepreneurial Trader. My plan has helped many traders that I have coached with their transformation process, and I am confident that it will help Peter, too.

      Most importantly, it will also help YOU.

      How to Benefit from This Book

      The central focus of this book is based on my model of the 10 Habits of Successful Traders. In the following chapters, you will discover the following:

      ● What the 10 common habits of successful traders are. The simplest way to succeed in trading is to learn from the best and model their habits. This book shows you what successful traders are doing, what you're not doing, and what you can learn from their habits.

      ● Why you should practice the 10 common habits. You will find out the benefits of cultivating these habits and how they have helped the top performers to gain financial success, a great sense of achievement, and a well-balanced life.

      ● How to replace your negative habits with positive habits. When you examine the positive habits of successful traders, you might discover your own negative habits that prevent trading success. Find out how you can replace the negative habits with the positive ones.

      The Pendulum Scenarios

      In Chapter 1, I will introduce you to two traders, Stacey and Fred. You will see how they adopt the typical habits and characteristics of an Entrepreneurial Trader and a “technical junkie.” You'll see how they treat their trading businesses differently, and how their mentalities and behaviors affect their trading results.

      The

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