The Lighthouse Trade - Finding Safety in Trading
Steadfast, serene, immovable, the same, Year after year, through all the silent night Burns on forevermore that quenchless flame, Shines on that inextinguishable light!The Lighthouse- Henry Wadsworth Longfellow
As traders we deal with troubled waters just as a sailor at sea. We at times have smooth sailing when all is well and we enjoy our trading. However there are days when our forex or futures trading can become a treacherous and difficult journey.
I think we all can find inspiration from the lighthouse and what it stands for. It is the bastion of hope and safety. It is the way home, the shelter from the storm. The promise that if you get to me you will be safe and secure. When a sailor leaves port it is the last thing he see's and when he returns it is the first thing that rises from the ocean floor to tell him he has made it home safely.
What is your "lighthouse" trade? That trade that is your safety, the trade that keeps you in the business? You see we all have trades that we like to take, and we also have the trades that we like that are also dangerous to our overall well being as traders. Whether we trade the futures, options or the forex market, we had better know what is our most successful setup. If we don't know then we are sailing blindly and will surely crash upon the rocks so to speak.
If someone was to ask you at this moment what is your most successful setup how would you answer? Would you be able to tell someone what it take for that setup to work successfully? Can you show proof of that via journal entries?
Hopefully you were honest with yourself in your answers to the above questions, because it will tell you a lot about yourself. You see with trading there are many rocks hidden below the surface, and without a proper 'map' which is our journal, we will fail to see the trades that are destroying our journey as a successful trader. Our minds can and do play tricks on us. Sailors would fall into the sea thinking they had seen a Siren or a Mermaid calling to them. Our mind will trick us too. Our mind "see's" things in the market too. For whatever reason we will see certain setup's we view as profitable, yet in the long run they are terrible setup's ones that fail over and over.
Journaling will help us avoid those areas of the market when we get chopped up, when the sea looks smooth but there underlying the surface is treacherous rocks just waiting to steal our profits. We need to clearly identify what is our best trade and TRADE IT! Don't get caught up chasing setup's that do not work or continue to cause drawdowns on our accounts. No set up is perfect, however, if we stick to our "lighthouse" trade will will continue to find success and we will continue to survive.
I have written before a few post that can provide some help regarding staying safe. This issues cannot be forgotten: The need to keep it simple, the need to pay attention to details, and proper risk to reward ratios.
Lets never forget this is a business. Trading IS a business it is not a social event or gambling. If an investor looked at your business what would they see? A well run ship, or a sloppy mess that is doomed for failure. We have a choice, it is up to us. We can treat trading with the respect that is deserves or we can be thrown against the rocks shipwrecked and not able to continue on.
TraderCisco
Feel free to email me: scott@euodootrading.com
