Behavior Modification

John Hopkins

John Hopkins

I made my ChartWatchers debut in the last issue and wanted to reiterate that my focus is on all things, "Beyond Technical Analysis".  In other words, my assumption is that the majority of eyeballs reading my articles are anywhere from somewhat to very skilled in technical analysis. So the good news for you is my article is surrounded by experts in technical analysis who will provide you with tons of information that you can put to good use when trading.

But I'm more concerned with all of the other things you need to concern yourself with when trading. From setting price targets, to stop losses, to proper execution of a trade. And when you go off track on any of these important steps, well it can lead to undesirable results.

If I was able to carve one thing into the minds of all the traders in the world it would be this; you must maintain the highest level of discipline possible when you trade, because without it, you have almost no shot at succeeding. You might get lucky from time to time, but to become truly successful you must be relentless in your pursuit of being disciplined.

Take a quick look at the chart below. Imagine when you entered the trade you set a price target of $80. You hit that price target within two weeks; congratulations! But, you didn't pocket your profits when you hit your price target. Instead, you shifted your thinking, hoping the stock would go even higher, and held onto the stock and the profit evaporated before your very eyes. Happens all the time.

The good news is you CAN change your behavior. It just takes practice. You have to get to the point where it becomes more rote then a decision making process. There is no question that if you hit your price target, you exit the trade. THAT is the type of discipline you need if you really aspire to be successful.

In my daily Market Insights to members of Invested Central, I include a section called, "Behavior Modification." It covers those types of decisions that go "Beyond Technical Analysis." If you would like to see all of the case studies from last week, including how you can change your behavior, just click here and you will be able to see them all.

Committed to helping  you succeed,

John Hopkins
Invested Central