Everyone loves to earn profits when trading. After all,
that's the purpose of entering an order and making a
trade. One aspect of being profitable is that it brings
confidence. That's a good thing. When you believe you
understand what you are doing and that you are making
good trades, that gives you the encouragement to
continue doing as you are doing.
The problem arises when the new trader believes that
it's a personal gift and that he/she just has a talent
for making money in the market. Thus, it's easy to get
sloppy, do less research, spend less time making a trade
plan, and in short - abandon or greatly reduce the time
spent on the very items that made the trades successful.
While it is financially rewarding to begin a trading
career with a string of winning trades, I believe it's
not as beneficial as it seems. Most traders would be
better off if they earned some money, but their trades
should include some winners and some losers. The danger
of becoming overconfident and getting careless with
future trading is very real. When the process includes
some wins and some losses, it's far more likely that the
trader is going to make a serious effort to determine
why some trades worked out better than others.
The work ethic is maintained. Research continues. From
my perspective, if you begin trading by making too much
money too quickly, you will come to regret it. Thus, if
you do have the 'good' fortune to begin trading with a
string of successes, try to recognize what went into the
trade decisions and the effort involved. Don't make the
mistake of believing that no one else could have done
what you did.
Mark D Wolfinger
Expiring Monthly: The Option Traders Journal