How hard can day trading possibly be? The question I hear often…

The number one problem for most traders, and the reason they cannot get ahead, is that they simply cannot muster the discipline to get out of a trade when they should.

No matter how often I say it, I cannot persuade others to get out in time.

Part of the problem is human nature, and part of the problem is erroneous hype from most sources that traders encounter when first entering this business.

If there is any one key to my own success as a trader, it was that I learned the lesson of “getting out on time” early in my career.

Human nature as a factor displays itself in a complexity of interwoven emotional and physical phenomena. It is not the same for each person, so I cannot simply say that the reason you stay in too long is due to greed. For many, greed certainly plays a big part in not getting out in time, but that would be a purist point of view and it is not practical. Greed mixed with pride would be more like it. Whereas greed cannot be satisfied with small profits – actually it is never satisfied at all with any amount of profits – pride won’t allow you to be wrong about a trade. But is greed mixed with pride enough to describe why traders stay in too long? Not really. Laziness also enters the picture. Some traders are simply not ruthless about taking profits while they are there, or cutting losses when they are there.

O.k., we’ve talked about greed, pride, laziness, and not being ruthless about getting out on time. Now, what about distractions? Some traders are simply too distracted by other things to extract themselves from a trade when they need to.

Of course, then there is industry hype to contend with. You are told to cut your losses and let your profits run. But no one ever tells you quite how to do that.

Almost everyone tells you to use a stop loss, but no one tells you where to put it. No wonder aspiring traders are confused.

There is really only one answer to getting out on time: self-examination.

I found out that not “getting out of the trade on time” was due entirely to who I was and what made me tick.

Back to trading:

When the profits are there, be sure to take at least some of what is available. When you see that you are wrong in the trade, get out. Do not give it time. Do not give it space. Get out, get out, get out – especially if you are trading a 3 lot.

But to do that successfully, you are going to have to find out who you are, who you really and truly are. That is going to require deep introspection.