Planning Your Dive and Diving Your Plan – Trading!

A colleague of mine just returned from a scuba diving trip in
Cozumel, which just happens to be one of my favorite places to
dive. Anyway, she was telling me about an unexpected difficulty
she encountered while swimming around the corral reef down about
85 feet. It wasn't anything serious but her story reminded me of
something my scuba instructor used to say over and over again.
"Plan your dive, and dive your plan".

When you're down about 90 or 100 feet the nitrogen acts on your
body in a way that's not too dissimilar to having one dry
martini on an empty stomach. It's called Nitrogen Narcosis,
Rapture of the Depths, or Martini's Law. So the thing to do is
get your planning done while you have a clear head, (i.e. on the
surface).
And then when you're deep into it, and you're feeling
a bit euphoric, or nervous, you don't have to make any decisions
about 'what' to do. You just follow your plan.

This holds true for trading as well. When you're feeling the
euphoria or nervousness set in, remember to follow your plan.
And, uhm yeah,, also have a plan to follow. Clear heads will
prevail.

Years ago I had the good fortune of talking with a trading guru
for several hours. This individual is world renowned for his
trading saavy and skill. What he elaborated in that
conversation had a tremendous impact on me.
HE said that when
he learned how to trade that his family enforced only one rule
that he had to follow. KNOW WHERE YOU ARE GOING TO GET OUT
BEFORE YOU GET IN. He felt that the problem that most traders
had was that they felt that this simplicity did not apply to
them. I remember sitting and speaking with him and thinking
about my own mistakes, primarily letting hope take over in my
decision making.

Many traders think that crying "UNCLE" on a trade and taking a
loss is unacceptable. Since that conversation I have taken
numerous losses on trades but it's funny how they don't have the
STING that they used to because I PLAN MY DIVE and DIVED MY PLAN.

This is really simple and incredibly workable. Apply it to your
own trading and investing.-Downjonesfully,Harald Anderson
http://www.eOptionsTrader.comHarald Anderson is the founder and Chief Analyst of eOptionsTrader.com a leading online resource of
Options Trading Information. He writes regularly for financial publications on Risk Management and Trading Strategies.

His goal in life is to become the kind of person that his dog already thinks he is. http://www.eOptionsTrader.com.

Harald Anderson