Suri’s Scalp Trading Rule #4
February 12, 2010 2:51 PM

4. Think EXITS all the time.

Chinese Proverb: “If you must play, decide upon three things at the start: the rules of the game, the stakes, and the quitting time.”

Beginner traders focus on Entries and think they can figure-out ‘Exits’ when they are in the trade. When you are in a trade, you have limited focus and your thinking is prone to making errors. A trader who understands and envisions the process of the entire ‘TRADE’ wins more than someone who thinks
of Entries or Exits only. Once again, my favorite quote: A Planned ‘Entry’ leads to a Planned ‘Exit.’ As Dr. Alexander Elder puts it, “Exits separate experts from amateurs.”

Mark your EXITS on your trading chart. If you have no automated way of marking your entries/exits, use your charting software line drawing tools to draw your Exits. Mark Catastrophic exit levels (search for some tools posted by goose on TS Forums) and trade accordingly. One of the other practice is to write your ‘EXIT’ levels on a paper and keep it infront of you. If these EXIT levels are just in your mind, they can be easily manipulated (by your own mind) and you will not execute them until it is too late.

Another note for all beginner traders: Have an EXIT plan for the entire ‘Trading endeavor’ itself. Many brilliant and successful people are drawn in to trading (full-time) thinking that they can coast trading with their experience and success in other areas. Of course Knowledge and experience does help but
Trading (specially short-term Trading/Scalping) is a different animal itself. There may be some over-lap of your experience in other areas to few trading areas, but most make no difference. I have known some of brilliant and very successful people who came to trading and could not believe the amount
of hardwork and time it requires to master. After few years, they all gracefully exited ‘Trading’ for other endeavors. Trading is not just intelligence or how well you know math or how well you can write and test trading software… It is how well you can organize information, how well you can adapt, how well you execute, how well you can manage risk, how well you are disciplined and it is how well you can master your trading techniques.. Those all makes a huge difference to be successful trader. Unfortunately, this process of mastery takes a long time…

I hear people who have been trading for mega years but never really achieved ‘TRADER’ status and still looking for that perfect setup or ‘Holygrail.’ They have NO EXIT plan and may be stuck in the ‘Illusion of Trading Success.’ After few years, most intelligent people who are not so successful in trading will realize that ‘Trading’ may not be for them and cut their losses and move on to their trained areas. There are lot more other areas where people can make
money and earn a great living than ‘TRADING’, with almost guaranteed income. TRADING offers no guarantees.

Trading is very hard and demands you to be at your best every single day. But it is NOT an impossible task. There are many traders who are very successful in their craft with hardwork and experience. Evaluate trading every few years and see if it is still a great choice of career for ‘YOU.’ Have an EXIT Plan for Trading itself: Set an achievable Money/Time based goal (ex:5 Years) to become a great trader. But if you are not able to achieve your goal within that time, move on to other areas of interest and never fall in that [X+1] syndrome… Have an Exit Plan for everything.

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