Have many traders actually thought about how much control they have of their trading? Trading is decision making based on various conditions that lead to the range of emotions that humans can experience from exultation to despair.
You could argue that there are various parts of a trading plan which are easy to control however just as many that are quite difficult if not impossible to control.
The point at which where we can exercise the most control is at the point of trade entry. It is here where we can measure the various tools and indicators that we use in our analysis and decide whether or not to enter the trade.
It is here where we have the maximum control in being able to not enter the market because the conditions are not right based on our trading plan. Consequently, you could suggest that trade entry is an easy part of trading as we have maximum control, and can decide to do as we want.
For those who have extensive entry lists that they check off as they evaluate a potential trade, they would exercise more control than those who have very simple entry criteria. They would be more selective and if the market didn’t present the exact conditions that they wanted, they simply would not trade.
The situation changes completely when the trade is entered however. As soon as the trade is entered, countless possibilities arise and most of which cannot be controlled.
This is an interesting situation that confronts all traders.
Even though you may have exercised great control in deciding to enter a trade or not, you now have lost a great deal of control in what happens. Individual traders simply just can’t control what happens in the market.
A trader must now be prepared to react to whatever the market does. The market does not care that you exist nor does it care that you have a trade open. It is the market that is now in control.
The market can do whatever it wants and these possibilities are endless. Your security could halve in price, all the volume may dry up, it could reverse on you, gap down, or more frustratingly, move nowhere and establish a sideways trading range the day you enter.
When you are faced with a losing trade, you have a fair amount of control. You could follow the time tested trading rule of cutting your losses and just exit the trade. You can generally control how much you will lose in a trade should it not move in your anticipated direction.
Interestingly, the same cannot be said for profits. Although you can generally control the size of your losses, you really have little control over the size of your profits. Should you have a $1000 profit, you have no control over whether it becomes a $2000 profit. You do however have control over protecting profits.
Within your trading plan, there are components that you have control over and those which you have little or none. It is important that you maximize the control that you do have to your advantage.