Ego can be the death of any trader

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You hear this rule repeated frequently, and it makes a lot of sense. If you let your Ego rule your stock trading, you just might end up in a lot of trouble. Ego wants you to believe you can’t be wrong, and truth be told, you can’t hold beliefs like that. If the market turns on you, and you’re down money, it’s the Ego that will tell you to double down and hope for the best. Usually, you’re better off letting the market tell you whether your trade works or not.

Don’t argue with the market. Instead, set stops and let nature take its’ course. If you’re stopped out at 8%, it means you were wrong about the trade, but you were right about protecting your downside. Your Ego should be content to know that you were smart enough to use a stop in the first place. If you don’t have an exit plan on every trade, you might be consumed by an internal dialogue that threatens to undermine all of your decisions.

How can you keep you Ego in check when trading? Plan your trades and trade your plan. If you know what your entry and exit points are, you’re likely to stick to your knitting and finish our your trade without a nasty incident. No one’s telling you to have no Ego at all, but just make sure to put the money first, and your own feelings second. Rule with the head and not the heart.

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