On Your Path to Millionaire Status, You Need to “Stay the Course”

It only takes a short 10-minute drive to reach the busiest intersection in my town. Every town has one. In fact, I’m sure you can picture yours right now.

For me, on one side, there’s a busy shopping center with a gargantuan Acme grocery store and Home Depot, with my favorite pizza shop called Amalfi’s tucked in between. On the other sides, are the main artery into town and a spur that leads to bustling Interstate 95.

Like I said, it’s busy.

It’s also dangerous.

You see, while everyone knows – on some level – that it’s important to follow traffic rules, it’s a long stop light, and no one likes waiting.

That means drivers are constantly zipping through a stale yellow light or trying to sneak by a light that “just turned red.”

Now, for most of my life, when someone ran the red light, nothing much happened – a few horns beep, choice words are yelled, creative hand gestures exchanged – but nothing drastic.

That was, until we had our first major crash – a driver had run a red light, t-boning another car.

Thankfully, no one was injured.

However, the accident left an almost tangible aftertaste with everyone in town. Looking at the intersection now, it’s completely changed. Outside of the newly installed red-light cameras, people tend to treat the intersection with a little more caution every time they pass through.

Now, there’s a reason why I’m telling you this story.

You see, as traders, it can be easy to fall into some of the same bad habits of those time-stressed commuters at my local intersection.

Only instead of traffic discipline – investors struggle to maintain stop-loss discipline.

Thankfully, here at The 10-Minute Millionaire, we have steps we can take to avoid such a fatal accident.

And I’m going to be sharing one of them with you today…

Stop the Loss, Stop the Pain

As 10-Minute Millionaires, we know that each trade is just one piece of a much larger puzzle. Probability is in our favor if we follow the system, but we know that this a probability of a win, not the certainty of one.

That’s why every trade needs a predetermined way out…an exit plan for when you the trade doesn’t go as expected.

That’s what makes stop-loss orders an extremely simple and powerful way to excise emotion, and downsize risk.

Once you’ve decided to use a stop loss, you think it’d be foolproof, right?

Plug in the numbers and you’re off to the races.

If only it were that simple.

From the onset of our journey here at The 10-Minute Millionaire, we’ve told you that the greatest force working against your goals toward reaching millionaire status is yourself.

And managing your risk is no different.

Fact is, it’s okay to be wrong here and there.  In fact, as a 10-Minute Millionaire, you are a realist; you know we’ll be wrong on a certain percentage of trades.  It’s all part of the game.  But you can thrive in that game as long as you have two things working for you:

  • A system that pays off much more than it costs you, over time.
  • A risk-management system that avoids the bet-the-farm investments and keeps the losses you inevitably have at a low level.

The bottom line is, at some point, you will get stopped out of a trade. It happens. And in investing, it happens with a frequency that we know and understand.

But after you’ve lived through a few, even if you know they’re coming, that’s when the doubt kicks in.

After a while, new traders will start asking themselves: “Should the stops moved to a price further away…or maybe not used at all?”

Once that mentality kicks in, you’ll be tempted to adjust your stops – move them down – ultimately veering you away from the predetermined plan the 10-Minute Millionaire system put into place.

Don’t make that mistake.

Because it’s a big one.

It’s one of those costly errors that separates successful 10-Minute Millionaires from the typical market trader.

The reality is that more trading accounts are crushed for lack of stop-loss discipline than any other reason that I’ve seen.

That because, again, our Number 1 human foible – making decisions based on emotion instead of logic – is our single-biggest enemy.

Just setting a stop isn’t enough.

It takes discipline to keep it in place and to keep from succumbing to our emotions.

If you find yourself struggling to be a winner by “keeping your commitments” – maintaining your stops when your trade moves against you – you’ve got plenty of company.

But don’t despair.

After decades in the markets trading and teaching others, I’ve developed many tools and techniques to help traders who have a tendency to ignore their stops.  I’ll share these with you from time-to-time.

And today I’ll share one of those techniques that has helped thousands of traders…

Honor Your Stops Tip- Write Them Down

Writing down your stop loss price might sound like a simple. And it is.

It IS simple. And it IS a solution – and an excellent one at that.

In fact, taking the time to sit down, and write down your stop prices with pen and paper is one of the best tricks in the game.

Research published in periodicals as diverse as Harvard Business Review and Psychology Today is clear that writing down a commitment makes us substantially more likely to keep it as opposed to just make a verbal commitment.

There is something about the combination of the physical act of writing and the visual nature of seeing the numbers on paper that makes the information click in our brains.

My favorite way to do this is keeping a trading log.

Just grab your favorite brand of notebook and write down a few simple column headings: date, symbol, entry price, stop-price and profit target. Don’t make it too complicated.

And don’t take this trick lightly.

This is such a big deal, I’m even going to ask you to go a step further and demonstrate your personal commitment to keep your stop.

Sign your initials for each trade entry. Now you’re adding extra incentive – to keep the contract you just made with yourself.

The bottom line here is: the ultimate key to success – the strategy that the best traders utilize – is to learn to remove emotion from the equation and accept that the occasional losing trade is just part of the game.

Great traders are the masters of the fine art of “framing” a trade, including setting and keep your stops.

And they accept those occasional losses with no second-guessing or personal recriminations.

I can put this in very simple language.  Until you can set and keep your stops every time nothing else I can teach you will help.

It’s that fundamental. It’s that important.

Keep your losses small and let your winners grow and you will make money.

Lots of money.

In fact, you’ll make a fortune.

And we’ll do it here together at The 10-Minute Millionaire.

Great trading,

D.R. Barton, Jr.

12 Responses to “On Your Path to Millionaire Status, You Need to “Stay the Course””

  1. i can not use a sheet of paper as i use a trailing stop loss so i would have to erase and write everyday. i have my own program that calculates the TSL and i run it after the market closes. my problem is i have a hard time to follow it.

  2. Could you publish the current 10 minute Millionaire portfolio with the info you have indicated we should keep so that I can update my list? I am sure I do not have all of the trades in place since I came in late to the program.

  3. You hit the nail on the head; setting and keeping one’s stop-loss is the hardest lesson for traders to learn. However, I would say that the successful traders are the ones that have learned this valuable lesson. Thanks, D.R.

  4. Patrick Childs

    I agree somewhat. I made 2 costly mistakes in 2013 with stop losses looking back cost me a fortune. I bought tesla in early 2013 I studied the company and bough 4000 shares at 42 and 44 dollars. In a month it jumped to 110. I was estatic. I calculated my stop loss as a risky stock and put a drop loss at 92. In days we fell from 110 to 90 and change my stop loss kicked in and all sold. But the stock bounced back up. In days was 120. I was do I buy back in or take my gains. I stopped. 14 months later stock hit 290. A fortune lost. A gain but a volatile stock tramway differently! Later in 2013 Hillary Kramer made me aware of ICPT. On October I paid 70 for 1500 shares. I put a stop loss at 50 calculating the volatility of these stocks. November came that stop loss kicked in at 49 low! I was off a buck. I took a big 30k loss. I was sick 2 weeks kept my eye off the ball. I liked what the company was doing so I put a buy in late December after the 30 day wash period a buy at 68. The stock was at 70. January 3 came around I look my buy had never kicked in and Lee market the stock was up 100 dollars! Omg I wanted to cry I though a mistake. Nope in 2 days the stock jumped from 72 to 460 and change! I missed a 600k gain on a FDA approval of their liver drug.
    So use them but these some costly mistakes still regret. See tesla at 340 now I was in.so cheap.
    Oh Netflix another late 2013 a stop loss sold 1400 shares then the stock began to rocket months later I missed out on the 900% gain since. I feared seeing the PE like Teslas buying here I could lose a ton. Like Amazon today all at all time highs. I did own Amazon at 190 when living out of the country but like traders do sold early thought this company makes no money but Bezos had a plan. So I’m 50 could have retired with 8 figures. Im drill. Messed with a 7 figure portfolio low 7 but I had the lottery! The end of this sad story. But agree on stop losses overall.

  5. I just started trading; I use Stealth, but also use Velocity. On my very first Stealth trade ERX on 5.26.17 I thought everything was lost when my trade went sideways into the red zone; but then I remembered the stop loss was 60%; in other words, D.R. had the loss in his formula. Today 6.1.17 as I write this it is in the green zone, and with expiration on 6.23.17 I am keeping my eyes on it.

  6. Rusty – stop’s are a must. If you are unsure of how to use them, one of the best ways it to use the education or training section of your trading account. They are great tools. Hope this helps.

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