Stock Market Control
In this video, Stuart McPhee talks about the illusion of control when trading the stock markets. We come to trading that we are very comfortable with and that means that you are in the control of things. We come from another walk of life, another profession and we do have a great deal of control. We may be business owners, we can be doctors and we have a huge deal of control of what goes on in this environment. All people have different levels of control. So he says that we have to think about what level of control we have at different points in time.
Our control goes through a wide range. When you land up into a trade, you have huge amount of control. This happens because before entering up in the trade you have absolute control to not take the trade in the first place. Moneys are in the bank, they are not affected, you have absolute control over what happens. When you choose a method to use, you are so focused on it that the method is telling you when to get into trades. This is what the method is designed to do. So he believes that your trading plan is designed to keep you out of trades. The plan is designed to say NO. But it may appear a stock that fits to your plan. So then the plan says YES. So this is why you have absolute control.
The unfortunately reality is that when you choose to go into a trade, all that control that you had just vanished, is gone. You are then at the mercy of whatever the market wants to do. So all the control is completely gone. But still one of the things that you can control is the loses. It is so vital to cut your loses as much as you can. You have a fair amount of control. When the stock goes down, again, you have a huge amount of control to say that is it. What you cannot control as much are the profits. You don't have huge amount of control because you point higher and higher.
So what Stuart McPhee suggests is that when you have large amounts of control you should maximize it and take advantage of it. The two points when you have that is before you enter the trade and when you control the loses. Most people are not taking advantage in these situations. Sometimes, you can get an illusion that you have control over what is going to happen. When you pick a stock, you may feel that this is something you have chosen and therefore you have control over it when really what actually happens is that you cannot control what that particular stock is going to evolve.