Concentrate on a plan When trading

When trading it is important to concentrate on your plan not your money.  If you have a plan and are following it through the money will come.  

If you concentrate on how much money you are making or losing it will be extremely stressful.  Not only that you will find it more difficult to make money.  You will start to take profits too early as you try to hold onto the profits that you have made.

This is probably the biggest disadvantage to keeping your eye on how much money you are making.  It can cause you to take profits as soon as you have them, especially when you are on a losing streak. 

But taking out profits too early and not letting them run and grow can have a number of disadvantages.  The biggest one is you might not be able to pay for your losses when you are right.  Let’s face it you are going to be wrong when trading.

Everyone makes mistakes or places a bad trade.  The important part is making enough when you are right to be able to (at least) pay for when you are wrong.  If you are consistently taking profits too early and not letting them run you might be involved in a losing game.

Counting your money on the table also will make you not want to exit losing trades in hopes that they will come back.  This only leads to bigger losses and opportunity cost.  Even if the stock does come back and you break even after 5 years, you would have missed hundreds of great opportunities to make your money grow.

On the other hand concentrating on a plan can be great because it lets you find out what you are doing wrong (or right).  It will let you stay into good stocks longer and let you get out of bad stocks faster.  In the long run concentrating on a plan can help you do much better.