P&L is the only thing that matters.

Profit and Loss is everything. If you are a trader, nothing else matters. It doesn’t matter how many charts or indicators you have, it doesn’t matter how many TV shows you watch or how much you read. It doesn’t matter if you can calculate possibilities all day long.

What are you looking at on your screen? Every time I look at my screen(s) there is one number that always has my attention. That number is my P/L Day, or my Profit and Loss for today. There is a second number right next to it and that is my P/L YTD – or my Profit and Loss Year to Date. If these numbers aren’t increasing, then I want to know about that right away. Nothing else matters.

Everything else is a tool that you use to manage your P/L. It’s easy to accumulate trading tools but difficult to make money. More tools will not equal more profits. In fact, I think for most people, the opposite is true. The more distractions you have, the less money you make. Trading is very simple. You are either right or wrong. If you are right, then you have to resist the temptation to break what isn’t broken. Sometimes, the best thing to do is to wait patiently.

If you are wrong, then your focus has to be on fixing things as soon as possible. Waiting for a position to improve over time just might work but, if you are taking that approach, then you are actually deciding that you can predict the future. Or maybe you are just paralyzed by the loss and afraid to make another decision. This is a natural response — If you made one wrong decision then your mind can easily scare you into thinking that your next decision will also be wrong. Decision making is like playing the piano – the more you do it, the better you get at it. Don’t ever be afraid to make a new decision and move on.

I use a couple of tools and try to avoid being influenced by all the other available tools. I have become good at reading and understanding a certain chart setup so that I can use it profitably. I would rather become an expert at interpreting one presentation than to be a superficial user of 10 different indicators. Keep it simple and focus on P&L – nothing else matters.

Stay optioned, my friend.

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