How to Guarantee Your Success in Trading and in Life

by Darrin Donnelly on July 16, 2013

If you read books about how to achieve your goals in life, you’ve probably come across what is known as “The Success Equation.”

The Success Equation is this: E + R = O

The E stands for Event, the R stands for Response, and the O stands for Outcome.

Event + Response = Outcome

Accepting this equation forces you to take personal responsibility for where you are in life.  It forces you to accept the fact that while you don’t control the events that occur around you, you DO control your responses to those events.  And when you control how you respond to an event, you take control of the outcomes in your life.

The power to control the outcomes in your life guarantees your success (or failure).

Every trader should keep The Success Equation in mind at all times.  Write it down and put it in a place where you’ll see it often.

Nobody can control what the market or a particular stock will do next.  The sooner you accept this fact, the sooner you’ll be on your way to a successful trading career.

What you, as a trader, CAN control is how you react to market events.

If a stock blasts through a buy point, you are in charge of how you respond to that event.  You can buy it, you can pass on it, you can decide how large or small your position size should be, etc.

The same goes for when a stock breaks down.  You can trust your stop and exit the stock to save you from further damage, you can hold onto the stock and rack up further losses while you hope for a rebound, you can buy more of the stock or sell some of the position, etc.

The point is, all traders are working with the same stock market events.  Events that they cannot control.  However, each trader will have vastly different outcomes in their portfolio based on how they responded to those market events.

Losing traders love to blame “the market” or Wall Street “insiders” for their losses.  They blame the event instead of their response to the event.

Winning traders accept full responsibility for their results – both good and bad – because they accept that while they can’t control the events thrown at them by the market, they can control their responses to those events.

Event + Response = Outcome.  Traders have no one to blame but themselves for the outcome of a trade because they have total control over how they respond to market events. 

Stop blaming others for your lack of success in the market and in life.  Take full responsibility and live your life by embracing The Success Equation.


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