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For the most part, it is our firm belief that traders, in a desperate search for the “holy grail,” will unnecessarily grasp at anything that suggests,

‘‘super complexity.” Logarithms, neurological mechanisms, and confusing mathematical trading equations are but a few of the examples of how far we have transgressed away from the basics. Basics such as major trend lines, price support and resistance, volume increases and decreases, major moving averages, core chart patterns, and the like. The western frame of mind, in

particular, assumes that if it isn't complex, it isn't workable. Our view is closer to the exact reverse of this misconception. The clarity of mind and the certainty of action that are born from a simple approach are almost indescribable. And all of our students get a healthy grounding in the basics, and learn the value of ceaselessly revisiting them. Decide today that you will become a master of the basics, and you'll quickly understand that simplicity is the mother of clarity.

If you answer yes to any of the following questions, your trading approach may be too complex: 1. Will your trading tactics and techniques thoroughly confuse an intelligent 12-year old?

2. Does your approach call for mathematical calculations? 3. Do you need a calculator to trade?

4. Are more than three pieces of software required to come up with your trades? 5. Will it take more than 5 minutes to write out your trading strategy on paper?

These are only a few questions that point to overcomplexity. Make sure you keep it simple. LAW #6: LEARN FROM THY LOSSES

The path that leads to market mastery is a journey fraught with countless perils. The danger, the loss, the trials and tribulations that an aspiring trader must endure, are enough to break the backs and crater the souls of most individuals who dare to trek its course. It is a shame that so many are quick to assume that an individual, who has mastered his craft and commands the markets with incredible acumen, has accidentally stumbled upon his gift by some innate tendency or natural endowment. This is far from the truth. Pain. Loss. Frustration. Confusion. Uncertainty. Inconsistency. These are but a few of the states and circumstances that provide the education necessary to reach the desired heights of greatness. Each trader who enjoys a certain level of success today is guaranteed to

have suffered through the pain and agony of being a loser yesterday. We, as human beings, simply do not learn from our successes, but rather from our failures and shortcomings. We, as adults, know that fire should not be touched because, at one time in our childhoods, we got

burned. So it is with trading. We learn how to win only after we learn all the ways to lose So my question to you is this. What are you doing with your market failures? Are they wasted, ignored, left to fester and grow more potent as time goes on? Or are they serving as valuable examples of what not to do in the future? Within our losses lies the secret to the success that we are looking for. We must lose first, then use those losses as a springboard to winning. Remember, we leap forward by great distances only after first stepping backward. In other words, we step back, then leap forward. That is the law of nature. That is the blueprint of success. And that, my friends, is the way to trading mastery. Without stepping back first, our attempt to leap forward will be feeble and weak. So do not moan and whine when you experience a losing trade. On the

contrary, you should rejoice. For that loss, dealt with properly, is a wonderful angelic guide that has the potential to lead you to a winning future.

SEED OF WISDOM

One of the most valuable tools available to a trader is not some fancy market indicator or some sexy trading technique, but a simple, yet effective diary of losing trades. I have found that

keeping a log of all my losses makes it easier for me to spot trends and recurring mistakes and errors. For instance, after reviewing a string of five losses, one might discover that a late entry was made on four of them. That valuable discovery, if dealt with properly, holds the key to dramatically improving one's winning percentage. At that point the trader would focus his or her attention on entering sooner or refraining from chasing the desired stock too far. I recall making an interesting discovery years ago, after using my log to review all my losses made the prior year. After a careful review, I found that 78 percent of my losing trades were in stocks that cost between $8 and $15 per share. I remember that day like it was yesterday. It was an amazing discovery that I'm sure I would have missed without the use of my log. Clearly, that review revealed the simple fact that if I had stayed away from stocks in the lower-price ranges, my performance would have at least doubled. So many incredible things can be derived from a careful review of one's failures. A daily diary of these failures tells a lot about who, what, and where we are. Used with dates, it can also tell us where we are going, and if we are going anywhere at all. I wouldn't leave

home without it. Heck, I wouldn't even be at home without it. My 5-year-old daughter learned how to walk by falling. Now she's running. This 33-year-old trader and author learned how to trade by first losing. Now I'm teaching traders all over the world how to win in the markets just like I do. Winning takes care of itself. Just learn the art of losing properly, and your dreams may justbecome your reality.