1. Always wait for the setup: No Setup-No Trade. 2. THE BEST trades work almost right away. 3. Never take a big loss. If it doesn’t ‘feel’ right. Remove it! 4. Always perfect your craft and sharpen your skills(good traders are constantly learning) 5. Be patient with winning trades: Impatient with trades that fight back. 6. DISCIPLINE is the key to winning at everything! 7. Never get emotionally attached to trades, trading, losses or profits. 8. Always trade with the size that makes you unemotional(emotional trading is the quickest way out of this game). 9. Keeps things simple and do not over-think or over-complicate your trading. LESS IS ALWAYS MORE. 10. Stay humble at all times.
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Archives of “January 2, 2019” day
rssThought For A Day
How To Overcome A Market Bias
DON’T ASSUME THERE IS A RATIONAL REASON BEHIND THE MARKET DIRECTION
Market direction is simply the way the market is moving at any given time during the day, and can change at any moment. Market direction is based on the number of trades that take place at certain prices, no more no less. That is why when you think you have the direction called, the markets change and move in a new direction.
When a trader remains focused on what is happening, they remain focused on their own trades without wasting energy trying to understand why. The market will move where the market will move, one thing is for sure, the market does not need to have a rational reason why it is moving in a direction. Overcoming the need to rationalize a reason behind a market direction will serve to support a stronger trading plan.
SHOW UP EVERY DAY AND MAKE YOUR TRADING ASSUMPTION BASED ON WHAT YOU ARE SEEING (more…)
The mark of a professional Trader
- It is my fault. I traded this position too large for my account size.
- It is my fault. I didn’t stick to my own risk parameters.
- It is my fault. I allowed my emotions to dictate my day trading.
- It is my fault. I was not disciplined in my trades.
- It is my fault. I knew there was a risk in holding this trade into earnings, and I didn’t fully comprehend them when I took this trade.
Perception vs Reality
“It is often said by experienced investors that the equity market discounts future events. Investors who support that contention believe that if you wait for an event to occur before investing, then you would probably be too late because the investment implications would already have been priced into the particular investment.
The notion that the equity market discounts future events necessarily leads us to the conclusion that the equity market prices stocks based on perception rather than on reality. Future events that are supposedly being discounted have not yet occurred. Therefore, stock price movements reflect investors’ changing perceptions of what will occur, but not what will certainly occur. If the market were able to discount an event with complete certainty, then we would not worry about volatility or risk.”
What enables a trader to exit every trade the same way, with confidence?
- Preparation: If you put yourself in the best possible position and you lose money at least you spent that money wisely. Good things happen to those that are prepared because 90% of people do not know how to do it or are unwilling.
- Purpose: Acting with purpose. You prepared, you knew the risks, you executed the way you wanted to execute. In cold blooded evaluation you would do it the same with the information you had at the time.
- Protection: Losing the invisible money is how I have seen many people blow up. Invisible money is not locking in profits or losing more than your plan allowed. If you lose what you intended to risk you own the trade, if you lose more the trade owns you.
Your goal as a trader is to always reduce the time it takes to analyze, react, and recover. The best traders do this effortlessly after much thought, experiment, and practice. I lacked confidence because I thought about the wrong things or not at all and I was doing random things all of which made it too costly, emotionally and financially, to practice.
Don't focus on the money
By focusing on the money, you get hooked on the trade that you have placed in. Therefore, you are less likely to be in the zone and really noticing what is happening in the market.
You need to detach yourself from the result of your trade. This does not mean that you don’t care. Of course you do, and that is why you have placed your trade. It means that you are not married to your position. You are free to be in the zone and really notice what is happening versus what you hope and wish to happen.
The Crowd Speaks Technical Analysis
Nice write-up
on the benefits of adding some technical analysis to a rational, fundamental worldview by Anthony Bolton, the recently retired manager of the top-performing Fidelity Special Situations fund. A few excerpts (emphasis mine):
My contention is that if you are trying to predict the mass action of thousands of investors, most of whom are investing on a rational or logical basis, you won’t be able to do this by taking the same logical approach as everyone else. (more…)
Trading-It's as much art as science
Habits of the Wealthiest People
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