1) Fresh Ideas – I’ve yet to see a very successful trader utilize the common chart patterns and indicator functions on software (oscillators, trendline tools, etc.) as primary sources for trade ideas. Rather, they look at markets in fresh ways, interpreting shifts in supply and demand from the order book or from transacted volume; finding unique relationships among sectors and markets; uncovering historical trading patterns; etc. Looking at markets in creative ways helps provide them with a competitive edge.
2) Solid Execution – If they’re buying, they’re generally waiting for a pullback and taking advantage of weakness; if they’re selling, they patiently wait for a bounce to get a good price. On average, they don’t chase markets up or down, and they pick their price levels for entries and exits. They won’t lift a market offer if they feel there’s a reasonable opportunity to get filled on a bid.
3) Thoughtful Position Sizing – The successful traders aren’t trying to hit home runs, and they don’t double up after a losing period to try to make their money back. They trade smaller when they’re not seeing things well, and they become more aggressive when they see odds in their favor. They take reasonable levels of risk in each position to guard against scenarios in which one large loss can wipe out days worth of profits.
4) Maximizing Profits – The good traders don’t just come up with promising trade ideas; they have the conviction and fortitude to stick with those ideas. Many times, it’s leaving good trades early–not accumulating bad trades–that leads to mediocre trading results. Because successful traders understand their market edge and have demonstrated it through real trading, they have the confidence to let trades ride to their objectives.
5) Controlling Risk – The really fine traders are quick to acknowledge when they’re wrong, so that they can rapidly exit marginal trades and keep their powder dry for future opportunities. They have set amounts of money that they’re willing to risk and lose per day, week, or month and they stick with those limits. This slows them down during periods of poor performance so that they don’t accumulate losses unnecessarily and have time to review markets and figure things out afresh.
6) Self-Improvement – I’m continually impressed at how good traders sustain efforts to work on themselves–even when they’re making money. They realize that they can always get better, and they readily set goals for themselves to guide their development. In a very real sense, each trading day becomes an opportunity for honing skills and developing oneself.
Archives of “January 6, 2019” day
rssNYSE officers in 1937 settled trades each day via “chain gang”, delivering traded securities to brokerage houses
Mistakes
| Another observation on mistakes is that the trader who is right in his analysis 60% of the time and makes mistakes in less than 10% of his trades will make money.The trader who is right in this analysis 80% of the time and makes mistakes 20% of the time will lose . |
Trading Errors When Trend Following
Who really wants to define a loss? Only smart trend followers. Most people think they can postpone a loss. They become investors instead of traders. Many refuse to define a loss. I have seen traders not close a losing trade, after they realized that the trade’s potential is greatly diminished and has gone against them. They want to right. All the way to the poor house. This is a typical trading error when trend following. You need an exact plan when you are trend following. You can not make it up as you are going. This is what losers do. Besides having the exact plan you must believe in it and follow it. Do not think of the money. Think in terms of percentages. Follow your rules and stay in the marathon of trend following. Successful trend following is not about tips or magic indicators. It is about you and how you approach the markets. You must be willing to take losses once it is clear the trade is not working.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts, commodity options or forex can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results. You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.
2 Kinds of Traders -In Which Category Are You ?
Stock Trading Volume
Q: Are significant changes in trading volume still important in your daily scans?
A: Yes, they’re still important and relevant in my view.
While there is both debate and frustration among traders regarding how trading volume is being tracked and reported within the major indexes (rendering some traditional indicators and metrics based on such information less helpful), relative comparative trading volume is still relevant when screening for short-term stock setups.
13 Reasons You Aren't As Successful As You Should Be
Trend Following Gives You the Needed Plan
Click to Enlarge & Read
Ed Seykota On Trading
“Pyramiding instructions appear on dollar bills. Add smaller and smaller amounts on the way up. Keep your eye open at the top.”
“It can be very expensive to try to convince the markets you are right. Markets are fundamentally volatile. No way around it. Your prolem is not in the math. There is no math to get you out of having to experience uncertainty.”
“Here’s the essence of risk management: Risk no more than you can afford to lose, and also risk enough so that a win is meaningful. If there is no such amount, don’t play.”
“To avoid whipsaw losses, stop trading.”
Learn from Rafael Nadal
As I was watching Rafael Nadal put away Novak Djokovich this Monday night to win his first US Open, I couldn’t help but compare the qualities he has leveraged in improving his game to that of an aspiring trader. Nadal has literally willed himself into becoming the best tennis player in the world, amazingly enough, at a time when the best player possibly in history (Federer) is still in his prime. I was at the US Open earlier this week and marveled at how easy Federer positioned himself for each shot, and the best word I could use to describe him is efficient. Nadal however, can be best described as a machine that doesn’t quit. As I broke his game down, I realized that so many of the qualities he possesses have a corollary in the trading world.
- Expand your playbook: When Nadal burst onto the scene, he was a dominant clay court specialist. Despite the incredible success early in his career on clay, his game needed improvement if he wanted to duplicate his success in other venues. He worked very hard to not only improve his serve, but also his net game to the point each of these areas are now pluses, on top of being the top baseliner in the game. He eventually won Wimbledon which is an incredible accomplishment for a player groomed as a baseliner. With the US Open under his belt, he is also one of the few to accomplish a career grand slam. A trader should not get too comfortable with only one setup, as the market will eventually change and render that setup less effective. Traders should constantly look to expand their playbook in order to have options in adapting to the markets. Being great at one play is very important, and should not be minimized, but traders should be willing to stretch themselves in order to improve as a trader.
- Eliminate Mistakes: As I was watching the final set on Monday night, they mentioned that Nadal hadn’t made a single unforced error in the final set yet. I think he ended up with a single error in the last set when it was all said and done. This is flat out ridiculous. Nadal was playing someone who was at the top of their game and slugging it out toe to toe for many 20 plus shot rallies. This is probably one of the biggest reasons he is at the top right now. He doesn’t give away points; he makes the other player earn it. As a trader, you must eliminate needless mistakes. It is hard enough to take money consistently from the markets, let alone if you are struggling with mistakes. Common mistakes could include, trading sub par setups, letting stops slide, or not sizing a position properly. Make sure your trading methodology is clearly defined, and then trade it well.
- Plays every single point: Another amazing quality Nadal has is the unwillingness to give up on a point. I’ve seen Nadal up 40-Love, standing 3 feet behind the baseline when his opponent hits a drop shot. This is a scenario where many players would concede the shot, content to be up 40-15 on the next point. I don’t think I have ever seen Nadal concede the shot. He hustle’s for every ball, which forces his opponents into more errors as they try to hit perfect shots. As a trader, you certainly don’t want to overtrade, but your job as a trader is to take advantage of opportunity when it is presented. You can’t do this if you are not at your desk waiting for each opportunity. Beyond just being there, you must be prepared, whether that entails pouring over charts before the markets open or running through potential market moving news events. It takes a high level of concentration to be able to sit and watch the markets for hours on end, especially when it is dull and lifeless, but all it takes is one single opportunity to make a traders day.
- He is in excellent shape: Nadal may be in the best shape on tour. He slugs away for hours on end, and may hit the most balls overall on tour. If you think about it, his game is predicated on prolonged rallies which he usually wins. You must be in excellent shape in order to withstand 4 or 5 hours matches several times in a 2 week period. While a trader doesn’t have to be in the same physical shape as a world class athlete, being in good shape helps a trader remain balanced through the day and traders should definitely be well rested. One of a traders most important qualities is the ability to stay focused. Remaining focused is much easier when a trader isn’t dealing with ups and downs of a high sugar diet or dealing with only a few hours of sleep. While a trader can certainly deal with being tired once in a while, they will surely have frequent concentration lapses if they are in a constant battle with their diet and rest schedule.
Traders who are not happy with their performance should take a hard look at themselves and ask are they working hard enough. Nadal could have been content to win a few French Opens and hang around long enough in other tournament to get some decent payouts, but he kept working at improving his game. He has managed to become the best player in the world, and is already on his way to becoming one of the all time greats. When someone is this successful, it is never simply from talent alone. The Michael Jordan and Tiger Woods of this world do happen to be talented, but they also outwork their peers and are never satisfied.
Traders should constantly be looking for ways improve their game as the markets are one opponent that is also constantly evolving. It’s also worth noting, that a traders biggest adversary is themselves, much like any athlete who performs in a non team sport. It is not that easy to have lasting success in this field, but the ones who do have certainly adapted by constantly improving themselves.