Archives of “January 7, 2019” day

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Surfing and Trading

  
  Education
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– After a lull (chop, quiet market) a new set of waves (setups, breakouts) will appear. Often, the first wave is not the best wave. Don’t get too excited because you see an OK wave (false breakout) after you haven’t seen any good ones at all. Often there is a better one behind it (look for confirmation).

– If you catch a wave ride it as long as you can, until you see yourself heading into shore, rocks, or other people (end of trend).

– Get into position and be ready to go for a wave so you’re ready to take a good setup once it appears. (focus, attention)

– Once you see a wave you want, commit to it to getting on it. Paddle as fast as you can to get enough speed to go with the wave. (have a plan, preparation, confidence with entry, execute with precision)

– Don’t try to catch the wave too early, make sure it has built up enough energy to carry you along (overly eager entries, wait for confirmation)

– Don’t catch the wave too late or else you’ll catch it on the top of the wave and it will throw you down into the seabed (buying tops or selling bottoms)

– Don’t try to surf every wave (over trading), just the ones that look easy to catch and worth the energy required to catch and ride it (capital preservation, high probability trades)

Any other surfers out there have some surfing/trading parallels? – If there’s no waves (setups) be patient and enjoy the water and sun. A setup will come. If not, then it wasn’t meant to be (sit on hands day) or not a good spot (market). Come back tomorrow or find another spot. Don’t try to make something of nothing.

31 Trading Rules

  
  Education
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  1. We are who we are and we start from where we start
  2. Each of us brings unique strengths to the markets
  3. Every morning we agree to play as delighted beginners
  4. Reality Pays. The more our minds model the market, the more in synch we get
  5. We build on our strengths and manage everything else.
  6. The outcome we have is the outcome we want
  7. If what you are doing isn’t working over and over again, re-examine your internal models
  8. Our internal process is more important than anything else because it drives everything else
  9. You have the resources to improve your mental trading game. Coaching just helps find them
  10. We begin our trading practice slowly and build it with flow and grace
  11. Lean into fear. Fear is a primary cause of failure
  12. If you are frustrated with the markets, that means they aren’t following the internal model you have projected on them
  13. We increase the level of our awareness rather than the intensity of trading
  14. As we expand our awareness, our interventions will happen sooner and be more creative and effective
  15. We respect ourselves and celebrate our profits no matter how large
  16. If we can experience a new behavior for a moment, we can experience it for a minute, an hour, a week, a year.
  17. Change happens when we experience a new behavior that is aligned with who we are, feels emotionally satisfying in the moment and takes us to where we want to go
  18. Avoidance is buying pain on credit with interest
  19. If self-criticism made us trade better we would all be rich
  20. We allow the markets to breathe through us
  21. The markets are messy, our information is imperfect, our systems will fail and we can still make money
  22. All trading systems are successful in some markets, all trading systems will eventually fail in all markets
  23. The markets don’t care about you or your position
  24. We seek the practice rather than the result
  25. Learn about yourself with the delight of an anthropologist finding a lost tribe
  26. We make internal maps of the market, but our maps are always distorted
  27. Our negative responses are created by our maps, not the market
  28. By changing our map, we change how we respond to the markets
  29. All our trading errors have an ultimate positive purpose or intention
  30. There is no “failure” just feedback
  31. You have all the resources you need, although some may be out of your awareness

A Lesson on the "As if " Principle

  
  Education
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clip_image002In the 1880s, the psychologist William James developed and began teaching his “As If” principle of life. This might not make any sense to some of you, but it works. For example, if you want to be courageous, try to act courageously. If you want to be a nice guy, start putting a smile on your face and be friendly. If you want to be a great trader, then think like the great traders before us. You cannot be a great trader without first thinking that you are one. You get it?

A person that constantly thinks that he or she will fail in trading, cannot learn how to trade, or just simply has feelings that he or she will “never make it”, will inevitably fail. Think, act, and be like Jesse Livermore, Bernard Baruch, Nicolas Darvas, Gerald Loeb, Richard Wyckoff, William O’Neil, Jim Roppel, Steve Cohen, and many, many others. They play (played) to win and that’s how you should play: play to win. (more…)

Trading is an art

  
  Education
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Once, there were two farmers who lived in the desert.  Both desperately needed to acquire water so they could survive the desert and support their families.  After working together to search the area, they concluded there was water somewhere in the area but they were not sure where.  So, they set out to find a water well. They started digging in similar locations between their properties. After they both dug for several days, the second farmer finally struck water. As soon as this happened, the first farmer could see it from a distance and ran over to the second farmer.  Seeing that he had stuck a huge water well, he asked the farmer, “You and I had the same tools for digging and have been digging in similar locations.  How did you find water and I did not?” 

The second farmer asked him, “How did you dig for water?” 

The first farmer responded, “I went and dug 50 holes 1 foot deep trying to get maximum coverage of my area.  What did you end up doing?” 

The second farmer replies, “Oh!  That is very interesting.  I dug one hole, 50 feet deep.” 

Many traders set out on the path of trading and do exactly what the first farmer did – they dig 50 holes 1 foot deep. If you are going to strike water, gold or oil, you will have to dig one hole, 50 feet deep.  The reason for this is a matter of mastery. To be a master at anything, you have to become so familiar with it, know how it works inside and out to the point you understand every aspect of what you are doing.  (more…)

NINE Trading Quotes For Profitable Traders

  
  Education
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1. Pick a trading methodology. This is a particular way of approaching the markets, based on belief, practice, and study. Some popular methods are: trend following, momentum trading, breakout trading, swing trading, scalping, and day trading. Leave randomness behind and embrace a specific method.

2. Choose a specific timeframe and filter out the noise of extraneous price action. If traders use the daily chart with end of day prices, then they don’t have to watch every price tick, all day long. Traders can make (or lose) money trading weekly, daily, or intraday, but they must focus on their own timeframe.

3. Use a trading system. This gives traders specific entry and exit signals based on their own edge, from back testing price data, chart studies, and chart patterns. This systematic approach can remove the random nature of individual trades, and put them inside a framework.

4. Have a trading plan. This gives traders a blueprint to execute a trading system in real time. It helps them mitigate risk by pre-planning their entries and exits, position sizing, maximum risk exposure, stop losses, trailing stops, and profit targets.

5. Reduce the risk of ruin. Through proper position sizing and the use of stops, traders may limit the size of their losses. Don’t hesitate to exit trades when proven wrong. (more…)

Self Improvement

  
  Education
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self-improvementIf you are having trouble achieving your trading goals, take time out to examine the real causes of your problems. Working towards improvement will take a dedicated approach on your part. Identification of the problems are the first step. Attacking the problems one at a time is the first part of the solution. Doing the right thing at the right time based on the information you have should be your goal. Sit down and have an in depth talk with yourself and ask yourself some hard questions. For example: – do I have the emotional makeup necessary for this business? – do I have the financial reserves so that I am not relying on trading to pay the bills while I learn? – do I really enjoy doing this? Coming up with honest answers will be the only way to ultimately overcome issues that keep getting in your way. If you keep doing the same things, you will keep getting the same results, so you’ll need to change. Plain and simple. Best not to delay in sorting things out.

Waiting for the right moment to enter and exit definitely comes with experience. Correct order execution, taking profits when they are offered and cutting losers are also vital to your success.

My mind is not bogged down by indicators, rumours, conjecture or analyst’ reports. It is much easier for me then to concentrate on what really matters – recognizing what the charts are telling me and acting on this information.
Concentrate on the problems you might have. Hesitation, taking big losers, selling winners to soon, screwing up order entry, racing heart and sweaty palms. (more…)

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