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20 Habits of Wealthy Traders

  
  Education
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1)      Patient with winners and impatient with losers
2)      Making money is more important than being right
3)      View Tech Analysis as a picture of where traders are lining up to buy and sell
4)      Before they enter every trade they will know profit target or stop exit
5)      Approach trade no.5 with the same conviction as the previous 4 losing trades
6)      Use naked charts
a)      As we mature we begin peeling off indicators
b)      Prices action is key
7)      Comfortable making decisions with incomplete information
8)      Stopped trying to pick tops & bottoms long ago
a)      They make their money in the meat/middle of a trend (wait for confirmation)
b)      A trend is much more likely to continue than it is to reverse
9)      Do not think of the market as expensive or cheap
a)      Ignore whether you think something is overpriced or understand, think price action
10)  Aggressive with trade size when doing well or modest when not
a)      Do more of what is making, less of what is not
11)  Realised that the market will be open tomorrow (more…)

Trading Tactics

  
  Education
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Gerald Loeb

Gerald Loeb was a highly successful trader who wrote the classics “The Battle For Investment Survival” and “The Battle For Stock Market Profits.” Although they’ve been around for as long as I’ve been alive, you may find them helpful in today’s market.

Once in a while I take time to review old handwritten notes I’ve taken from the books I’ve read in the past including from Loeb. These notes often serve as inspiration to my own trading. Even though I’ve read them many times over the years, they always offer a good insight.

Loeb’s Trading Tactics:

  • The market is a battlefield. Make sure you are on the winning side
  • You must trade with the actions of the market and not simply by how you might think the market should trade
  • Knowledge through experience is one trait that separates successful stock market speculators from everyone else
  • To do well in short-term trading, it takes full-time attention and dedication
  • Exploit all new trends quickly and aggressively
  • The best traders are usually psychologists. The worst are usually accountants (more…)

3 Stages of Trading :Simple really but difficult to manage

  
  Education
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Ideal preparation involves commitment to clearly defined rules of engagement.  This is necessary for the developing a sound, consistent pre-trade routine that is suitable for any market environment.  The ideal state of mind for action is feeling confident and remaining focused on the present.  The focused confidence being a direct result of adequate preparation.  If you are prepared then doubt will find no home in your mind or in your charts.  The ideal response to your trade should foster future confidence by building on past successes while learning from mistakes, all within the framework of maintaining a healthy balance between the two.

These three are mutually inclusive.  Without each working together to create the whole, managing your trading success will be difficult. Simple really but difficult to manage.  But once managed very difficult to complicate.

ACTION + RESPONSE = COMPLICATED AS IT CAUSES CONFUSION

PREPARATION + ACTION = COMPLICATED AS IT CAUSES DOUBT

PREPARATION + RESPONSE = NOT POSSIBLE WITHOUT TAKING ACTION

PREPARATION + ACTION + RESPONSE = MANAGEABLE SIMPLICITY

 

Sumo Trading

  
  Education
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The market trades much differently at bottoms than in the middle, and the tops. How to figure where we are is in part disclosed by how the market trades. Entries and trades should be completely different, but its very very hard to switch gears from day to day.

Seems like Sumo trading where one side gets the momo and knocks the other side clean out of the ring till the next match at few moments later.

14 Stages of Trading Psychology

  
  Education

1. OPTIMISM – It all starts with a hunch or a positive outlook leading us to buy a stock.

2. EXCITEMENT – Things start moving our way and we get giddy inside. We start to anticipate and hope that a possible success story is in the making.

3. THRILL – The market continues to be favorable and we just can’t help but start to feel a little “Smart.” At this point we have complete confidence in our trading system.

4. EUPHORIA – This marks the point of maximum financial risk but also maximum financial gain. Our investments turn into quick and easy profits, so we begin to ignore the basic concept of risk. We now start trading anything that we can get our hands on to make a buck.

5. ANXIETY – Oh no – it’s turning around! The markets start to show their first signs of taking your “hard earned” gains back. But having never seen this happen, we still remain ultra greedy and think the long-term trend is higher. (more…)

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