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10 Things Traders Confuse with Success

  
  Education
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Many new traders deceive themselves. They celebrate small wins. They look for the magic solution to making money through a fail safe system. They believe a seminar or newsletter will change their life completely. The mistake trading for easy money and coaches and gurus for having that secret recipe for success. Well, there is none, there is simply trading robust methodologies that have an edge, while managing risk, and keeping the right mindset. Trading can be a very fruitful endeavor, but new traders need to quit looking to be given fish and learn to fish for their self. Don’t confuse these 10 things with trading success. New traders need to understand the difference between having a tug on their fishing line and having a boat full of fish.

  1. It is not the winning trading system that determines your trading success but your ability to follow it.
  2. It is not the big wins that make you rich but your ability to keep them and not give them back in losses.
  3. Reading great trading books will not help you unless you read the right ones and really practice their lessons.
  4. Mentors will not help you unless you follow their advice.
  5. All the training to trade will do you know good unless you put it into action in your account.
  6. A great methodology will do you no good if you do not have great risk management.
  7. Small winning trades will not make you profitable if you have big losses.
  8. Capturing bull market trends make no difference if you give back your profits in the next bear market.
  9. A 95% win rate does you no good if your 5% of trades that are losses are bigger than the 95% that are winners.
  10. Participating in social media does traders no good if they follow the wrong people and are in the wrong trading groups.

To Trade or Not to Trade

  
  Education
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in trading activity alone does not make money, the right activity at the right time is what makes money. Many times the right thing, is to do nothing.

In your actual trading you have to do four things very well to make money.

You have to know when to get in.

Only enter trades that have the highest probability of success and the best risk/reward ratio. Buy the best monster stocks during up trends. Short the fallen leaders when the game changes and they are under the 50 day. Buy the monster stocks at the gift of the 200 day moving average. Short down trending junk stocks. Go where the trends are.

You have to know when to get out.

When your trade reverses through a key support get out. When the market trend changes get out of your long positions. When your stop loss is hit, get out. When the stock reverses and hits your trailing stop, get out.

You have to know when to stay in. (more…)

The Legendary Turtle Traders

  
  Education
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Have you ever heard of the legendary Turtle traders? Millionaire trader Richard Dennis set off to find out if traders were just born to trade, or if they could be trained to be successful in the markets from scratch. The answer? If they could follow rules they could be successful.

“I always say that you could publish my trading rules in the newspaper and no one would follow them. The key is consistency and discipline. Almost anybody can make up a list of rules that are 80% as good as what we taught our people. What they couldn’t do is give them the confidence to stick to those rules even when things are going bad.” –Richard Dennis: Founder of the ‘Turtle Traders’ quoted from the book Market Wizards:

The Turtle system proved that the traders that followed the rules went on to be millionaires and to manage money professionally.

Markets – What to buy or sell

  • The Turtles traded all major futures contracts, metals, currencies, and commodities.
  • The turtles traded multiple markets to diversify risk.

Position Sizing – How much to buy or sell

  • Turtle position sizing was based on a markets volatility using the 20 day exponential moving average of the true range.
  • The Turtles were taught to trade in increments of 1% of total account equity,

Entries – When to buy or sell (more…)

Do it once.

  
  Education
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Trading is about proving to yourself you can do things. As you get over these barriers you realize that you were holding yourself back for no reason. This will give you confidence to defeat the next one.

The first step is to recognize it. This is where it is important to see outside yourself. You can do this by writing, taking a break, talking about it, reading about trading, reading something completely opposite of trading, etc.

Here are a list of some of the barriers:

Making twice your goal. (more…)

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