Why Intelligent People Traders Fail

 1. Lack of motivationA talent is irrelevant if a person is not motivated to use it. Motivation may be external (for example, social approval) or internal (satisfaction from a job well-done, for instance). External sources tend to be transient, while internal sources tend to produce more consistent performance.

 2. Lack of impulse controlHabitual impulsiveness gets in the way of optimal performance. Some people do not bring their full intellectual resources to bear on a problem but go with the first solution that pops into their heads.

 3. Lack of perseverance and perseverationSome people give up too easily, while others are unable to stop even when the quest will clearly be fruitless.

 4. Using the wrong abilities. People may not be using the right abilities for the tasks in which they are engaged.

 5. Inability to translate thought into action. Some people seem buried in thought. They have good ideas but rarely seem able to do anything about them.

 6. Lack of product orientation. Some people seem more concerned about the process than the result of activity.

 7. Inability to complete tasks. For some people nothing ever draws to a close. Perhaps it’s fear of what they would do next or fear of becoming hopelessly enmeshed in detail.

 8. Failure to initiate. Still others are unwilling or unable to initiate a project. It may be indecision or fear of commitment.

 9. Fear of failure. People may not reach peak performance because they avoid the really important challenges in life.

 10. Procrastination. Some people are unable to act without pressure. They may also look for little things to do in order to put off the big ones. (more…)

10 Typical Trading Errors

1)Refusing to define a loss

2)Not Liquidating a losing trade ,even after you had acknowledged the trades’s potential is greatly diminished.

3)Getting locked into a specific opinion or belief about market direction.From a  psychological perspective this is equivalent to trying to control the market with your expectation of what it will do :”I’m right ,the market is wrong.”

4)Focussing on price and the monetary value of a trade,instead of the potential for the market to move based on its behaviour and structure.

5)Revenge-trading as if you were trying get back at the market for what it took away from you.

6) No reversing your position even when you clearly sense a change in market direction.

7)Not following the ruled of the trading system.

8)Planning for a move or feeling one building ,but then finding yourself immobilized to hit the bid or offer ,and there after denying yourself the opportunity to profit.

9)Not acting on your instincts or intuition.

10)Establishing a consistent pattern of trading success over a period of time ,and then giving your winnings back to the market in one or two trades and starting the cycle over again.

3 Trading Truth

TRUTHLINKSHumility:  We are in a business with change.  I have never met a person who has been successful at anything who thought they had it all figured out.  Yes, celebrate and enjoy but tomorrow you start over at the beginning.  Celebrate later and not until the play is over.

Perspective: Trading is emotional.  Eliminating the highs and lows is important because it takes out so much energy.  Yes it would have been cool to dive into the end zone but I would have had to pick myself off the ground and had to be on the extra point team the next play. The low is never as low or the high is never as high as it is in reality, generally.  Having perspective is how it all evens out.

Preparation:  When asked why athletes make better traders I always respond because they are willing to work long hours for the few times when it all lines up.  For football, you train 6 months the play a season.  You have 12 games.  You spend 4 days preparing, 1 day playing, 1 day reevaluating, and 1 day resting.  We prepare for those times and we always are waiting for the next time.  One trade can make your day, one week can make your month, one month can make your year, one year can make your career. (more…)

The Greatest Trading Loss

The Greatest Trading Loss


What is the greatest risk you face in trading?


Is it loss of money?


Certainly, that’s what most traders believe. I tend to disagree though. In my opinion we have something much greater at risk, that very few of us consider during the ‘learning phase’.


The American political journalist and author, Norman Cousins, is quoted as saying, ‘Death is not the greatest loss in life. The greatest loss is what dies inside us while we live.’


Along similar lines, I would argue that loss of capital is not the greatest loss in trading. The greatest loss is what we lose from within. (more…)

Strategies to prevent overtrading

1. Before each trade, clear your mind.

As I was flipping through channels, I came upon an interview with a surfer. He was saying that he knew a big surf would come and he would go underwater. The interviewer asked, how does he handle it? He said, it is simple. If I panic, I only have 3-5 seconds of air to breathe. If I stay calm, I have 45-60 seconds of air.

What does surfing have to do with trading? Well, especially when the markets are choppy, if you overtrade, you could lose all of your capital. However, if you take a moment and think about your trades, you can have much better results.

2. Have a trading plan and stick to it.

Plans are roadmaps. You want to know where you are headed. Think about it. If you are having a surgery, you want your surgeon to know why he is performing the surgery, where he should start, and what is the expected outcome.

In order to stick to your plan, think about your plans/rules as giving your word. Usually, we associate giving our word as a contract and we do not break it with others.

However, this rule does not apply to ourselves. So treat yourself as well as you would treat your best friend, and keep your word to yourself.

3. Look at each trade as an individual transaction.

Ask yourself:

If this was the first trade of the day, would I get into it?

What would be the initial size of this trade?

Do not look at an individual trade to make up for all of your losses.

4. Create a routine that works for you.

We are creatures of habit. As Aristotle says, “We are what we repeatedly do. Therefore, excellence is not an act, but a habit.”

5. Come from abundance.

There are a lot more opportunities. You will get what you expect. You might have heard of the following:

Imagine going to the ocean and taking water from the ocean. You can use a thimble or you can use a huge tub. You can do it once or as often as you want. It does not matter to the ocean, it is up to you and what you think you deserve.

6. Be patient – look for the right opportunities.

As the saying goes, there is a lot of fish in the sea.

7. Keep a daily journal.

To start with, keep track of:

Where you got into the trade

Where you exited the trade

Why you got into the trade

Why you got out of the trade

After a while, you’ll notice your own patterns.

8. Remember, this is a process. It takes time and experience. Rome was not built in one day.

9. Reward yourself.

I know this might sound counterintuitive. A lot of us wait to celebrate and reward ourselves till we do things perfectly. We think that if we start celebrating the intermediate steps, we’ll become complacent.

The truth is, to create a new habit, we need encouragement. Imagine a baby who is just starting to walk. S/he takes his/hers first step and then falls down. What do parents do? Do they yell and punish the child, or do they encourage and celebrate his/her action? If you said the latter, you are right.

Usually, encouragement works much better than punishment. The idea of celebration is to encourage ourselves.

Trading is simple, but not easy. The greatest difficulty is to accept the simple rules and follow them with discipline.

To summarize, the 9 steps to prevent overtrading are: (more…)

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