1. Need to internalize lots of trading simulation of specific set-ups in real-time to trade effortlessly
2. Need to trust money management system to weather +10 losses in a row
3. Tuff to internalize that its the 5-6 huge monthly runners that is the big pay-off days
4. Must master +3 trade set-ups to make money consistently month to month.
5. It takes considerable time to mathematically think and act like a trader
6. Trading is a performance skill which requires mastery of every element of trading
7. It requires time capital and considerable effort to achieve the experience to make it effortless and automatic (more…)
Archives of “February 2019” month
rssIreland Rescue Imminent As Bund Spreads Pass 720bps
At last check Irish-Bund spreads were north of 725 bps, meaning Ireland is now effectively insolvent, and joins Greece in the group of bankrupt European countries. If this blow out is not stopped immediately, the contagion will again spread to the periphery first and then to the core shortly thereafter. The only question is when, just like in the case of oh so coy Greece, will Lenihan admit defeat and ask the IMF and the ECB for help (oh, and do it so during a Citigroup-mediated conference call). However, as Market News reports, citing Handesblatt, the Irish rescue may be imminent, and may come as soon as today.
From Market News:
Eurozone governments are preparing for a possible Greece-style rescue for Ireland although the country has not yet asked for financial assistance, German daily Handelsblatt reported Thursday, citing German government sources.
(more…)
TRADING LESSON
Information is not knowledge. The only source of knowledge is experience
Don’t spend all your time reading all the trading books you find. Practice is king when it comes to trading. Test different strategies and trading approaches until you find one to suit you.
Implement the rich mentality going forward and see the difference!
The Pitfalls of Speculation
The question at once asks itself: “How may the top of the market be discerned, and the dangers of the eleventh hour be avoided?” The answer is more or less complex.
It is, of course, necessary above all things to revert to the estimated and fixed value of the stocks traded in and to find out how much above this normal point the securities are selling. This done, common sense, plus prudence, and minus piggishness, may determine the question and dictate the time for liquidation. This action, however, once decided upon must be adhered to with great rigidity, for thousands of traders who thus take time by the forelock have been dissatisfied afterwards by seeing a still greater advance in which they had no interests, and through greed and impatience have re-entered the lists at a most inopportune time.
The trader who realizes his profits, and sees a further advance following his own withdrawal from the market, may console himself with the fact that he has made and secured a profit; that trying to guess the exact extreme of a cycle is hazardous, and that the advance which followed his withdrawal is unsound, being founded on speculation rather than valuation.
But this is a digression from the technical phase of the matter. So far as it is possible to judge the culmination of the speculative campaign by extraneous appearances, it may be said that a long period of backing and filling, a swinging back and forth of prices at the approximate high level marks the beginning of the end.
The definition of the “top” of the market is that point at which the great traders have almost in unison decided to unload, and per contra, the public has reached its highest level of enthusiasm. At the beginning of this period the insiders possess and enormous aggregate of stocks which must be sold in such a manner as not to break the market. This operation will take weeks, or even months to accomplish, as any precipitate selling would be disastrous. The wise element, therefore, sells all the market will absorb without any severe decline, and ceases selling, or even takes the buying side at the first sign of any “softness.” In short, they do all they can to maintain a good feeling and high prices, at the same time parting with the securities as rapidly as possible.
This statement may convey the impression that the shrewd speculators act in unison. This is true, but not necessarily in the sense that there is any preconceived arrangement between them. The unison or more or less unconscious, and is founded on the fact that there are only two sides to the market, the right and the wrong side, and that those of the speculative world who have sufficient wisdom and experience to know what is right are working to the same end, while all the inexperienced or unthinking horde are working on theories diametrically opposed to reason or even probability.
From the SAME AS IT EVER WAS files:
The Pitfalls of Speculation by Thomas Gibson, 1906.
TECHNICAL ANALYSIS FOR IDIOTS
The outline of the book is very simple and well designed, consisting of four parts: Introduction to Technical Analysis, Tools For Technical Analysis, Time to Trade, and Trading Mechanics. There is a wealth of information here so let’s look at a few nuggets.
INTRODUCTION TO TECHNICAL ANALYSIS
Arps does a good job of explaining the purpose of technical analysis as a way to “help you anticipate potential changes in the direction of market prices resulting from crowd behavior driven by the emotions of greed and fear” and not as a “business of absolute predictions.” All too often the new trader considers technical analysis to be the answer to predicting future price action; Arps tempers this expectation with a good analogy: “Like weather forecasting, technical analysis doesn’t result in absolute predictions about the future. Instead, technical analysis can help investors anticipate what is “likely” to happen to prices over time.” After laying the foundation Arps begins to build a firm structure by covering topics that include market structure, charting, and various swing patterns.
TOOLS FOR TECHNICAL ANALYSIS
Part 2 covers the technical of technical analysis. Here Arps dissects just about every tool available to traders from trendlines to moving averages; oscillators to point and figure charts; and price to support and resistance. These tools help the trader better anticipate future price direction by considering recent price support/resistance areas, overbought/oversold areas, trending/consolidation conditions, divergence, etc. “Answers to these questions can alert you in advance as to when prices are likely to change direction and thus provide you with powerful information that can significantly improve your trading profits.” Much of what is covered here is your traditional meat and potatoes but there is a little extra gravy, such as Arps’ own Fear-Greed Index, a chapter on Volume Float analysis, made popular by Steve Woods, and the Jackson Probability Zones, a method named after J.T. Jackson.
TIME TO TRADE
Understanding the basics of technical analysis is one thing: applying it to current market conditions is quite another. In part 3, Arps discusses how to use technical analysis for building the skills necessary to become a successful trader. What is of particular interest to me is Arps discussion of developing a trading plan, which, he says, consist of four parts: rules for entry, rules for exit, money management rules, and the selection of a strategy. Anyone who has traded for any length of time will quickly point out that the trader may have more degrees in technical analysis than a thermostat but if he does not have a plan for using that knowledge it will be worthless. In fact, it could be dangerous. Arps does a great job of cautioning the would be trader who believes that technical analysis knowledge is key when it is not. “There are several reasons to have a trading plan, but probably the biggest is the way it simplifies things. Decision making becomes very clear cut. The trading plan defines what is supposed to be done, when, and how. Just follow the plan. The plan serves as a roadmap to entering and holding, profit taking, or cutting losses. Writing down your plan gives you an immediate edge over most traders and investors.” Bottom line: the trader’s edge is following a plan; not the plan itself.
TRADING MECHANICS
In part 4, Arps takes the trader through the (more…)
Trader's mindset?
How does someone know that they reached the trader’s mindset? Here are a few characteristics:
1. No anger whatsoever.
2. Confidence and being in control of the self
3. A sense of not forcing the markets
4. An absence of feeling victimized by the markets
5. Trading with money you can afford to risk
6. Trading using a chosen approach or system
7. Not influenced by others
8. Trading is enjoyable
9. Accepting both winning and losing trades equally
10. An open mind approach at all times
11. Equity curve grows as skills improve
12. Constantly learning on a daily basis
13. Consistently aligning trades with the market’s direction
14. Ability to focus on the present reality
15. Taking full responsibility for your actions
Developing the trader’s mindset takes time. It usually takes traders 2-5 years before they can read through the above list and honestly say that it describes themselves.
Look Inside Yourself
One trader wrote in that he was in a slump and wondered if he should switch markets or find another indicator.
Do you ever find that you also want to blame something outside yourself?
One of my favorites used to be blaming ‘the system’ – the system is rigged against me: the brokers are the only ones getting rich, robbing me on these bid/asked spreads, hunting all my stops, etc.
When you blame an external situation, you are giving up control, and instead letting yourself be controlled by outside events. This converts you from a proactive trader into a reactive trader. Or a winner into a whiner.
If you are reacting after the fact in the markets, you are then letting your emotions start to control you, instead of planning how you will react to any set of circumstances.
You know how letting emotions control you turns out in the markets. You go broke.
You must believe that you control your own destiny. If you are not getting the results you expect of yourself, look inside yourself.
Start analyzing your actions and behavior. Are you hanging on to losses too long? Are you cutting profits too soon? Are you having trouble pulling the trigger only to watch in frustration as your trade wins without you?
These and other frustrations should clue you in that you need to fix some element of your trading plan. Evaluate your present situation, and if it needs to change, take decisive action and change it.
Checklist for Successful Trading-Video
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