Archives of “February 2019” month

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Every Trader Must Read Quote-Note From -Paul Tudor Jones

  
  Education
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There are two unpleasant experiences that every trader will face in his lifetime at least once and most likely multiple times. First, there will come a day after a devastatingly brutal and agonizing stretch of losing trades that you’ll wonder if you will ever make a winning trade again. And second, there will come a point when you begin to ask yourself why it is you make money and if this is truly sustainable. That first experience tests an individual’s grit; does he have the stamina, courage, guts, and smarts to get up and engage the battle again? That second moment of enlightenment is the one that is actually scarier because it acknowledges a certain lack of control over anything. I think I was almost 38 years old when one day, in a moment of frightening enlightenment, I knew that I really did not know exactly how and why I had made all the money that I had over the prior 17 years. This threw my confidence for a jolt. It sent me down a path of self-discovery that today is still a work in progress.

-Paul Tudor Jones

Ten Bad Habits of Unprofitable Traders

  
  Education
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1. They trade too much.

2. Unprofitable traders tend to be trend fighters, always wanting to try to call tops and bottoms.

3. Taking small profits quickly and letting losing trades run in the hopes of a bounce back, is a sure path to failure.

4. Wanting to be right more than wanting to make money will be a very expensive lesson.

5. The biggest key to profitability is to avoid big losses. (sizing / risk vs reward)

6. Unprofitable traders watch (Blue Channels ) for trading ideas.

7. Unprofitable traders want stock picks, while profitable traders want to develop trading plans and systems.

8. Unprofitable traders think trading is about being right.

9.  Unprofitable traders don’t do their homework because they think there is a quick and easy route to trading success.

10. Unprofitable traders #1 question is how much they can make if they are right, while the profitable traders #1 concern is how much they can lose if wrong.

Don't be afraid to be a sheep

  
  Education
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  1. Follow the trends. This is probably some of the hardest advice for a trader to follow because the personality of the typical futures trader is not “one of the crowd.” Futures traders (and futures brokers) are highly individualistic; the markets seem to attract those who are. Very simply, it takes a special kind of person, not “one of the crowd,” to earn enough risk capital to get involved in the futures markets. So the typical trader and the typical broker must guard against their natural instincts to be highly individualistic, to buck the trend.
  2. Know why you are trading the commodity markets. To relieve boredom? To hit it big? When you can honestly answer this question, you may be on your way to successful futures trading.
  3. Use a trading system, any system, and stick to it.
  4. Apply money management techniques to your trading.
  5. Do not overtrade.
  6. Take a position only when you know where your profit goal is and where you are going to get out if the market goes against you.
  7. Trade with the trends, rather than trying to pick tops and bottoms.
  8. Don’t trade many markets with little capital.
  9. Don’t just trade the volatile contracts.
  10. Calculate the risk/reward ratio before putting a trade on, then guard against holding it too long.
  11. Establish your trading plans before the market opening to eliminate emotional reactions. Decide on entry points, exit points, and objectives. Subject your decisions to only minor changes during the session. Profits are for those who act, not react. Don’t change during the session unless you have a very good reason.
  12. Follow your plan. Once a position is established and stops are selected, do not get out unless the stop is reached or the fundamental reason for taking the position changes.
  13. Use technical signals (charts) to maintain discipline – the vast majority of traders are not emotionally equipped to stay disciplined without some technical tools.

Two Kinds Of Traders

  
  Education
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News events in particular cause traders to make incorrect decisions, because they play on emotions. The urge to follow the crowd is normal. It is comforting. And in a strong bull market, it may just be correct.

But in most circumstances, letting emotions push you into making trading decisions costs traders money.

There are two kinds of traders.

1. Those who make emotional decisions based on any of the above.

2. Those who make money off of those who make emotional decisions.

India: The Bubble Popped

  
Analysis, Education

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Nifty aggregate earnings (added up) are now DOWN 2.25% from the June quarter last year. This, combined with the Nifty just 5% from all-time highs is, one might think, a little effervescent. In more understandable English terms: We are in a bubble.

The understanding that this is not really driven by earnings is necessary to know when the stop loss hits and the urge is to wait because of the glorious India story.

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