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10 rules, lessons, and examples For Traders

1. Find and trade markets where your edge is the greatest.
2. Avoid markets were the probability of rule changes and lack of transparency is present.
3. Think of and imagine market scenarios others fail to.
4. Fundamental macroeconomic forces will ultimately prevail.
5. Trading time frames and profit objectives though must coincide with what the market is giving you at any one time.
6. Quantify risk with a multidimensional perspective, not just by one or two measures such as VAR or a price stop.
7. Learn from history. Jay Gould and his attempts to corner the gold markets in the late 1860’s. The Russian default of 1917 and 1998. The European Rate Mechanism break up. The Tequila crisis of 1994. The Asian financial crisis.
8. Be deadly serious, as Gichin Funakoshi said “You must be deadly serious in training”. If you have a position make it a meaningful size and monitor it carefully. I recall many comments from fellow traders the past few years saying something like “I am long EuroSwiss just to have some on but not really watching it.”
9. Define and use a trading methodology that incorporates a process and framework that works for you. Inclusive in this should be a daily routine that includes diet, exercise, family time, etc.
10. Seek out catalysts for CHANGE in markets. Where are the forces, in a Newtonian like law of motion, building up the greatest to cause a CHANGE and movement in markets?

Trading To Win

There is a meaningful difference between trading to win and trading to not lose. The average person feels more psychological pain over a loss than they feel pleasure over a gain–particularly once they have already “booked” that gain mentally. If I’m expecting a bonus from my employer, I’ll be happy when I receive the paycheck–but I’ll be much more upset if I find out the bonus has been rescinded.

We can never eliminate loss from life or trading; nor can we repeal the basic uncertainties of markets. What we *can* do is develop an edge in the marketplace and, over the course of many trades, let that edge accumulate in our favor.

And, if you’re trading well, maybe that losing trade will offer you a fresh perspective about how the market is trading: an insight that can make you money the next time around. Then it’s not a loss. It’s information that you’ve paid for. 

Are You Doing These 7 Mistakes ?

*  You’re a momentum trader and you’re trading a slow, low volatility market;
*  You’re a trend trader and you’re trading a choppy, range market;
*  You’re a research-oriented big picture trader and you’re getting caught up in short-term price action;
*  You’re a skilled short-term trader and you’re locked in a longer-term directional market view;
*  You’re a contrarian fader and you’re getting run over in high volume directional flows;
*  You’re an independent thinker, but you’re distracted and influenced by the views of others;
*  You’re a trader who reads others well at the table, but you’re isolated from other traders;
A great way to lose money is to not understand yourself and how you’re wired cognitively.  If you’re a deep thinker, you’ll lose money sitting at the trading table.  If you’re a fast thinker, you’ll lose money dabbling with investment theses.  The route to success is to be who you are when you’re functioning at your best.  Working on improving your discipline, controlling your emotions, and following your process is not helpful if you’re sitting at the wrong table to begin with.

Positive awareness trumps negative self talk

The language you use as a trader can provide either positive reinforcement through honest self awareness or negative results through demeaning self talk.  In other words, when discussing your trading with others or in your journal become aware of how you view yourself.  Do you see yourself as an amateur, a whipping post, a loser?  Do you blame an indicator or the market or an advisor for your failures and lack of discipline?  When you are with others do you brag about your winners and hide your losers?  All of this talk is based on fear:  fear of being wrong, fear of what others might think of you and your decisions; fear of the market; fear of being afraid.  When you practice positive self awareness  you create a fertile learning environment that allows you to grow and progress as a BETTER trader, not focus on BECOMING a GOOD trader (implying that you are a bad one).  When I work with individuals I often hear the following:  “If I would just do this I would become a good trader” or “If I had your discipline I would be a able to make money.”  These statements are grounded in a sense of doubt and fear.  Instead, these statements should be replaced with “I am becoming a BETTER trader because I know the market cannot hurt me” AND “I am becoming a BETTER trader the more I stick with my rules.”  See the difference between the two?  One is focused on the joy of progress; the other on the fear of not being good enough.  Are you focused on progress or failure? Listen to yourself and you will quickly figure it out.  It is EASY to get down on yourself and much HARDER to remain positive in the face of adversity. 

Sugar :15.43 crucial support

Dear Traders ,Readers -In my last update about Sugar on 15th March.I had written below 19.18 level it will crash to 15.43-14.19

Just click here to see

On Friday it closed at 15.66 level.

On 1st April made low of 15.46.

Now break below 15.43 will take to 14.19 level.

Three Consecutive close below 14.19 then …It will crash to 10.44 level.

Below 15.43,Watch more panic in Sugar Stocks.

I will update more next week.

Updated at 23 hrs/25th April/Baroda