- 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.
- 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.
- Use a trading system, any system, and stick to it.
- Apply money management techniques to your trading.
- Do not overtrade.
- 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.
- Trade with the trends, rather than trying to pick tops and bottoms.
- Don’t trade many markets with little capital.
- Don’t just trade the volatile contracts.
- Calculate the risk/reward ratio before putting a trade on, then guard against holding it too long.
- 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.
- 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.
- Use technical signals (charts) to maintain discipline – the vast majority of traders are not emotionally equipped to stay disciplined without some technical tools.
Archives of “Education” category
rssA trader's mind
Two Kinds Of Traders
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
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.
How America uses its land
2 Keys For Traders
Do the hardest work first. The greatest performers in any field delay instant gratification in pursuit of their ultimate goal, which is to be the best they can be while pushing through less than comfortable situations. For me, the hardest work is determining a loss target. I firmly believe that the very best traders determine where a loss is to be taken before determining where money can be made. It is difficult to consider how much you are willing to lose before you consider the instant gratification of adding to your bank account. But it has to be so. Accept a loss and delay the gratification of instant money for the reward of a lifetime of income.
Practice intensely. “Ninety minutes appears to be the maximum amount of time that we can bring the highest level of focus to any given activity.” It is very important that athletes and musicians in particular practice and practice intently every day but there are limits and the need for adequate rest. How does this relate to traders? For me I trade off bigger charts, such as the daily and weekly, along with one intra-day chart and by so doing I allow myself plenty of time to do other things, such as write this blog. For others, such as day traders, it is just as important that time is spent outside the charts, refreshing the batteries. In fact, I am sure most of you would agree that when we walk away from the charts for a while we tend to see them with better clarity when we return. Trade intently but take a rest. The market will be here when you get back. I promise.
How To Win at Life ?
Hope Quotes for Traders
“The speculator’s chief enemies are always boring from within. It is inseparable from human nature to hope and to fear… The successful trader has to fight these two deep-seated instincts. He has to reverse what you might call his natural impulses. Instead of hoping he must fear; instead of fearing he must hope. He must fear that his loss may develop into a much bigger loss, and hope that his profit may become a big profit.”
– Reminiscences of a Stock Operator
“Hope is not a strategy.”
– Rigo Durazo
“There is no worse course in leadership than to hold out false hopes soon to be swept away.”
– Winston Churchill
“It is not enough to rely on luck or hope to carry us past the weak parts of our game. These parts must be attended to. The system must be whole and complete.”
– Zen and the Art of Poker (more…)
Bored?
7 dirty words you can’t say while trading
Should– Phrases include: “The market should have” and “I should have”. Those phrases are often used to socialize losses. They are a strong signal something is off. They should be used to aid you in correcting your vision not make you feel better.
Must– Phrases include: “The market must…”, “I must make money”, or “I must trade”. The market does not have to do anything and neither do you. When you use the word “must” it is hardly ever from a position of strength. The market knows when you are desperate and will take full advantage of you. Keeping your expenses as low as possible will make it easier to not make those statements.
Will– Phrases include: “The market will..” and “I will make money”. Once again the market does not like to be told what to do. It is the bratty kid screaming at the tops of his lungs. The word “will” relaxes your mind, similar to “should”, people use it to be lazy instead of a dark background in an otherwise light picture. You can do everything right and still lose money. That is why trading is so effective at diminishing confidence. In most every activity, if you do everything right you are going to get the desired result. Doing the “right” things is bare minimum. Of course, over time you will get paid for doing the right things but it is never when you think it should be and hardly how much you anticipated.
Won’t– Phrases include: “The market won’t…” or “I won’t make money”. Notice a theme here? You are part of the market, you are not the market. Not getting what you expect, even if it is positive, confuses the brain. If you expect to lose and don’t it is still a bad outcome. Your brain is going through enough as it is. The market is a one way walkie talkie, you listen, it talks. (more…)