Latest Posts

rss

Trade with Discipline

  
  Education
#  #  #  #  #  #  #  #  #

1. never EVER add to a losing position. EVER! If it’s not working, why add good money to bad? At this point, you are in damage control mode. It’s another thing if you are trying to pyramid into a position. For example: You go into a trade with 1/3 size, add another 1/3 and add the final 1/3 in an attempt to build a full position in a stock you feel strongly about. I do not mind that. But adding money to a full position which is not working is a BIG NO in my book! You never want any ONE trade to ruin your entire week or month folks. DISCIPLINE!

2. NEVER ever compromise your stop loss. I know a nice ran away bull market makes everyone think that’s okay to remove the stop loss or lower the stop loss to much lower levels because eventually the stock will bottom and rebound. BE EXTREMELY CAREFUL guys! This is absolutely NOT what we are trying to do as traders. This is basically turning your trades into investments just because you cannot handle the pain of a small loss. It is much easier to dig yourself back form a 2-3% loss than a 10-15% loss. Hindsight is always 20-20 and most of you will say “gosh, i shoulda stuck to the original stop”. Trust me, life will be much less stressful taking occasional small stop losses along the way then being stuck in “hold and hope” mode.

Confusion and Frustration for Traders

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

Maslow one commented that, when all you have is a hammer, you tend to treat everything as a nail. So it is with psychologists that involve themselves in markets. Lacking an understanding of actual speculative strategies and tactics–not to mention portfolio construction–they reduce performance problems to the lowest, psychological denominator. In so doing, they confuse cause and effect: they observe frustrated traders and assume that relieving frustration is the key to making money.

The professional speculator, unlike the retail daytrader, rarely falls into performance problems because of derelict discipline or runaway emotions. Rather, it is the very competence of the professional that leads to performance challenges. *It is when pros are most in sync with markets, identifying and profiting from themes and patterns, that they are most vulnerable to ever-changing patterns of direction, volatility, and correlation*. The confidence that permits healthy risk-taking under the best of speculative conditions inevitably gives way to confusion and frustration when skilled participants are no longer in sync with their markets. (more…)

22 Trading Rules

  
  Education

1)All successful traders use methods that suit their personality; You are neither Waren Buffett nor George Soros nor Jesse Livermore; Don’t assume you can trade like them.

2)What the market does is beyond your control; Your reaction to the market, however, is not beyond your control. Indeed, its the ONLY thing you can control.

3)To be a winner, you have to be willing to take a loss; (The Stop-Loss Breakdown)

4)HOPE is not a word in the winning Trader’s vocabulary;

5)When you are on a losing streak — and you will eventually find yourself on one —
reduce your position size;

6)Don’t underestimate the time it takes to succeed as a trader — it takes 10 years to
become very good at anything; (There Are No Shortcuts)

7)Trading is a vocation — not a hobby

8)Have a business/trading plan; (Write This Down)

9)Identify your greatest weakness, Be honest — and DEAL with it

10)There are times when the best thing to do is nothing; Learn to recognize these times
(Nothing Doing)

11)Being a great trader is a process. It’s a race with no finish line.

12)Other people’s opinions are meaningless to you; Make your own trading decisions
(The Wrong Crowd)

13)Analyze your past trades. Study what happened to the stocks after you closed the
position. Consider your P&L game tapes and go over them the way Vince Lombardi
Bill Parcells reviewed past Superbowls

14)Excessive leverage can knock you out of the game permanently

15)The Best traders continue to learn — and adapt to changing conditions

16)Don’t just stand there and let the truck roll over you

17)Being wrong is acceptable — staying wrong is unforgivable (I liked this one! –
BMB)

18)Contain your losses (Protect Your Backside)

19)Good traders manage the downside; They don’t worry about the upside

20)Knowing when to get out of a position is as important as when to get in

21)To excel, you have to put in hard work

22)Discipline, Discipline, Discipline !

Go to top