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Risk Can Be Predetermined; Reward Is Unpredictable

  
Analysis, Education
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Before entering every trade, you must know your pain threshold. You need to figure out what the worst-case scenario is and place your stop based on a monetary or technical level. Every trade, no matter how certain you are of its outcome, is an educated guess. Nothing is certain in trading. Reward, on the other hand, is unknown. When a stock moves, the move can be huge or small.

How good is your WHY?

  
  Education
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I’ve been taking a minor natural break in trading over recent weeks, and in the meantime I’ve been pondering the power of the “WHY” I have when entering trades. You need a good why, no matter what you are doing in life, but especially when you walk into one of the toughest and most volatile markets in the world and put your money on the line.

What’s your WHY?

I can see looking back that the vast majority of my trading had a feeble why behind them; no wonder I lost cash hand over fist. Really my reason for entering was that I just wanted to enter, thats all. The second problem most likely is that even when I THOUGHT I had a good reason, the idea behind it was faulty.

So you can have no reason to enter, or you can have a wrong reason to enter.

Also I notice on the forums that the VAST MAJORITY of newbie / semi newbie traders there are trying to formulate their own personal why. Their own UNIQUE system, inventing unique indicators.

They think that the idea of the game is to outsmart everyone else in the market; to be unique. The obsession with system creation or inventing new indicators has being unique and outsmarting everyone else behind it as a hidden motivation. The thing with markets though is that its not about you, its about consensus. If you invent your own amazing oscillator and you are the only person in the world looking at it, then how good a reason is this to enter the market? How much consensus do you have behind you? Who supports your decision? Who agrees with you?

Probably nobody, except a handful by pure chance.

There’s more to say on this, but ponder your WHY when you pull the trigger. How good is that why?

How Stephen Hawking Understands The Universe In 150 Seconds [VIDEO]

  
Analysis, Education, Video
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Have you ever wondered how the legendary Stephen Hawking thinks about the universe? He has worked on some of the most mind-boggling physics and cosmology questions, like what’s at the center of a black hole. This video from The Guardian’s Made Simpleseries, animated by Scriberia, explains some of the main ideas of Hawking’s complex theories from his book A Brief History of Time, in just 150 seconds.

Here are some of the highlights from the video.

What actually is at the center of a black hole? A singularity – or tons of matter packed into a tiny space. That high concentration of matter basically creates infinite gravity – that’s why nothing can escape a black hole.

What happens when a black hole disappears? It explodes, and the explosion has a force equivalent to a million nuclear bombs.

Why is Stephen Hawking so well-known? His work suggests that at one point, everything in our universe was squeezed into one of those singularities. Then, it exploded into the universe as we know it now.

11 Points For Traders

  
  Education
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  1. At the very top tier, the investors he’s interviewed don’t want to manage clients’ money and deal with client predilections, dramas and desires.  They have clients only until they can afford not to.
  2. The best traders are focused on varying bet sizes based on their calculations and the individual equities’ probability of success.  They bet more on positions that have a strong wind at their backs.
  3. If there is bad news or adverse results with respect to their equity and if the market shakes it off and barely moves down, these managers will add to their positions because they know that the market is telling them something valuable.
  4. In the long run, it’s not the genius of investment ideas that produce consistent profits.  Trade implementation and execution is more important and will usually trump big ideas.
  5. All your trades fall into one of 4 baskets.  Keep track and make the necessary adjustments.  (a) Winning trades where you properly followed your disciplines – the best choice.  (b) Winning trades where you did not follow your disciplines.   (c) Losing trades where you followed your disciplines – okay.  (d) Losing trades where you did not follow your disciplines.

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Why You May Never Make Money as a Trader

  
  Education
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While there are a lot of traders out there, many of them don’t make any money. Well, it’s time for a wake-up call folks. Here are six reasons why you do not — and may not ever — make money as a trader:
Nomoney
You don’t put in the proper amount of effort. You don’t put in the full-time commitment it requires to be profitable in trading because you treat it like a hobby. Trading is not a part-time job. It’s serious business.

  1. Failure to be disciplined and consistent with your process. There’s no excuse for this. It’s all up to you.
  2. Trading like a gambler instead of a trader. You’re taking irresponsible risks rather than thinking in terms of probabilities and trading when you have an edge.
  3. Actually putting on trades without a solid game plan. What are you thinking? You must know your game plan and execute it.
  4. You over think things. Trading is a simple game — up, down, sideways. Keep it simple and make money.
  5. Not trusting yourself to do what you know you need to do. You spend too much time listening to other people. Trust yourself and execute what you know.

The good news: every one of these things is entirely in your control. All you have to do is choose to make things happen.

 

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