The Bank of England and European Central Bank will deliver their latest monetary policy decisions on Thursday.
No change is expected from either, but it should still mean that sterling and the euro come, at least briefly, into sharper focus.
It’s the single currency that has been doing better of late, boosted by the ECB’s implicit bond backstop and subsequent easing of eurozone tensions.
In July, it cost less than 78p to buy one euro. Now it’s more than 81p. (more…)
Why do so many traders abandon their trading plan? Is it their personality, an inherent pitfall of the trading profession, or temporary insanity? A host of factors may contribute to a lack of discipline. Depending on your personality, background, training, and experience with the markets, you may have trouble reigning in your tendency to act on impulse.
For some people, impulsivity is in their nature. They have trouble focusing their attention. They are easily bored. Seeking out quick thrills relieves the tedium of life. For others, impulsivity is related to emotionality. Some people have so much trouble controlling their emotions that they react impulsively out of frustration. Minor setbacks are inevitable in the trading arena. When the extremely emotional trader encounters one of these setbacks, he or she becomes overly agitated, and may close a position early, or in a fit of confusion, make a major trading blunder that can only be remedied by closing the position.
That said, any trader can act impulsively at times. There are many situational factors that contribute to impulsivity. Research has shown, for example, that when people are tired, they have difficulty focusing their attention. As much as part of your conscious mind cares about sticking with your trading plan, your unconscious mind thinks, “Who cares? I want to take a break.” Psychological resources are limited. When you push yourself to the limits, you will have trouble focusing on your ongoing experience, concentrating on your trading plan, and sticking to it. (more…)
William O’Neill lays it down clearly and simply:
“Some people say, “I can’t sell that stock because I’d be taking a loss. If the stock is below the price you paid for it, selling doesn’t give you a loss; you already have it.”
If you don’t get this it’s probably best for all concerned that you stay away from the markets and if you must be involved give your money to someone who you trust understands this.
We once heard the late Yale prof., Stephen Ross, say that “if you stare at the clouds long enough, you can see pink elephants.”
We kind of feel that way, though not completely, about seeing patterns in stock charts.
If you truly are serious about being a trader then there are seven things that you will have to accept.
You will have to accept that over the long term at best only 60% of your trades will be winners. It will be much less with some strategies.
Accept that the key to being a successful trader is having big wins and small losses, not big bets paying off. Big bets can lead quickly to you being out of the game after a string of losses.
Accept that the best traders are also the best risk managers, even the best traders do not have crystal balls so they ALWAYS manage their capital at risk on EVERY trade.
If you want to be a better trader then you need to accept that trading smaller and risking less is a key to your success. Risking 1% to 2% of your capital on any single trade is the first step to winning at trading. Use stops and position sizing to limit your losses and get out when your losses grow to these levels.
You must accept that you will have 10 trading losses in a row a few times each year. The question is what your account will look like when they happen.
You have to accept that you will be wrong, a lot. The sooner you accept you are wrong and change your mind the better off you will be.
If you really want to be a trader then you are going to have to accept the fact that trading is not easy money. It is a profession like any other and requires much work and effort and even years to become proficient. Expect to work for free and pay tuition to the markets through losses until you learn to trade consistently and profitably.
