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36 Points For Traders

  
Analysis, Education
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  1. You absolutely have to find a vent to release pressure and adrenaline – sports, drinking, painting, anything that helps.
  2. If you can manage to find a mentor in which you believe, you will make it much faster.
  3. Your trading style has to fit your personality and your lifestyle, or cognitive dissonance will get the better of you.
  4. Meditation sucks, doesn’t work for me.
  5. Overtrading is your death.
  6. Once you are comfortable missing a move, you will be able to trade profitably.
  7. Not trading the news does not make sense at all – during news there is real liquidity and a real interest to push prices in one way or another. Let the market show its hand, then get in.
  8. Let it turn, let price create structure, THEN get in, with the structure as protection in your back.
  9. Don’t system hop, but adapt the system of your choosing to your needs.
  10. Don’t trade overleveraged.
  11. Yes, it is possible to turn a small account into a huge account, but don’t expect it to happen overnight, and don’t expect to be able to do it before your fifth (or so) year of trading.
  12. Some are faster, some are slower, some will never get it.
  13. Risk per trade is a function of the volatility of your strategy and your psychological ability to deal with swings in your equity.
  14. Know exactly why you are trading, and what you want to achieve – which career path will be yours?
  15. Daytrading is not easier than swingtrading or vice versa. They both simply require different skillsets, different abilities (yes, some people are just too slow for daytrading) and different preparation routines.
  16. Trust your gut. Absolutely love the trade? Get in. Don’t love it? Just stay out.
  17. No pain, no gain. Demo trading is ok, but don’t do it for too long. Risk micro amounts of money, get used to losing money. Because you will lose for the rest of your life if you want to be a trader. It’s part of the game. You “just” need to win more than you lose.
  18. Listening to music while trading can be a good thing – just know yourself. If I listen to aggressive music in the car, I will push the pedal to the metal. The same happens when trading.
  19. Have a trading journal and review, review, review.
  20. Work on your psychology, but don’t underestimate the power of knowledge. Fear stems from not knowing. Work hard, know more, be more confident. Most psychological issues will dissolve into thin air.
  21. Yes, I said: don’t system hop. But for the first year or two, try out everything you can. Every market, every strategy, every trading style. How can you know what fits your personality if you don’t know what’s out there? Finally, decide and take the leap of faith.
  22. Screen time alone won’t help you. Again: review. REVIEW! You need an effective feedback loop or you will repeat the same mistakes again, and again, and again. There is no learning by doing in trading.
  23. You don’t need to be hyper intelligent to be a trader. The best traders I know are “simple” minds. They do what works, they have no ego, and they disregard what does not make sense to them.
  24. Do not have monetary goals. Have process-oriented goals.
  25. Do not look at your P&L during your trading session or you WILL trade your P&L. Before and after a trading session, the money in your account is money, yes. During the session, however, the money in your account is ammunition that has to be spent in order to acquire more ammunition, if that makes sense.
  26. Trading with the trend is not easier than trading against the trend. Trading with the trend is the last thing I learned and every single trader I know seems to have the hardest time following a trend.
  27. If you want to pay for education, do your research. It is very possible to differentiate the scammers from the real traders. If something sounds too good to be true, run as fast as you can.
  28. Never forget to be grateful at the end of the day. You are given the chance to make money by clicking a mouse from the comfort of your home. How many people on earth can say the same?
  29. Trading fulltime is often romanticized but can quickly turn into a social nightmare. Keep up that work-life-balance.
  30. Find other mental challenges for your brain than trading. Feeding your body McDonalds everyday will, and nothing else, will kill you. Trading every day without reading a good novel once in a while will make you braindead.
  31. Likewise, there are lots of videos on Youtube with quite good content. You need to find a way to distinguish the goodies from the baddies.
  32. Don’t be mistaken, trading is gambling. You want to be a professional gambler? Make up your mind.
  33. A structured pre-trading routine is one of the best things you will ever do in your career as a trader. Take your time to create and establish it.
  34. Learn your basic and classic price patterns such as Head & Shoulders, Wedges, Triangles, etc. It takes a week to get them all into your head and you will profit from that knowledge for years to come.
  35. Never pick tops and bottoms. Take the middle of the moves and your results will improve.
  36. Believe in your abilities and trust your strategy or you will be destroyed.

That’s it for now. I have plenty more of these in my tattered and very, very old notebook. Which do you agree with, which not? Do you want more of my wartime wisdoms? Let me know in the comments below!

Newton’s Law of Trading Rules: Every lousy trading rule has an equal and opposite trading rule.

  
  Education
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“Always seek out differing opinions and challenge your beliefs. Except when you know you’re right, then that other bullshit just becomes a distraction. Good luck with that.

It is very important to be flexible and open-minded. But invest with set rules and an iron discipline. Good luck with that.

Technical analysis and charts only tell you about what has already happened in the past. It’s much better to use the information from the future that we have when making decisions.  Good luck with that.

Never run with the herd. It’s much better to be all alone on open ground, running in the wrong direction and wholly conspicuous to predators. Good luck with that.

Take your losses quickly. But don’t get scared out of a good position. Good luck with that.

Amateurs trade in the morning, pros trade in the afternoon, junkies trade overnight and lots of guys on TV just trade on paper.  Good luck with that.

Be tactical and stay informed! But don’t try to time the market. Good luck with that.”

Trading From Your Gut, by Curtis Faith

  
  Education
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CHAPTER 1

The Power of the Gut

“The intuitive mind is a sacred gift and the rational mind is a faithful servant. We have created a society that honors the servant and has forgotten the gift.”
—Albert Einstein

George Soros, one of the greatest traders alive, trades from the gut. He has widely remarked on the correlation between his backaches and trading choices. In the autobiographical Soros on Soros, he wrote:

 I rely a great deal on animal instincts. When I was actively running the fund, I suffered from backache. I used the onset of acute pain as a signal that there was something wrong in my portfolio. The backache didn’t tell me what was wrong—you know, lower back for short positions, left shoulder for currencies—but it did prompt me to look for something amiss when I might not have done so otherwise.

Some traders might scoff at the idea of making decisions based on “feelings” or intuition. They see the trader’s role as one who remains calm and collected, rationally choosing the right course while those around them are tossed about by their emotions. They believe that Soros is either lying or fooling himself. They don’t see how gut instinct can help. Yet many successful traders feel otherwise. Who is right? Is one approach better than the other?

If you are one of those traders who doesn’t believe that gut instinct or intuition has any place in trading, I invite you to keep an open mind. I, too, once felt as you did. After all, I was trained to take a very systematic and logical approach to trading as a Turtle. I believed that it was important to keep your emotions in check. I ­didn’t believe in trading from the gut.

Trading from your gut is a way of tapping into the extra power of the right hemisphere of the brain.

What I didn’t realize at the time, however, is that there is a big difference between trading emotionally and trading from your gut. Trading emotionally means reacting to fear and hope, which can destroy your trading decisions. Trading from your gut is different. It is a way of tapping into the extra power of the right hemisphere of the brain, which can be a powerful, effective, and entirely rational addition to any trader’s repertoire. (more…)

Time to Read :Trading Rules !

  
  Education
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To me, it’s useful to re-read things like this sometimes, just to remind myself of the obvious.  I hope you find them useful.  (The last rule alone has saved me a lot of money over the years…)

Trade Management

  • Let winners run. While momentum is in phase, the market can run much further than might be expected.
  • Do not exit winners without reason!
  • Be quick to admit when wrong and get flat.
  • Sometimes a time stop is the right solution. If a position is entered, but the anticipated scenario does not develop then get out.
  • Remember: if one thing isn’t happening the other thing probably is. Historically, this has never been good for me…
  • Be careful of correlations. Several positions can often equal one large position bearing unacceptable risk. Please think.

Other thoughts

  • I am responsible for risk management, money management, trade management, doing the analytical work and putting on every trade that comes.
  • I am not responsible for the outcome of any one trade. Markets are highly random. I do not have a crystal ball. I am not as smart as I think I am.
  • Risk management is the first and last responsibility. I can [mess]anything else up and be ok as long as I do not violate my risk management parameters.
  • Opportunity comes every day. Do not neglect the work. Must do analysis every day.
  • Opportunity comes every day. Get out of [crappy] positions. Move on.
  • I am a better countertrend trader than a trend trader. Sometimes the crowd is right, and they will run me over at those times if I’m not quick to admit I’m wrong.
  • If you’re going to do something stupid, at least do it on smaller size.

SIX Ways to Improve Your Self-Discipline Today

  
  Education
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1. Acknowledge Your Weaknesses – Whether cookies are the downfall to your diet, or you can’t resist checking your social media accounts every two minutes, acknowledge your pitfalls. Too often people either try to pretend their weaknesses don’t exist or they try to minimize the negative impact their bad habits have on their lives. For example, many smokers think, “I could quit if I wanted to,” because they don’t want to admit they’re hooked.

2. Establish a Clear Plan – No one wakes up one day suddenly blessed with self-discipline. Instead, you need a strategy. Whether you want to increase good habits like exercising more often, or you want to eliminate bad habits like watching too much TV, develop a plan that outlines the action steps you’re going to take to reach your goals.

3. Remove the Temptations When Necessary – Although we’d all like to believe we have enough willpower to resist even the most alluring enticement, it only takes one moment of weakness to convince ourselves to cave to temptation. Making it difficult to access those temptations can be pivotal to increasing self-discipline. If your weakness is Facebook, turn off the internet while you’re working. If you can’t resist overspending when you go to the mall, leave the credit card at home and only take a small amount of cash.

4. Practice Tolerating Emotional Discomfort – It’s normal to want to avoid pain and discomfort, but trying to eliminate all discomfort will only reinforce to yourself that you can’t handle distress. We can usually stand a lot more discomfort than we think we can. Practice allowing yourself to experience uncomfortable emotions like boredom, frustration, sadness, or loneliness and increase your tolerance to the negative emotions that you may experience as you increase your self-discipline. (more…)

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