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Should ,Must ,Will ,Won't

  
  Education
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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.

The Same Winning Principles

  
  Education
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In life, as in trading, the right mindset is crucial for success. You must be confident in your decisions because they are based on cause and effect, not on emotions or opinion. Negative people who are unsure of themselves are not successful in any field. You need faith in yourself and your methods to be able to persevere and not give up before reaching success.

• You can risk too much and lose it all in your business, life, marriage, friendships or family. You have to measure the potential cost of every action. One affair can cost you your marriage, just like one big trade with too much risk can cost you all your capital.

• In business there are certain methods which bring in customers and turn a profit, and others which cause a business to turn away customers and lose money. Trading is similar: methods which turn a consistent and long-term profit are essential for success.

• Having unrealistic expectations in a marriage, job, or business will lead to unhappiness and failure just like it will in trading. You have to set realistic expectations so
you do not get discouraged easily and quit in any of these areas. You have to be satisfied that the results are worth your effort over the long term. You need to understand what to expect before you begin a marriage, a job, a business, or trading. (more…)

Trouble in paradise

  
Analysis, Education
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“We need the financial industry to be honest with us,” she told a conference in Berlin. “If we don’t get honesty, then we might not do the right thing technically but we will do the right thing politically.”

Wolfgang Schäuble, her finance minister, defended Germany’s sudden move. “If you want to drain a swamp, you don’t ask the frogs for an objective assessment of the situation,” he told reporters. ft

The Krauts really shouldn’t talk to the French like that

Secret to trading success: You

  
  Education
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“You are the weakest part of your system”. That is a defeatist statement and completely untrue. It makes your expectation to fail easier to accomplish and more importantly it makes failure easier to handle. It shifts the pressure away from you and unto fate.

Would you fly on an airline if their motto was “Our pilots are the weakest part.” I do not think so. You are your system. Even if your system is automated you added the inputs, parameters.

Taking responsibility for your action is not easy. Taking control of the outcomes of trading or life is a huge responsibility. You will have moments of weakness, but you are not weak. The market does not go straight up and either does the road to success.

4 Trading Mistakes

  
  Education
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  • Don’t over-leverage yourself or have all of your money tied into one position. Keeping cash on hand is okay as a trader. These days brokers are offering extremely competitive margin requirements for day trading futures, but low margins can be a wolf in sheep’s clothing.
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  • Don’t trade to trade. Understand that there are 3 positions you can take as a trader: a long position, a short position and a position to NOT be in a position. There will be plenty of trading opportunities that will come along. Don’t give money to the markets simply because you are bored!
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  • Avoid trading a strategy without having a good understanding of how the strategy works. What is the typical winning percentage? What is the largest drawdown? In general, high winning percentage strategies have smaller average profits per trade. Lower winning percentage strategies might not have as many winners, but when you are a winner, you typically win big. If you expect your strategy to bring big profits without losses, you can also expect a check made out to “REALITY” to come your way any day. 
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  • Don’t get cocky after a few wins. The market WILL humble you and make fools out of those with egos.

The Proverb of the Ants

  
  Education
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The chair asks: What fable of Aesop best explains the tendency to seek short term gain in speculation as the expense of the long term. Such situation often occur when it looks like the next 1/2 hour ( or day) will be very bad for your position but the next 8 hours (or week) will be very good. What to do? Be an ant or a grasshopper dancing and fiddling.

Trading is simple. The trader is complicated

  
  Education
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Here is a very short list of comments from very reliable sources—successful professional traders.

From my collection of Books

 John F. Carter: “It is important to remember that there is no need to spend wasted years looking for complicated setups or the next Holy Grail.  There are very simple setups out there to use.  Some of the best traders I know have been trading the same setup, on the same time frame, on the same market for 20 years. They don’t care about anything else, and they don’t want to learn about anything else.  This works for them, and they are the masters of this setup.  They have nothing else coming in to interfere with their focus” (p. 31, Mastering the Trade: Proven Techniques for Profiting from Intraday and Swing Trading Setups).

Clifford Bennett: “While there have been some spectacular front-cover traders, the ones who amass fortunes year after year tend to stay in the background. At the very least, they display a simple and down-to-earth approach to markets if they are ever interviewed” (p. 117, Warrior Trading: Inside the Mind of an Elite Currency Trader).

Mark Douglas: “What you want to do is become an expert at just one particular type of behavior pattern that repeats itself with some degree of frequency. To become an expert, choose one simple trading system that identifies a pattern, preferably one that is mechanical, instead of mathematical, so that you will be working with a visual representation of market behavior. Your objective is to understand completely every aspect of the system-all the relationships between the components-and its potential to produce profitable trades.  In the meantime, it is important to avoid all other possibilities and information” (pp. 208-09, The Disciplined Trader: Developing Winning Attitudes).

Marcel Link: “Systems should be kept as simple as possible. Overdoing things doesn’t make a system better; on the contrary, it can take away from a good system.  Trying to make a system too complicated with too many indicators and variables is a common mistake with some traders: some of the best systems are the simplest. As a rule of thumb, a system should fit on the back of an envelope and be easily explained so that someone can understand what every indicator does and every rule does.  Otherwise it’s too complicated.  Always remember the old adage ‘Keep it simple, stupid’ and you’ll be okay” (p 249, High Probability Trading).

George Angell: “One observation I’ve made over the years, which is especially notable on the trading floor, is that everyone who truly succeeds is a specialist. Unlike the novice trader, who may dabble in as many as a dozen different futures contracts, the professional floor trader is identified with just one kind of futures and one specific type of trading…moreover, the professional is identified by his specialty-scalper, short-term trader, spread trader, or whatever.  He does the same thing every day (pp. 10-11, Sniper Trading).

John Murphy: “My work has gotten better due to simplifying my approach.” (KEY TO SUCCESS)

Dennis Gartman: “Keep your technical systems simple. Complicated systems breed confusion; simplicity breeds elegance.” (From Dennis Gartman’s Trading Rules List, Rule #12).

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