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Good Luck-Advice for Traders

  
  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. (more…)

Anger

  
  Education
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As traders, fear and greed are the two emotions that we commonly handle in our trading decisions.

But I believe another emotion that we also sometimes experienced would be – anger.

Most traders have learned to be calm and sensible during trading. But there would certainly be times times when we fumed at missing out a fantastic trade, for not buying more contracts of a great trade, or frustrated for committing that same trading blunder again.

We would blame just about anything or anyone when our trading suffered. Somehow we didn’t realize that the anger have originated from us.

I recently read a book called “Zero Limits” co-written by Dr Joe Vitale & Dr Hew Len. The book was quite an eye-opening read. It mentioned that we are the one who are fully responsible for any circumstances which are happening within & around us.

When we encountered another person pouring out his or her frustrations, whether they were meant for us or not, we should accept that we were partly responsible for that happening, since his or her frustrations had come into our lives.

Naturally, we are responsible for our own anger too.

The way to resolve this would be, strange it may sound, is to keep cleansing ourselves by constantly repeating the phrases “I love you”, “I’m sorry”, “Please forgive me” and “Thank you” to ourselves.

According to the book, these are simple but powerful words that we convey to the Divine. We connect to the Divine by expressing our love and gratitude to him. At the same time, we seek the Divine’s forgiveness of our wrong doings.

Saying these 4 phrases will cleanse the memories of greed, fear and anger associated with anything (including trading) as we give in to the Divine to handle the situation for us.

We would experience a peace of mind that the Divine is taking care of us. Another positive outcome of cleansing ourselves is that we are now open to receive the inspirations from the Divine for us to act upon.

I encourage you to read more about this ancient Hawaiian practice called Ho’oponopono from “Zero Limits” to experience this positive feeling.

I hope that in time you will gradually banish your anger not only in your trading but also in other parts of your life.

“I love you”, “I’m sorry”, “Please forgive me”, “Thank you”.

22- Trading Wisdom Via John Templeton

  
Analysis, Education
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  1. There is only one long term investment objective, maximum total after tax return.
  2. Success requires study and work. It’s harder than you think.
  3. Outperforming the majority of investors requires doing what they are not doing.
  4. Buy when pessimism is at its maximum, sell when optimism is at its maximum.
  5. Therefore, buy what most investors are selling.
  6. Buying when others have despaired, and selling when they are full of hope, takes fortitude.
  7. Bear markets aren’t forever. Prices usually turn up a year before the business cycle hits bottom.
  8. Popularity is temporary. When a sector goes out of fashion, it stays out for many years.
  9. In the long run, stock index prices fluctuate around the EPS trend line.
  10. Stock index earnings fluctuate around replacement book value for the stocks in the index.
  11. Buy what other people buy and you will succeed or fail as other people do.
  12. Timing: buy when short term owners have finished selling and sell when they’ve finished their buying, always opposing the fashion.
  13. Stock prices fluctuate more than values. So stock indexes will never produce the best total return performance.
  14. Focus on value because most investors focus on outlooks and trends.
  15. Invest worldwide.
  16. Stock price fluctuations are proportional to the square root of the price.
  17. Sell when you find a much better bargain to replace what you are selling.
  18. When your method becomes popular, switch to an unpopular method.
  19. Stay flexible. No asset or method is forever.
  20. Stock market investing takes more skill than any other kind of investing.
  21. A person can outperform a committee.
  22. If you begin with prayer, you will think more clearly and make fewer mistakes.

The Tortoise and The Hare

  
  Education
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The job of a trader is to make good risk / reward decisions over and over.

To get better and better at doing this over time. 

The cash will follow. 

If you are only about the money your longevity, in my humble opinion is limited.

One danger about only focussing on the $$ is that you push it too hard in the quest. The risk is burning out or blowing up your account.  We’ve all seen or heard of traders who break down under the pressure that they’ve put themselves under to hit their monetary target or who have swung for the fences so hard that they have destroyed their account.  Occasionally these traders fly through the finish line in magnificent style.

On the other hand:

If you love the process that you take to define the good risk / reward trades and the execution of them then you are likely to be a success. (more…)

Unsuccessful Trading Behaviors

  
  Education
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  1. Refusing to define a loss.
  2. Not liquidating a losing trade, even after you have acknowledged the trade’s potential is greatly diminished.
  3. Getting locked into a specific opinion or belief about market direction.  I.E. “I’m right, the market is wrong.”
  4. Focusing on price and the money
  5. Revenge-trading to get back at the market from what it took from you.
  6. Not reversing your position even when you clearly sense a change in market direction
  7. Not following the rules of the trading system.
  8. Planning for a move or feeling one building, then not trading it.
  9. Not acting on your instincts or intuition
  10. Establishing a consistent patter of trading success over a period of time, and then giving your winning back to the market in one or two trades.

Discipline

  
  Education
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A day trader should leave no room for fear and greed to take over, otherwise, this will be the key to your losses. A good trader should be disciplined, make discipline a habit, and act in accord with trading systems/strategies. You can do your trade in a consistent and reliable manner this way. Certain situations require an individual to make decisions based on their pre-set criteria and parameters.

 You should make it a point to habitually follow your trading system/plan. When you’re making trading decisions, don’t let your emotions rule you. A day trader should always be disciplined, and once you attain your objective, leave the market first. Oftentimes people plunge in deeper because they are influenced by greed and fear.

 There are also day traders who are quite reluctant to lose money. For instance your stock goes down,and you’re still hoping that after some time it will rise again. And to your surprise, the share price goes further down. If only you were not reluctant to lose money, you could have sold it the first time its price went down, and prevent further loss.

 Day traders need to make fast executions and confirmations of the trade, so you must have a fast internet connection. They also need to receive and deliver quotes, news, and other pertinent market data. A fast internet connection allows you to make your day trading in a timely fashion. If you’re serious with your day trading. You would need hardware and software requirements to put a sufficient platform at home for online trading.

 You can practice through simulated trading before using real money. Here you can incorporate all your trading techniques and see if they actually work. Don’t be a scared to lose a certain amount of money. But it doesn’t mean that you should not limit your losses. Most importantly, you should learn from your past losses. Becoming a day trader is a simple thing. But in any case it requires dedication, time and effort. You will reap profits that you’ve never imagined, if you are able to put all of these things together.

Speculation and Trading vs. Gambling

  
  Education
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When does trading become gambling? There is a very thin line. I maintain that most traders ARE gamblers. They use markets as a substitute for a casino.

1. IF you enter trades without a clear trading plan, you just might be a gambler.

2. IF you trade just to be trading, you just might be a gambler.

3. IF your bored and enter a trade, you just might be a gambler.

4. IF you look at potential profit before assessing potential loses, you just might be a gambler.

5. IF you have no impulse control, you just might be a gambler.

6. IF you have no methodology, you just might be a gambler.

7. IF you rely on others for your trading decisions, you just might be a gambler.

8. IF you do not take full responsibility for your trading outcomes, you just might be a gambler.

9. IF you increase your risk due to losses, you just might be a gambler.

10. IF you do not use stop losses or do not adhere to them, you just might be a gambler.

And my all time favorite

11. IF you get an adrenaline rush when your entering trades, you just might be a gambler.

In summation I would like to say that I do enjoy casino gambling as a form of entertainment. I strive to over come the house’s edge when I do gamble. Gambling is entertainment and trading is a business and should be approached as a business enterprise. IF your using the markets as a gambling outlet, be my guest. Traders that approach trading with a positive expectancy WILL take all your money. They will send you stumbling out into the night, cross-eyed and mumbling to yourself. Be smart. You can either feed the trading gods or feed your head. Do the work and get educated before risking one thin dime. Employ laser like focus in your trading and use iron discipline. The end result can be well beyond your wildest expectation.

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