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DAY TRADING LESSONS

  
  Education
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daytradinglessons-update

  • Trading is a continuous learning process

  • Don’t trade without a plan. Be as prepared as possible. Don’t try to be right
  • Emotion is a much bigger influence in stock prices than any other factor
  • The market reacts more to sentiment than facts. Herd mentality rules
  • Sell into strength and buy into weakness
  • Market always rewards minority, not the crowd. The trick to figure out if the mass perception is wrong and WHEN it will be proved to be wrong.
  • Technical setups and money management are more important than fundamental catalysts when trading
  • Always ask: What beliefs are you acting upon? What is the basis for those beliefs? Why do you have those beliefs now? Would those beliefs be different if your recent gain/loss record had been reversed? Can you clearly enumerate what could happen that would cause you to change your mind?”
  • Extreme emotions cause extreme pain. I’ve learned how not to get overly bullish or bearish
  • Be mindful of higher trading volume on down days prior to a future catalyst as bad news can and often does leaks out
  • Take responsibility for your own trading
  • Cut your losses, let your winners run, and this is more easily said than done
  • If you can’t focus, you can’t trade. Be in the zone or stay sidelined
  • Buy below value and well below value if possible
  • Being flexible can be fruitful
  • Let the market come to me and don’t force trades
  • It is never “different” this time
  • Just more……….very soon ,Till then just read these and learn something new.
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    • Weekend Reading :"Gold Is Money And Nothing Else" – JP Morgan's Full December 1912 Testimony To Congress

      
      Education
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    In December 1912, no lessor man than J.P.Morgan testified to Congress to “justify Wall Street,” during investigations over alleged manipulation and collusion. The transcript reads like it could have been given yesterday (as nothing ever changes) but at its heart the banker laid out 33 “Morgan Epigrams” which appear – in the ensuing 102 years – have been lost to greed and arrogance… The irony is wondrous: “Securities do not always prove good”, “Money is gold, and nothing else”, “I think manipulation is always bad.”

     J.P.Morgan’s 33 Epigrams:

    1. I have absolute faith in the patriotism and public spirit of the Stock Exchange.

    2. The moral responsibility has to be defended as long as you live.

    3. Securities do not always prove good.

    4. It is difficult to get stockholders to take active interest in their companies.

    5. I do not believe I could carry any question through any board against the views of the other directors.

    5. I like a little competition, but I should rather have co-operation. Without actual control, you can do nothing. (more…)

    Great Trading Wisdom from 2,400 years ago

      
      Education
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    If you are a trader, you will relate

    When an archer is shooting for nothing . . . he has all his skill.

    If he shoots for a brass buckle . . . he is already nervous.
    If he shoots for a prize of gold . . . he goes blind;
    or sees two targets . . . he is out of his mind!
    His skill has not changed.  But the prize . . . divides him.  He cares.
    He thinks more of winning than of shooting . . . 
    and the need to win drains him of power.
                – Chuang Tzu, 400 B.C..
     
    If you do not relate, then you are not likely a trader.

    Trading – a game of probability

      
      Education
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    A big part of trading is a probability game. The market can move any directions and many times against all logic and fundamentals for a period of time. 
    An edge in trading is the ability to have winning probabilities on your side.
    Most people cannot distinguish between luck and skill when it comes to forecasting the market. At the best, I am right 70% of the time on fundamentals, 50% on the timing of the trade but I am making money on >80% of the trades.
    I acknowledge I do not know how to predict the market timing with certainty. The process of trading is replete with errors and thus one has to cater for it.
    Apparent randomness in the market is so complex that it cannot be managed with my finite mind. 
    So here are some ways that help me to handle the random behaviour of the market: (more…)

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