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51 Professional Trading Tips
1. Trading is simple, but it is not easy.
2. When you get into a trade watch for the signs that you might be wrong.
3. Trading should be boring.
4. Amateur traders turn into professional traders once they stop looking for the “next great indicator.”
5. You are trading other traders, not stocks or futures contracts.
6. Be very aware of your own emotions.
7. Watch yourself for too much excitement.
8. Don’t overtrade.
9. If you come into trading with the idea of making big money you are doomed.
10. Don’t focus on the money.
11. Do not impose your will on the market.
12. The best way to minimize risk is to not trade when it is not time to trade.
13. There is no need to trade five days a week.
14. Refuse to damage your capital.
15. Stay relaxed.
16. Never let a day trade turn into an overnight trade.
17. Keep winners as long as they are moving your way.
18. Don’t overweight your trades.
19. There is no logical reason to hesitate in taking a stop.
20. Professional traders take losses because they trust themselves to do what is right.
21. Once you take a loss, forget about it and move on.
22. Find out what loss parameters work best for your setup and adjust them accordingly.
23. Get a feel for market direction by “drilling down” (looking at multiple time frames).
24. Develop confidence by knowing and executing your trade setups the same way every time.
25. Don’t be ridiculous and stupid by adding to losers.
26. Try to enter a full size position right away.
27. Ring the register and scale out of your position.
28. Adrenaline is a sign that your ego and your emotions have reached a point where they are clouding your judgment.
29. You want to own the stock before it breaks out and sell when amateurs are getting in after the move.
30. Embracing your opinion leads to financial ruin.
31. Discipline is not learned until you wipe out a trading account.
32. Siphon off your trading profits each month and stick them in a money market account.
33. Professional traders risk a small amount of money on their equity on one trade.
34. Professional traders focus on limiting risk and protecting capital.
35. In the financial markets heroes get crushed.
36. Stick to your trading rules and you will never blow up your trading account.
37. The market can reinforce bad habits.
38. Take personal responsibility for each trade.
39. Amateur traders think about how much money they can make on each trade. Professional traders think about how much money they can lose.
40. At some point all traders realize that no one can tell them exactly what is going to happen next in the market.
41.Losing trades don’t diminish you as a person. You’re also not your winning trades. They are just by-products of the business you’re in.
42.Act in your best interest – placing a trade because you’re afraid of missing out on a big move is NOT acting in your best interest.
43.Flawless execution comes from forming a habit. A habit is formed when it is repeated over and over again. Start practicing.
44.Don’t let personal/external factors affect the trading for thou judgment is clouded. Let the market show you what to do. Always.
45.Make sure your trading goals are 1) realistic, 2) attainable, 3) measurable. If they don’t meet these criteria, then the goal is nothing.
46.You want to own the stock before it breaks out, then sell it to the momentum players after it breaks out. If you buy breakouts, realize that professional traders are handing off their positions to you in order to test the strength of the trend. They will typically buy it back below the breakout point—which is typically where you will set your stop when you buy a breakout. (In case you ever wondered why you get stopped out on a lot of “failed” breakouts).
47.Amateur traders always think, “How much money can I make on this trade!” Professional traders always think, “How much money can I lose on this trade?” The trader who controls his or her risk takes money from the trader whose head is in the clouds.
48.. Siphoning out your trading profits each month and sticking them in a money market account is a good practice. This action helps to focus your attitude that this is a business and not a place to seek thrills. If you want an adventure, go live in Minnesota for a winter. If you want excitement, deliberately forget your anniversary. Just don’t trade.Adrenaline is a sign that your ego and your emotions have reached a point where they are clouding your judgment. Realize this and immediately tighten your stop considerably to preserve profits or exit your position.
49.
50.Averaging down on a position is like a sinking ship deliberately taking on more water.
51.You Need MONEY -MIND-METHOD & Target to get success in Trading.If u miss any one of them…its my challenge to anybody in World …U will never ever be succesful !!
Updated at 22:45/07th Sept/Baroda
Can Any Economist Solve this Problem ? Venezuela's inflation is 500% this year and will soar to over 3000% in three years.
Intuition & Vision in Trading
Intuition – A qualitative virtue recognized by few and held by even less. Our intuition is the byproduct of the analysis performed by our subconscious. It acts much like a muscle and requires exercise to develop and grow. Like a muscle, neglect can cause atrophy. Traders with a strong intuition built on a strong trading strategy put themselves in an ideal position to achieve consistent success in the market. Over time, traders can feel the energy a market gives off and can execute trades from this. It is an invaluable tool in one’s trading arsenal.
Vision – While total clairvoyance as to future price movement is unrealistic. It is my goal as a trader to assimilate as much information as possible with the goal of playing out scenarios that tie in together. It’s not always easy to do, yet understanding trading does not occur in a vacuum and markets do exhibit funny things get you mentally prepared to deal with these outlier events. Those that can think for themselves and need not rely on templatized news releases for their ideas usually put themselves in a position to benefit from their forward thinking.
We have heard many times about leaders who saw an industry trend before it happened. This was no accident. It came as a result of their understanding of their field and what could change it for the better. Traders who gain an understanding of how things can potentially play out and factor that into their trading strategy go a long way to keeping their objectivity when things unfold in a fast and volatile market.
Words of wisdom published 1880s. Timeless.
Ignore the naysayers. Focus on what you do best.
Chemistry and Markets
Since the topic of chemistry/market analogies has come up, I’m reminded of something I noticed while studying economics. Anyone else notice some resemblance between stoichiometry and the Cobb-Douglas production function?
Stoichiometry and the reaction rate equation: r = k(T) * A^n * B^m
And the Cobb-Douglas production function: Y=AL^{\beta}K^\alpha
What kind of “chemical” reactions can we find in the markets?
Something like this?
Trader-Cash_p + Stock <-> Trader-Stock + Cash_p
An important difference with this “reaction” is that _p, which is price, fluctuates; whereas chemical reactions always have the same stoichiometry. So, are there any useful analogies?
Irrational
THREE LEGS OF SUCCESSFUL TRADING
If you ever read any book on trading you would notice that every author our there talking about three most important things of successful trading and investing are:
- Trading edge
- Money management
- Discipline or psychology
Depending on the book one is reading one of those three are emphasized more or less. If you read book on technical analysis author will say that having edge is most important, and even if you have PhD in psychology if you don’t have proper edge you will not be able to make money.
If you read book on psychology again author will tell you that you can have best trading system on the world if you are not able to take signals you will not be successful trader and that you must make system that will suit your personality.
Finally if you read book on money management, author will tell you that even if you have best system in the world and having best discipline in the world if you risk too much of your capital on each trade you will probably ruin your account and the game will be over.
To answer I would ask you following: What is more important heart or brain? Eyes or ears? Legs or Arms?
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