Opportunity, is not defined solely by the market and its movement. It is also a function of your trading signals and the ability of those signals to detect a positive expectancy in future returns.
If movement were opportunity, there could be no random price movement!.
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rss5 Trading Wisdom
“Never let the fear of striking out get in your way” – Babe Ruth
“If you can’t take a small loss, sooner or later you will have to take the mother of all losses” – Ed Seykota
“Don’t think about what the market is going to do. You have absosutely no control over that. Think about what you are going to do if it gets there.” – William Eckhardt
“I turned from a loser to a winner when I was able to separate my ego needs from making money. When I was able to accept being wrong. Before that, admitting I was wrong was more upsetting than losing money” – Marty Schwartz
“The worst mistake a trader can make is to miss a major profit opportunity. 95% of the profits come from only 5% of the trades” – Richard Dennis
15 Rules for Traders
RULE # 1:USE MONEY YOU CAN AFFORD TO LOSE
If you are trading With funds
1) You need for some family projects, you are doomed to failure.this is because you wont be able to enjoy the mental freedom to make sound trading decisions.
2)your trading funds should be viewed as money you are willing to lose. your position should be careful analysed so you don’t jeopardize other funds or assets.
3)one of the keys to successful trading is mental independance.
4)you have got to trade outside influencing factors and that means your trading freedom must not be influenced by the fear of losing money you really have earmarked for a specific need.
RULE # 2: KNOW YOURSELF
1)you need an objective temperament, an ability to control emotions and carry a position without losing sleep. Although trading discipline can be developed, the successful traders are unemotional about their positions.
2)there are many exciting things happening in the market everyday so it takes a hard nosed type of attitude and an ability to stand above short term circumstances.If you do not have this attitude you will be changing your mind and your positions every few minutes.
RULE # 3: START SMALL
1)Test your trading ability by making paper trades. then begin to trade small.start with mini account.
2) beginning traders should learn the mechanics of trading before graduating to more volatile contracts.
RULE # 4
O NOT OVER COMMIT
1)One rule of thumb is to keep three times the money in your margin account than is needed for that particular position.Reduce your position if necessary to confirm to that rule.this rule helps you avoid trading decisions based on the amount of money in your margin account.
2) If you are under margined you may be forced to liquidate a position early at a costly loss that could have been avoided.
RULE # 5: ISOLATE YOUR TRADING FROM YOUR DESIRE FOR PROFIT.
1)do not hope for a move so much that your trade is based on hope. The successful trader is able to isolate his trading from his emotion. Although hope is a great virtue in other areas of life, it can be a real hindrance to a trader.
2)When hoping that the market will turn around in their favor beginners often violate basic trading rules. (more…)
Tax Structure in India.. Funny But True
Question 1.. : What are you doing?
Ans. : Business.
Tax : PAY PROFESSIONAL TAX!
Question 2 : What are you doing in Business?
Ans. : Selling the Goods.
Tax : PAY SALES TAX!!
Question 3 : From where are you getting Goods?
Ans. : From other State/Abroad
Tax : PAY CENTRAL SALES TAX, CUSTOM DUTY & OCTROI!
Question 4 : What are you getting in Selling Goods?
Ans. : Profit.
Tax : PAY INCOME TAX!
Question 5: How do you distribute profit ?
Ans : By way of dividend
Tax : PAY DIVIDEND DISTRIBUTION TAX
Question 6 : Where you Manufacturing the Goods?
Ans. : Factory…
Tax : PAY EXCISE DUTY!
Question 7 : Do you have Office / Warehouse / Factory?
Ans. : Yes
Tax : PAY MUNICIPAL & FIRE TAX!
Question 8 : Do you have Staff?
Ans. : Yes
Tax : PAY STAFF PROFESSIONAL TAX! (more…)
Spotting the Best Trades
Let me begin by telling you of my system for isolating trades with odds 10 to 1 in my favor. Those are million dollar odds. Unfortunately, I still haven’t developed a method for calling all the big moves all the time. What I have done is develop a set of criteria that will, when they coincide, tell you the odds are heavily in favor of either an up or down move.
This method seldom speaks, but when it does, you have as close to a sure thing as you’ll ever get. As you will see, this method will not call all the swings, but that’s not its purpose. Its function is to segregate the super trades from trades that are questionable.
Trading in this manner is much easier because it allows you to take a longer term view of the market. I have found there is no need to monitor the market on a trade-by-trade basis, or, at times, even a daily basis. The signals are so strong that you don’t need to concern yourself with a microscopic view.
I use two major tools for selecting “bankable trades”. They are: 1) premium relationships, and 2) open interest. When these two click, the odds are 75% in your favor. To further substantiate the 75% probability, I also check contrary opinion, the market’s reaction to news, trend direction, and a few chart formations.
by Larry Williams, excerpt from his book, How I Made $1,000,000 Trading Commodities Last Year.
A Bad Teacher
The World’s Worst Teacher The market often rewards bad behavior. You exit a stock because your stop is hit. You are okay with this because you followed your plan. The market then immediately reverses. You begin to think, “If only I stayed with the position.” The next time the market goes against you, you decide you are not going to get tricked again. This time though, the market does not reverse and what started out as a small manageable loss is now huge. The market will give you loss after loss forcing you to abandon a methodology right before it takes off without you. On the flip side, the market will lull you into a false sense of confidence. You trade larger and larger, taking on excessive risk. You print money until your risks become so excessive that one or two bad trades wipe you out. Learn from the market, but realize that sometimes it can be a lousy instructor. |
15 Quotes From Leonardo da Vinci -Video
Strategy
- Adaptable- a strategy must be able to adapt to a changing market. It must also be able to adapt to your internal changes. If nothing changes there would be limited chances for profit. Every trader must root for changes but it does not matter if you cannot adapt.
- Definable- there are times when you need to override your strategy but that happens for less frequently than we think. A majority of your trades you should have a definite reason for a action.
- Quickly explainable– if you can’t explain your strategy or reason for a trade in a minute or less it is probably too complicated. Until you fully understand your strategy a majority of your “indicators” are just putting a band-aid over a gaping wound that is your lack of understanding.
- Personal- You are an input into the way you execute. You cannot be something you are not. Do not get me wrong there are things about yourself that you need to bend to trading but strategy should not be that one. It is hard to fake being tall and expensive to be a type of trader you are not.
I am not saying a trading plan will make you a successful trader, there are other factors. It is a necessary first step. You need a trading plan to consistently and confidently execute. Your trading rules should answer whatever questions the market asks you. Originally I made the mistake of planning out my trades, for example. If the market does x I am going to do y. Well when I was creating that plan that was what was working. When I started to apply that plan the market had changed. That is why many probably scrap their plans or do not work on them in the first place.
You are either a system trader or a discretionary trader. Each has it’s own equity curve and set of responsibilities. Below are some videos that you will find helpful.
9 Rules For Traders
1. Don’t Fight the Tape – the trend is your friend, go with Mo (Momentum that is)
2. Don’t Fight the Fed – Fed policy influences interest rates and liquidity – money moves markets.
3. Beware of the Crowd at Extremes – psychology and liquidity are linked, relative relationships revert, valuation = long-term extremes in psychology, general crowd psychology impacts the markets
4. Rely on Objective Indicators – indicators are not perfect but objectively give you consistency, use observable evidence not theoretical
5. Be Disciplined – anchor exposure to facts not gut reaction
6. Practice Risk Management – being right is very difficult…thus, making money needs risk management
7. Remain Flexible – adapt to changes in data, the environment, and the markets
8. Money Management Rules – be humble and flexible – be able to turn emotions upside down, let profits run and cut losses short, think in terms of risk including opportunity risk of missing a bull market, buy the rumor and sell the news
9. Those Who Do Not Study History Are Condemned to Repeat Its Mistakes