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Risk management is the #1 priority, making money is #2. — #AnirudhSethi

  
Analysis, Education
The eagerness of new traders to earn money comes at the expense of proper risk management, if it is even considered at all. 
A trader must to begin with appropriate position sizing, the positioning of their stop loss, and their win-rate assumptions. 
More than winning streaks or making fantastic judgments, the management of losing streaks and drawdowns will decide whether or not a business will be profitable. 
Few people understand this, which is one reason why so few people are successful traders.
Risk management is the most important aspect of successful trading; without it, nothing else matters since, over the long run, the first losing streak wipes away any profits made in the past. 
Any trader who doesn’t appreciate the dangers in the markets is doomed to fail if they don’t implement risk management strategies. The alternative is disaster.

Stay disciplined with system execution long-term – #AnirudhSethi

  
Analysis, Education
Discipline in trading is sticking to your own trading plan. 
A trader who exercises self-discipline is able to trade a system with the appropriate position sizing, stop-loss levels, and trailing stops over time, just as they had originally intended.
A trader may have feelings of dissociation at times. 
If they spend the time the market is closed researching trading, building a system, and outlining the method they will use to enter and exit trades and how large they will size their positions, they may feel calm and sensible about the process. 
Then, when the market is active and prices are changing and they are winning or losing money, their emotions and ego might flare up and make it more difficult to think rationally and execute their set strategy. 
The mark of a really professional trader is the capacity to act morally even when doing so goes against your gut.
Here are five situations in which a trader may be tempted to let their emotions, wants, or ego get the best of them instead of sticking to their trading plan, and the best way to avoid giving in to those urges.
The consequences of failing to act on a trading signal as soon as it appears can be severe. 
The fear of rejection might prevent you from entering the contest. 
You could not have conviction in your signals because you haven’t backtested them enough, you don’t grasp the edge, or you’re trading too aggressively. 
If you want to trade, you must embrace the possibility of losing money. 
If you’re nervous about entering a trade because of anxiety you may want to reduce the amount of your stake.
“In my opinion, failing to make a crucial deal is far more detrimental to your financial well-being than making a poor trade,” he said. 
“- William Eckhardt
A trader’s lack of self-discipline might lead them to enter a transaction too late, when the odds of success are lower. 
Having the knowledge that any one transaction won’t have much of an impact on the following hundred deals will help you resist the need to chase. 
There will be more opportunities to trade in the future.
In trading, a lack of patience can be shown by jumping into a position too soon. 
Trying to beat the market by purchasing ahead of a signal is risky since you are making irrational purchases. 
A trading signal is a filter that helps you make profitable trades more reliably. 
One cannot have any advantage over other traders if they lack the self-control to wait for their signal.
(more…)

US stocks close lower. NASDAQ lower for the 6th consecutive day

  
Analysis, US Market

The major US indices are all closing lower.

  • The NASDAQ is down for the 6th’s consecutive day. The index is down -7.98% from the closing level on August 25
  • The S&P and Dow industrial average fell 5 the last 6 trading days
  • Energy led the S&P 500. Communication services was the big loser
  • S&P 500 and worst weekly losing streak since June (3 weeks lower)
  • NASDAQ and S&P closed at the lowest level since July 26
  • The Dow is closing at its lowest level since July 18
  • Dow industrial average -338 points or -1.07% at 31318.43
  • S&P index -42.59 points or -1.07% at 3924.27
  • NASDAQ index -154.25 points or -1.31% at 11630.87
  • Russell 2000-13.07 points or -0.72% at 1809.74

For the trading week:

  • Dow industrial average fell -2.97%
  • S&P index fell -3.29%
  • NASDAQ index fell -4.21%
  • Russell 2000 fell -4.74%

US State Department says that Iran’s response to nuclear deal ‘not constructive’

  
Analysis, Politics
  • A US State Department spokesperson said the United States had received Iran’s response to the EU bid to revive the 2015 deal and would formulate its own response.
    “We are studying it and will respond through the EU, but unfortunately it is not constructive,” the State Department spokesperson said.
  • Iran sent its reply to the EU on Thursday after careful examination, Iranian Foreign Ministry spokesperson Nasser Kanaani said in a statement on Telegram. “The sent text has a constructive approach with the aim of finalizing the negotiations,” the statement said.

—

This new news from the US Star=te Dept should act as a tailwind for oil (check out that link above to my earlier post for why)

Iran says its submitted a constructive response to finalize revival of the nuclear deal

  
  Analysis

Iran state media reporting statements from the Iranian Foreign Ministry.

  • Says Iran has submitted a constructive response to US proposals on terms to revive the 2015 nuclear deal
  • Says the response is aimed at finalising the talks

This saga has been going on for months and months and months. Perhaps we are getting close to finalising talks. Or perhaps not.

—

The point for oil traders is the view that if an agreement can be reached then it eases access to oil markets for Iranian exports and thus there is greater supply and thus, at the margin, prices will fall. It’ll take time to ramp up Iranian oil exports of course. And, also of course, that fall in price is based on the ‘all else being equal’ assumption. Which, it never is. In this instance, for example, there may be a reduction in supply from OPEC+ if more Iranian oil enters the market.

—

Oil update:

oil chart 02 September 2022
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