“The market does not know you exist. You can do nothing to influence it. You can only control your behavior.”
“The ocean does not care about your welfare, but it has no wish to hurt you either. You may feel joy on a sunny day, when a gentle wind pushes your sailboat where you want it to go. You may feel panic on a stormy day when the ocean pushes your boat toward the rocks. Your feelings about the ocean exist only in your mind.”
“A sailor cannot control the ocean, but he can control himself. He studies currents and weather patterns. He learns safe sailing techniques and gains experience. He knows when to sail and when to stay in the harbor.”
“When joy sweeps you off your feet, you will make irrational trades and lose. When fear grips you, you’ll miss profitable trades. A professional trader uses his head and stays calm. Only amateurs become excited or depressed because of their trades.”
I still need to control my emotions, thus I am still an amateur trader. No matter how much I try to pretend to myself to not get excited or fearful, its impossible. You just cant lie to yourself… This is the one other skill I need to work on psychology wise.
On a side note I would like to share with you what attracts me about trading (more…)
Archives of “amateurs” tag
rss40 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.
William Eckhardt-Quotes
I take the point of view that missing an important trade is a much more serious error than making a bad trade.
Buying on retracement is psychologically seductive because you feel you’re getting a bargain versus the price you saw a while ago. However, I feel that approach contains more than a drop of poison.
You shouldn’t plan to risk more than 2 percent on a trade. Although, of course, you could still lose more if the market gaps beyond your intended point of exit.
I haven’t seen much correlation between good trading and intelligence. Some outstanding traders are quite intelligent, but a few aren’t. Many outstanding intelligent people are horrible traders. Average intelligence is enough. Beyond that, emotional makeup is more important.
The answer to the question of whether trading can be taught has to be an unqualified yes. Anyone with average intelligence can learn to trade. This is not rocket science.
If you bring normal human habits and tendencies to trading, you’ll gravitate toward the majority and inevitably lose. (more…)
On Losses (and Profits).
- ‘Tradings only real secret is… The best loser is the long-term winner’ – Phantom
- “Trading is a losing game, the best loser is the long-term winner” – Anonymous.
- ‘Losses can either be lost money, or tuition in the school of trading’ – Courtesy of Mark Moskowitz.
- ‘The worst advice I use to get was. – ‘No one went broke taking a profit’’. – Courtesy of John Berra.
- “It seems that the necessary thing to do is not to fear mistakes, to plunge in, to do the best that one can, hoping to learn enough from blunders to correct them eventually.” – Abraham Maslow
- ‘“Learn to like your losses”. Why? Because they are small!’ – Courtesy of Stuart A.Brown.
- “One common adage…that is completely wrongheaded is: You can’t go broke taking profits. That’s precisely how many traders do go broke. While amateurs go broke by taking large losses, professionals go broke by taking small profits.” – William Eckhardt.
- “Its not about being right or wrong, rather, its about how much money you make when you’re right and how much you don’t lose when you’re wrong.” – George Soros.
- “The first loss is the best loss.” – Jim Rogers.
- “Losers average Losers”…Paul Tudor Jones.
- “You learn nothing from your winners and everything from your losers.” – Courtesy of Jeff Horn.
- ·“To become a Master Trader, you must first be a successful loser.” – Jeff Horn.
4 Trading Quotes for Today's Trading Session
“You must practice being a successful trader first. From that state of mind you will get information about what to do, and that will produce what you want to have.”
“Excellence is about stepping outside the comfort zone, training with a spirit of endeavor, and accepting the inevitability of trials and tribulations. Progress is built, in effect, upon the foundations of necessary failure.”
“Amateurs keep thinking what trades to get into, while professionals spend just as much time figuring out their exits.”
“Confidence doesn’t come from being right all the time: it comes from surviving the many occasions of being wrong.” Brent Steenbarger, The Daily Trading Coach “When you attain some degree of control over yourself, you can then see how other traders are not in control of what happens to them.”
List of Mistakes by Traders
Hesitation – fear of putting on a trade where price signals an entry because of what you think could possibly happen. Hey, it’s game of probability, and you’ll miss 100% of the shots you don’t take.
Chasing – running after the trade you hesitated on because of thinking about it too much, and now you think it will go forever without you. (It may go a long way without you, but don’t worry, another train will come along in a while.)
Overleveraging, averaging down, letting a loser run, trading without protective stops – all caused by the fact you are so certain price will do a certain thing that risk management is for stupid amateurs who get shaken out of “good” positions just when price is about to finally run their way.
Trading against a strong trend – you think price has run too high or too low because you have special indicators that tell you price is “overbought” or “oversold” and therefore has to reverse, even though price is showing you otherwise.
Taking profits too soon – you think no one ever went broke taking a profit and you think that normal price action retracements are reversals, so you grab tiny profits, while allowing losing trades to hit full stop, leaving you with a very poor reward:risk ratio.
10 Habits of Successful Traders
1. Follow the Rule of Three. The rule of three simply states that a trade will not be made unless you can carefully articulate three reasons for doing so. This eliminates trading from an indicator alone.
2. Keep Losses Small. It is vitally important to keep losses small as most all of large losses began as small ones, and large losses can put an end to your trading career.
3. Adjust Stops. When a trade is working move your stop loss up in order to lock in gains.
4. Keep Commissions Low. There is a cost to trading but there is no reason to overpay brokerage fees. A discount brokerage is just as good as a premium brand name one.
5. Amateurs at the Open, Pros at the Close. The best time to enter trades are after lunch when the professionals are looking to get in at a better price than one provided in the morning.
6. Know the General Market Trend. When trading individual stocks make sure you trade with the general market trend or condition, not against it.
7. Write Down Every Trade. Doing this will allow you to learn what is working and what is not. It will also help you determine what types of trades work best for your personality.
8. Never Average Down a Losing Position. It is a loser’s game when you add to a loser. You add to winning positions because they are winners and are proving themselves to be such.
9. Never Overtrade. Overtrading is a direct result of not following a well thought out plan, deciding it is best to trade off emotion instead. This will do nothing but cause frustration and a loss of money.
10. Give 10 Percent Away. Money works the fastest when it is divided. When we share we prime the economic pump of the universe.
Trading is a game of rules. We either make the decision to abide by them or we break them. We do the latter at our own peril.
Investing vs Gambling
“Investors are the big gamblers. They make a bet, stay with it, and if it goes the wrong way, they lose it all.”
Jesse Livermore
Not having an exit strategy before initiating a trading position is worse than gambling, where you realize that the chance to lose is too big, therefore you risk only money you can afford to lose. Not having a stop loss means that you are most likely risking more than you could afford to lose. As they say amateurs go out of business because of taking big losses. Professionals go out of business by taking small profits. Cut your losses short when your stop level is hit. Even more, make sure to put your stop loss order immediately after you initiate a trade. Put your stop loss at a place where the trend you are following will be over. Let your profits run by gradually lifting you profit protection stop order. In order to maximize your profits you have to be willing to give some of them back.
I” don’t believe anyone ever gets wiped out in the market because of bad luck; there is always some other reason for it. Either you were off when you did the trade, or you didn’t have the experience. There is always a mistake involved.”
Newton’s Law of Trading Rules: Every lousy trading rule has an equal and opposite trading rule.
“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.
Take your losses quickly. But don’t get scared out of a good position. Good luck with that.
Amateurs trade in the morning, pros trade in the afternoon, junkies trade overnight and lots of guys on TV just trade on paper. Good luck with that.
Be tactical and stay informed! But don’t try to time the market. Good luck with that.”
William Eckhardt Quotes
Partner of perhaps the best-known futures speculator of our time, Richard Dennis.Created the famous trading group known as the Turtles. William has averaged over 62 percent return.
Partner of perhaps the best-known futures speculator of our time, Richard Dennis.Created the famous trading group known as the Turtles. William has averaged over 62 percent return. “I take the point of view that missing an important trade is a much more serious error than making a bad trade”.
”Buying on retracement is psychologically seductive because you feel you’re getting a bargain versus the price you saw a while ago. However, I feel that approach contains more than a drop of poison.”
”You shouldn’t plan to risk more than 2 percent on a trade. Although, of course, you could still lose more if the market gaps beyond your intended point of exit.”
”I haven’t seen much correlation between good trading and intelligence. Some outstanding traders are quite intelligent, but a few aren’t. Many outstanding intelligent people are horrible traders. Average intelligence is enough. Beyond that, emotional makeup is more important.”
”The answer to the question of whether trading can be taught has to be an unqualified yes. Anyone with average intelligence can learn to trade. This is not rocket science.”
”If you bring normal human habits and tendencies to trading, you’ll gravitate toward the majority and inevitably lose.”
”Watch idly while profit-taking opportunities arise, but in adversity run like a jackrabbit.”
”One adage that is completely wrongheaded is that you can’t go broke taking profits. That’s precisely how many traders do go broke. While amateurs go broke taking large losses, professionals go broke by taking small profits.”
”What feels good is often the wrong thing to do.”
”Human nature does not operate to maximize gain but rather to maximize the chance of a gain. The desire to maximize the number of winning trades (or minimize the number of losing trades) works against the trader. The success rate of trades is the least important performance statistic and may even be inversely related to performance.”
”Two of the cardinal sins of trading – giving losses too much rope and taking profits prematurely – are both attempts to make current positions more likely to succeed, to the severe detriment of long-term performance.”
”Don’t think about what the market’s going to do; you have absolutely no control over that. Think about what you’re going to do if it gets there.”
”It is a common notion that after you have profits from your original equity, you can start taking even greater risks because now you are playing with ‘their money’. We are sure you have heard this. Once you have profit, you’re playing with ‘their money’. It’s a comforting thought. It certainly can’t be as bad to lose ‘their money’ as ‘yours’? Right? Wrong. Why should it matter whom the money used to belong to? What matters is who it belongs to now and what to do about it. And in this case it all belongs to you.”