1. “Between stimulus and response, lies our freedom to choose” – Steven Covey
This quote is very important. What it tells us as traders is that there should be a specific setup you’re looking for (a pattern of sorts) and then aspecific protocol that follows it. Too many traders just “wing it” when they are trading instead of having a specific setup and plan that they know works and they know what their risk/reward is. If you don’t know what you’re looking for and you don’t know exactly what you’re doing when you see it, you’re likely headed down the wrong path.
2. Stick to your plan.
It’s extremely easy to lose focus of what you’re doing and start doing what someone else is doing. Stick to your trading plan and what you know works.
3. Ignore the noise.
Noise comes in a variety of ways. At times it’s economics news, at times it’s other traders. It’s not uncommon for traders to seek what other traders think about their trades because they are unsure about their trade setups. Noise for many traders usually results in less profits and larger losses.
4. Be patient.
Anyone who is successful at anything has patience. Whether it’s an athlete, your favorite musician or successful entrepreneurs, they all have patience. You don’t become successful without having patience. Just as important it is to have a set plan and rules, patience is just as important. (more…)
Archives of “athlete” tag
rssDay Trading is like Monopoly
I know a lot of traders who are just eeking by or breaking even at the end of the month. Many of these traders ask what they could be doing better or what my “secret” is.Monopoly. You buy 4 houses and sell them to buy a hotel. In other words, you find a simple, routine, monotonous way of trading and you just do it over and over. Most of the guys I talk to have a trading strategy, most of them have tested it. What they don’t have is the confidence to just stick with it. Trading shouldn’t be a roller coaster, but rather it should be routine like filling out TPS reports.Mental Toughness by Daniel Teitelbaum. In his book he states that you need to break down the walls that are stopping you from reaching success. He has you work on several mental exercises to help you focus on what you need to do. After all, if you knew that you had to take that GOOG trade this morning or your family would die you’d be plenty motivated to take the trade and to do it right.
So what’s the secret? It’s painfully simple – Day Trading (or any type of trading) is like
I think the main reason that most traders can’t stick with it is that they haven’t got enough mental focus. They get tired and sleep in past market open, or they become unsure of themselves so they fail to initalize the first trade of the day when the setup is right in front of them, or they rationalize that some piece of news or the other will do such and such to the market. All of these rationalizations are subconscious disruptions coming to the surface.
If you’ve ever failed to stick with your trading plan and end up taking the one losing trade of the day, I strongly recommend you check out
Make a committment to yourself, to your family and to your trading by taking the next 30 signals without deviating from your trading plan and I guarantee that you will learn the secret to your trading success – you.
The Artist and the Trader
Art is for the Artist. Words must be written, Songs must be sung. Visions must be seen. Not because they are valued; but because they are Ideas. The Artist understands that wealth, true wealth as opposed to simply being rich, stems from Ideas. Great Art is valued, if valued properly, because they express an Idea well. Not always because they express a grand idea.
There is the modern myth that the Artist must not be materialist or wealthy. Whereas the Trader, as an Artist, knows that all Artists are wealthy, but all are not rich. It would seem that a great Trader and the Artist share a similar soul.
For they both :
Take a loss. The modern myth largely stems from the Artist producing their best Ideas to bounce back from a loss. They both believe they can replace their losses with better Ideas.
Respect everyone. An Idea can come from anyone. Every trader has been on the wrong side of a trade against someone of much more limited means, brains and circumstances.
Generous souls. For if wealth comes from Ideas, Ideas can always flow. An Artist never will admit he is out of Ideas. Many only have one grand idea, but die thinking the next grand idea is around the corner.
There is never enough. If Ideas are wealth, Life is to be lived to its fullest. The trader that gives up simply to be rich and preserve their riches has given up on their Ideas. Like the Artist that has sold out, simply producing copies of his once great work. Their admitting that it was either great timing or luck; not skill and belief that their Ideas still matter.
Free souls. Comes from the empowerment of wealth coming from your thoughts.
Drawn to excess. Because Ideas are regenerative, its tempting to believe everything is. Like the young that are blind to time. Or the athlete that believes there is always another game, tomorrow.
TRADING IS SIMPLE. IT’S JUST NOT EASY
How could two phrases sound so similar, but yet be so different?
I think we need to look differences between the context of each phrase.
When I describe the idea of trading being simple, what I really mean is that itshould be effortless. The word effortless is defined by Merriam-Webster Dictionary as:
I believe that good traders are able to trade the markets effortlessly – it’s simple to them. But getting to the point of doing anything effortlessly is noteasy. In fact, it’s really hard. A good analogy would be describing an athletes ability to perform his or her skill. If we took two people – one being a person who runs two miles everyday versus a person who hasn’t ran for the past two months, who will have the easier time running one mile? The answer is simple of course. The person who runs everyday will be able to run one mile easily – it will be effortless to them. However, the person who hasn’t ran in two months will find it extremely hard to and likely have to take breaks in-between so that he or she can finish. (more…)
Winners Trade to Win
As you already know, I am not a slave to conventional wisdom. It is my belief that most popular beliefs held by the masses are not wise at all. This applies to all walks of life, not just the stock market.
The latest bit of unwise conventional wisdom is the idea that one must “focus on not losing money in order to make money”. Play it safe and protect your capital has been a popular mantra over the past month. What a load of crap.
You know what happens when you focus on not losing money? You lose it. Either that or you make meager gains (all hail consistency, as in consistently average!). It’s akin to an athlete playing not to get injured. That is when you get hurt. The team that plays not to lose rarely wins.
In trading, playing not to lose will cause you to pass up on good trades and scare you out of trading volatile, yet lucrative markets. If you have put in the blood, sweat and tears that accompany hard work and dedication, know what you are doing, and have a sound methodology and edge, don’t ever play not to lose.
Note that this doesn’t mean you throw caution to the wind. On the contrary, a trader must be vigilant about managing risk, position size and ones emotions. These three factors, along with having an edge, allow one to play to win, rather than lose, and put on winning trades.
Larry Hite on “Being Wrong”
One final important gem from Larry Hite is that being wrong is okay. He says he was never very good in school and not much of an athlete either. But he turned that to his advantage because he was able to grasp the idea that he could be wrong. In fact, it came as no surprise to him when he was wrong. Hite recalls with pride: “I’ve always built in an assumption of wrongness [in my trading]. I always ask myself: What is the worst thing that can possibly happen in this scenario? Then I use that worst-case scenario as my baseline. I always want to know what I’m risking, and how much I can lose. And sometimes, when you really look at it, there’s really not all that much risk [which is why you can get rich].”