Archives of “bad habits” tag

rss

Risk Management Game

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

A random person is pulled off the street and given $10,000 to trade.  They have no prior experience which, on the bright side, means they have no bad habits, emotional baggage, or preconceived notions.  Before trading they go through a five day crash course on market basics (order entry process, chart reading, pattern recognition, etc…).  Suppose you are tasked with the responsibility of drafting a set of risk management rules which they are required to abide by.  The objective is to make them survive as long as possible in the trading arena so they can learn as much as possible through first-hand experience.

What types of rules would you set?

The ideal approach of course is to structure a set of rules which makes it as difficult as possible to blow up the account while still leaving them open to accumulating profits.  The goal isn’t so much helping them capture large gains as much as it is helping them survive.  After learning how to survive, then they can modify their approach to being more aggressive and seeking larger gains.

Here are two of my top rules: (more…)

The Old Is Forever New-Trading Wisdom

  
  Education
#  #  #  #  #  #  #  #

It does not really matter whether you have just begun your trading career or have been trading for years, at times we need to go back to the basics.

The very first group of skills and reasons that brought us into trading can be the very foundations that can lift us to new heights.

It does not matter how old an idea is, when it is revisited, it will have a new impact on us, because we now have additional experiences to apply them to which will bring about new results.

All of us as traders can easily slip into some bad habits and never know it. If we stop and return to our first learning sessions, we will find powerful skill sets from some very basic knowledge.

Remember, it is not how much knowledge that you have that determines your success, but what you do with that knowledge that really brings about the levels and rewards from your efforts.

Visualise and Be Motivated

  
  Education
#  #  #  #

cat lion mirrorFirst, visualise the bad habits that you had. How do you feel? Terrible? Fuel with regrets? Uncomfortable? Now, make a note of the negative emotions and remind yourself how badly you want to get away from it.

Next, visualise the new but good habits that you intent to acquire. Again, how do you feel about it? Excited? Energised? Happy? If so, make a note of the positive emotions and compare it with the negative ones.

With that, do you feel motivated to change? I hope the answer is yes. And make sure to apply the same technique frequently to remind yourself that you really want to change.

The Power of Focus

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

Let’s take a break and look at some trading psychology tips. Today our ideas are coming from one of my favorite books that’s not really trading-oriented. We’re going to be looking at a few highlights from a book called “The Power Of Focus”, by Jack Canfield, Mark Hansen, and Les Hewitt. While there’s no way to do the book justice in our limited space here, hopefully you’ll take away some of the more important pieces of the book. And best of all, you’ll be able to apply them immediately.

Your habits will determine your future. This is not news to any of us, but what I found interesting was something of an aside in the book. The book contends that the results of bad habits don’t show up until well after the habit has been learned. That’s unfortunate too, as we all know that it’s incredibly difficult to unlearn something. The implication is that that you’ll be engaging in a destructive behavior, but you may not know it until it’s far too late to actually do anything about it. In fact, up to 90% of your everyday behavior is based on habits. Have you made it a habit to spend an hour a day preparing and doing trade research? Have you committed to waking up an hour earlier to plan your trading or work day? Or do you hit the snooze button a few times, and miss out on reviewing the news and charts of your positions? Habits are the key to success.

Your goals must have a number. And this doesn’t just mean the total returns on your trades, as an overall goal is still too ambiguous to actually use in making daily plans. You need to know how many trades per day, week, or month it will take to achieve your goal. Of course, you’ll also need to know what type of return you need to average on each trade to reach that goal. As the book states so accurately, “a goal without a number is just a slogan.”

Take decisive action. They say 80% of success is showing up, and that’s probably a pretty good rule of thumb. So how does one “show up” to be a trader? By taking trading action! And if you’re not taking the action you know you should be taking, you absolutely must understand and admit that you’re procrastinating. Stings, doesn’t it? But recognizing the truth is the first step to attacking any problem. The book explains six reasons for procrastination; think about which ones apply to you.
1) You’re bored.
2) You’re overwhelmed.
3) Your confidence has slipped.
4) You have low self-esteem.
5) You don’t enjoy what you do.
6) You’re easily distracted. (more…)

Trading Psychology

  
  Education
#  #  #  #  #  #  #  #  #  #
  • Are you trading because you want to trade? Consider trading a business not a game.
  • Are you not trading? This is the opposite of trading too often. You may be so scared of taking a loss that you avoid trading altogether.
  • If you get stopped out of several stocks, walk away.Paper trade until the profits return.
  • Follow the system.Would you be making more money if you followed your trading signals? Understand why you’re ignoring the signals you receive.
  • Don’t overtrade.Sometimes the best place for cash is in the bank. You don’t HAVE to trade.
  • Learn from mistakes. Review your trades periodically. It’ll uncover bad habits.
  • Focus on the positive. The loss your suffered today pales to the killing you made last week.
  • Ignore profits. If you find yourself getting nervous about a winning trade or making too much money, then concentrate not on the bottom line but on improving your trading skills. Get used to making too much money.
  • Obey your trading signals. Otherwise, what are you trading for? Plan your trade and trade your plan.
  • Don’t trade when you’re upset.This also goes for being too excited.
  • Abandoning a winning system. Don’t become bored with your winning system and search for new, more exciting ways to lose money.

Trading Psychology

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #

salespic5Are you trading because you want to trade? Consider trading a business not a game.
Are you not trading? This is the opposite of trading too often. You may be so scared
of taking a loss that you avoid trading altogether.
If you get stopped out of several stocks, walk away. Paper trade until the profits return.
Follow the system. Would you be making more money if you followed your trading
signals? Understand why you’re ignoring the signals you receive.
Don’t overtrade. Sometimes the best place for cash is in the bank. You don’t HAVE
to trade.
Learn from mistakes. Review your trades periodically. It’ll uncover bad habits.
Focus on the positive. The loss your suffered today pales to the killing you made last
week.
Ignore profits. If you find yourself getting nervous about a winning trade or making
too much money, then concentrate not on the bottom line but on improving your
trading skills. Get used to making too much money.
Obey your trading signals. Otherwise, what are you trading for? Plan your trade and
trade your plan.
Don’t trade when you’re upset. This also goes for being too excited.
Abandoning a winning system. Don’t become bored with your winning system and
search for new, more exciting ways to lose money.

 

The 10 Bad Habits of Unprofitable Traders

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #

The 10 Bad Habits of Unprofitable Traders

  1. They  trade too much. A major edge small traders have over institutions is that we can pick our trades carefully and only trade the best trends and entries. The less I trade the more money I make because being picky is an edge, over trading is a sure path to losses.
  2. Unprofitable traders tend to be trend fighters always wanting to try to call tops and bottoms, while they eventually will be right there account will likely be too small by then to really profit from the actual reversal. The money is made swimming with the flow of the river not paddling up stream the whole time.
  3. Taking small profits quickly and letting losing trades run in the hopes of a bounce back is a sure path to failure. The whole thing that makes traders profitable is their risk/reward ratio, big wins and small losses. Being quick to take profits but allowing losses to grow is a sure way to eventually blow up your trading account.
  4. Wanting to be right more than wanting to make money will be VERY expensive because  the trader won’t  want to take losses and he definitely will not want to reverse his position and get on the right side of the market because in his mind that is a failure, in a profitable trader’s mind that is a success if they start making money.
  5. Unprofitable traders trade too big and risk too much to make too little. The biggest key to profitability is to not to have BIG LOSSES. Your wins can be as big as you like but the downside has to be limited.
  6. Unprofitable traders watch BLUE CHANNELS for trading ideas. Just stop it. (more…)

7 Bad Habits of Traders

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

  1. Trading with no stop losses. You can’t control your profits but you can control and limit your losses with a planned exit. Not having an exit plan can be very expensive when a trend takes off against you and you start hoping instead of just cutting your losses and moving on.BAD-HABITS

  2. Your opinion can be very expensive. Trading your opinion against all other market participants can be very expensive. The market goes where it wants and when you disagree with where it is going it will cost you.
  3. “Egos are expensive things.” – Ray C. Freeman. Inflated egos cause a trader’s #1 priority to be proving they are right and refusing to admit when they are wrong. It is very expensive for ego gratification to be above making money.
  4. Trading off predictions can cost a lot of money when they are wrong. There is more to be made by reacting to what the market is doing instead of predicting what you think it will do later.
  5. Stubbornness causes small losses to become big losses. It causes a trader to make the same mistake over and over becasue they do not assimilate feedback they keep doing the same thing over and over and getting the same results.
  6. Not having an exit strategy for a winning trade can be very expensive, it is possible to ride a big winning trade into being a big loser if you do not have a set way to take profits. Trailing stops and targets can put the profits in the bank.

  7. Trading too big of position sizes for your account size can be very costly because no manner how good your winning trades are you are set up to give back the profits with a few big losing trades.

I Trade In The Zone.

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #
  1. I Trade In The Zone’. I Trade IN The Moment, IN The Present, With Total Disregard For What Others Think & Feel About Me.
  2. ‘I Trade In The Zone’. I Ignore ALLEmotions & Defensive Perspectives. I Trade; I Do, I Act From An Entirely Detached & Impartial Perspective.
  3. ‘I Trade In The Zone’. Only In The Zone Do I See The Market As It Truly Is.
  4. ‘I Trade In The Zone’. I Block Out ALL Bad Habits & Self-Limiting Beliefs Attained From My Past, My Environment & Their Surrounding Noise.
  5. ‘I Trade In The Zone’. My Mind Is Pure, Clear, Focused & Yet Empty. The product Of‘Choice’ Means I ALWAYS Can; At Will, ‘Trade In The Zone’.
  6. ‘I Trade In The Zone’. I Trade Without Ego, Never Reacting To Pain, Sorrow Or Fear. I Just Trade The Market As It Truly Is. I Am A Super Trader, I Am The Master Of My Emotions, & So I Can Trade In The Zone. ‘I TRADE IN THE ZONE’.
  7. ‘I Trade In The Zone’. Trading In MY Zone Means I Distinguish Actual Reality From My Interpretations & Projections Of Reality. I Control The Zone!
  8. ‘I Trade In The Zone’. Only In The Zone, My Centred State, Can I ‘Super Trade.’ I Flow With Trends, I Spot Reversals & Breakouts; I Cut Losses Without Hesitancy & Let My Profits Run Perpetually. ‘I Trade In The Zone’.
  9. The Zone Is Where I Live; It’s My Nirvana, My Sanctuary, My Paradise, My Heaven.
  10. I LIVE & TRADE In The Zone. The Zone Is In Me; & The Key To Enter Is Within Me Forever!

Practice does *not* make perfect.

  
  Education
#  #  #  #  #

Only *perfect practice* makes perfect. I learned this in my younger years, pursuing a professional baseball career. Perfect practice will keep your losses smaller than your gains in the trading business.  

There are a lot of things involved in perfect practice. When you get tired, or when the phone rings, or whatnot, *don’t trade*. Always, *always* exit trades exactly the way I’ve outlined above on every trade in every market condition. Always *wait* for your pitch, the well-timed setup for entering. Don’t practice sloppy entries just because you’re bored. Only perfect practice will help you. Anything else just amounts to practicing bad habits.

Go to top