1) Patient with winners and impatient with losers
2) Making money is more important than being right
3) View Tech Analysis as a picture of where traders are lining up to buy and sell
4) Before they enter every trade they will know profit target or stop exit
5) Approach trade no.5 with the same conviction as the previous 4 losing trades
6) Use naked charts
a) As we mature we begin peeling off indicators
b) Prices action is key
7) Comfortable making decisions with incomplete information
8) Stopped trying to pick tops & bottoms long ago
a) They make their money in the meat/middle of a trend (wait for confirmation)
b) A trend is much more likely to continue than it is to reverse
9) Do not think of the market as expensive or cheap
a) Ignore whether you think something is overpriced or understand, think price action
10) Aggressive with trade size when doing well or modest when not
a) Do more of what is making, less of what is not
11) Realised that the market will be open tomorrow (more…)
Archives of “bottoms” tag
rssSumo Trading
The market trades much differently at bottoms than in the middle, and the tops. How to figure where we are is in part disclosed by how the market trades. Entries and trades should be completely different, but its very very hard to switch gears from day to day.
Seems like Sumo trading where one side gets the momo and knocks the other side clean out of the ring till the next match at few moments later.
OVERCONFIDENCE
It is common for traders to complain of a lack of confidence in their trading, but very often it is overconfidence that does them in. Overconfidence results from a lack of appreciation of the complexity of markets and an underestimation of the challenges of trading them successfully. In a sense, overconfident traders lack respect for the markets. They think that reading about a few setups or buying the newest software will prepare them to make money. Overconfident traders don’t want to work their way up the trading ladder: they resist the idea that screen time is the best teacher. They also chafe at the idea of growing their account. Rather than start with one contract and wait until they’re profitable before trading larger size, they want big positions—and profits—right away. Because they’re so eager to make money—and so sure they can make it—overconfident traders generally trade impulsively. They won’t wait for the setup to form; they’ll jump the gun—and get whipsawed in the process. Instead of being patient and waiting for short-term patterns to align with longer-term patterns, they will take every trade, enriching their brokers in the process. (more…)
10 Trading Thoughts
1. You only have three choices when you are in a bad position, and it is not hard to figure out what to do:
(1) Get out
(2) Double up, or
(3) Spread it off.
I have always found getting out to be the best of all three choices.
- No opinion on the market or you are doubtful about market direction? Then stay out. Remember, when in doubt, stay out.
- Don’t ever let anyone know how big your wallet is, and don’t ever let anyone know how small it is either.
- If you snooze, you lose. Know your markets, when they trade, and what reports will affect the market price.
- The markets will always let you in on the losers; the market’s job is to keep you out of winners. Dump the dogs and ride the winning tide.
- Stops are not for sissies.
- Plan your trade, then trade your plan. He who fails to plan, plans to fail.
- Buy the rumor and sell the fact. Watch for volatility in these situations; it usually marks tops or bottoms in the markets.
- Buy low, sell high. Or buy it when nobody wants it, and sell it when everybody has to have it!
- It’s okay to lose your shirt, just don’t lose your pants; that is where your wallet is.
One last thought to leave with you. It applies not only to every-day life but to trading the markets as well:
Success is measured not so much by the wealth or position you have gained, but rather by the obstacles you have overcome to succeed!
You might be a bad trader if……….
There are young people in the market that are really bad traders and there is also old traders that are very good, but there are no old bad traders in the market because they went broke and gave up a long time ago.
You might be a bad trader if……….
…your primary method is to try to call tops and pick bottoms.
“Don’t try to buy at the bottom and sell at the top. It can’t be done except by liars.” -Bernard Baruch
You might be a bad trader if……….
…instead of benefiting from the 200 point run in Apple this year you actually lost money by fighting the trend.
“Cardinal Rule #1 is to sell short only during what you believe is a developing bear market, not a bull market.” -William O’Neil (more…)
Surfing and Trading
– After a lull (chop, quiet market) a new set of waves (setups, breakouts) will appear. Often, the first wave is not the best wave. Don’t get too excited because you see an OK wave (false breakout) after you haven’t seen any good ones at all. Often there is a better one behind it (look for confirmation).
– If you catch a wave ride it as long as you can, until you see yourself heading into shore, rocks, or other people (end of trend).
– Get into position and be ready to go for a wave so you’re ready to take a good setup once it appears. (focus, attention)
– Once you see a wave you want, commit to it to getting on it. Paddle as fast as you can to get enough speed to go with the wave. (have a plan, preparation, confidence with entry, execute with precision)
– Don’t try to catch the wave too early, make sure it has built up enough energy to carry you along (overly eager entries, wait for confirmation)
– Don’t catch the wave too late or else you’ll catch it on the top of the wave and it will throw you down into the seabed (buying tops or selling bottoms)
– Don’t try to surf every wave (over trading), just the ones that look easy to catch and worth the energy required to catch and ride it (capital preservation, high probability trades)
Any other surfers out there have some surfing/trading parallels? – If there’s no waves (setups) be patient and enjoy the water and sun. A setup will come. If not, then it wasn’t meant to be (sit on hands day) or not a good spot (market). Come back tomorrow or find another spot. Don’t try to make something of nothing.
Overconfidence
It is common for traders to complain of a lack of confidence in their trading, but very often it is overconfidence that does them in. Overconfidence results from a lack of appreciation of the complexity of markets and an underestimation of the challenges of trading them successfully. In a sense, overconfident traders lack respect for the markets. They think that reading about a few setups or buying the newest software will prepare them to make money. Overconfident traders don’t want to work their way up the trading ladder: they resist the idea that screen time is the best teacher. They also chafe at the idea of growing their account. Rather than start with one contract and wait until they’re profitable before trading larger size, they want big positions—and profits—right away. Because they’re so eager to make money—and so sure they can make it—overconfident traders generally trade impulsively. They won’t wait for the setup to form; they’ll jump the gun—and get whipsawed in the process. Instead of being patient and waiting for short-term patterns to align with longer-term patterns, they will take every trade, enriching their brokers in the process. (more…)
20 Habits of Great Traders
1) Patient with winners and impatient with losers
2) Making money is more important than being right
3) View Tech Analysis as a picture of where traders are lining up to buy and sell
4) Before they enter every trade they will know profit target or stop exit
5) Approach trade no.5 with the same conviction as the previous 4 losing trades
6) Use naked charts
a) As we mature we begin peeling off indicators
b) Prices action is key (more…)