Archives of “caution” tag

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Nikkei 225 closes lower by 0.85% at 23,319.87

  
Analysis, Global Indices
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Asian equities slump amid some caution in the risk mood

Nikkei 13-11

Japanese stocks are lower as tariffs continue to be a niggling issue in US-China trade talks. We had Trump threaten more tariffs – should talks not go well – in his speech before a WSJ report noted that both sides are still struggling to find common ground on the matter.

Meanwhile, the civil unrest in Hong Kong is continuing to affect the risk mood in the region as well, with the city continuing to descend into total chaos. The Hang Seng is down by 2.2% on the day as it sinks to session lows at the moment.
US futures are also a tad softer and that is keeping risk trades on edge as we begin the session. The franc is among the better performers with USD/CHF approaching 0.9900 though the yen has given up some of its earlier gains with USD/JPY still around 109.00.

8 Trading Psychology Quotes

  
  Education
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Your biggest enemy, when trading, is within yourself. Success will only come when you learn to control your emotions. Edwin Lefevre’s Reminiscences of a Stock Operator (1923) offers advice that still applies today.

  1. CautionExcitement (and fear of missing an opportunity) often persuade us to enter the market before it is safe to do so. After a down-trend a number of rallies may fail before one eventually carries through. Likewise, the emotional high of a profitable trade may blind us to signs that the trend is reversing.
  2. PatienceWait for the right market conditions before trading. There are times when it is wise to stay out of the market and observe from the sidelines.
  3. ConvictionHave the courage of your convictions: Take steps to protect your profits when you see that a trend is weakening, but sit tight and don’t let fear of losing part of your profit cloud your judgment. There is a good chance that the trend will resume its upward climb. (more…)

Control Your Emotions

  
  Education
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1. Caution.

Excitement (and fear of missing an opportunity) often persuade us to enter the market before it is safe to do so. After a down-trend a number of rallies may fail before one eventually carries through. Likewise, the emotional high of a profitable trade may blind us to signs that the trend is reversing.

2. Patience.

Wait for the right market conditions before trading. There are times when it is wise to stay out of the market and observe from the sidelines.

3. Conviction.

Have the courage of your convictions: Take steps to protect your profits when you see that a trend is weakening, but sit tight and don’t let fear of losing part of your profit cloud your judgment. There is a good chance that the trend will resume its upward climb.

4. Detachment.

Concentrate on the technical aspects rather than on the money. If your trades are technically correct, the profits will follow.

Stay emotionally detached from the market. Avoid getting caught up in the short-term excitement. Screen-watching is a tell-tale sign: if you continually check prices or stare at charts for hours it is a sign that you are unsure of your strategy and are likely to suffer losses.

5. Focus

Focus on the longer time frames and do not try to catch every short-term fluctuation. The most profitable trades are in catching the large trends. (more…)

RESISTANCE, DROP

  
  Education
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Resistance is a powerful word, but in the market it can mean the end of a long climb up the latter of a successful bullish run. Points of resistance aren’t necessarily concrete, think of them more as a tightened rubber band that if you push into it to hard, it can send you plummeting very quickly.

Resistance is what it implies, a possible push against current price action. There are two correct responses you can have at a resistance, turn back (with a proper candlestick confirmation), or wait to see if the resistance is overcome, You never want to go head on into resistance because chances are you will get your butt handed to you. The other thing you don’t want to do is automatically turn back without a little push. YOU DON’T ALWAYS WANT OR HAVE TO BE IN THE MARKET. There are times when you need to be on the sidelines in observation mode; at a point near resistance is one of those times. Trying to break resistance is like trying to run over a locomotive on a bicycle. You can’t do it!! Your best option at resistance is to rest to see either the strength or weakness of your price action. Whether price is successful at demolishing or chipping away resistance or does a turnabout, wait until it makes a concrete decision before following. NOTE: wherever price leads, follow until you get a signal that it is no longer safe to do so, or until you have had your fill of a nice fat profit.

Let other traders jump in front of the locomotive to slow it down; DON’T YOU DO IT! Save yourself and wait until it is safe. Resistance points can either be safety zones put in place to help you protect your profits or the force and authority to crush you if you try to cross the line. When you come to a resistance point it means STOP!!!!, DO NOT PROCEED WITH CAUTION it is a RED LIGHT, when it is green, proceed with caution because there are times when price will break resistance only to fall back limp under the weight of the break through triumph.

12 Wisdom Points for Traders

  
  Education
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1. Now the successful trader prepares before he enters battle.  The unsuccessful trader makes but a few, if any, preparations before he enters battle.  Proper preparation leads to victory; a little preparation leads to defeat; and no preparation leads to ultimate destruction!  The one who is properly prepared is the one who is most likely to win.

2. In trading, let your great object be a quick and decisive victory, not the slow death of a lengthy loss.

3.  If you know who the enemy is and you know yourself, you will never fear the next trade.  If you know yourself but not the enemy, you will win one lose one.  If you do not know the enemy or yourself, you will lose on each trade.

4.  The quality of entry is like a well-timed swoop of a falcon which enables it to strike and destroy its victim.

5.  Proper preparation may be likened to the bending of a crossbow; decision, to the releasing of the trigger.

6.  Just as water retains no constant shape, so in trading know the market is constantly changing.

7.  Ponder and deliberate before you enter a trade. (more…)

Discipline

  
  Education
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discipline-0Every day, every trade requires 100% discipline.

Discipline = Emotional Mastery, A Formula Of Confidence/Caution + Humility.

Confident but no caution = Arrogance. Cautious but not Confident = a lack of Conviction, Weakness.

A freedom from pride & Arrogance is Humility. A Weak Trader will never win in the long run.

A Super Trader = A Disciplined Trader. In Discipline, No Weakness Can Exist.

 

Courage and Trading

  
  Education
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According to Plutarch, “Courage stands halfway between cowardice and rashness…” Clearly, we don’t want to be reckless; and clearly, we don’t want to be hesitant and timid. What we need is a balance. As we go about our trading moderating our greed and our fear to a combination of healthy desire and clear minded caution, we use courage to go forward.

Courage doesn’t mean closing your eyes, holding your nose, and jumping into the deep end. It does mean moving forward with clean and clear perception as well as steadfastness of purpose.

You don’t need courage if you’re totally confident and unafraid. Courage, according to John Wayne, is being scared to death and saddling up anyway. Because people tend to fear the unknown, and the unknown is all that is certain about any given trade, we need to employ courage. Since trading is always new, since anything can happen and it often does, since the wildness lies in wait, we need to overcome uncertainty and fear so that we can appropriately enter, exit, and remain in trades.

When asked what he meant by “guts”, Ernest Hemingway told Dorothy Parker in an interview “grace under pressure”. Trading is all about grace and gracefulness under pressure.

The good news is that courage is like any muscle. It grows and becomes stronger the more you use it. Often as I trade I’m unaware of utilizing courage. I know I’m extremely alert. I may even be excited. I’m not aware of any fear until something starts to go wrong. However, that alertness and excitement is a product of adrenalin running. Excitement or fear comes from the interpretation you give to the adrenalin high. The more you act as if you’re unafraid, the less afraid you become. It all gets easier. Act the part and become the part. Make it your goal to trade with increasing grace under pressure.

The difference between excitement and fear depends of what you are imagining.

Are you imagining loss or are you imagining profit? Of course, you always have to keep the alternative in mind as trading is all about balancing the alternatives, profit with loss. But you don’t have to put loss into the foreground of your mind, because you never would put on a trade unless profit was the probable outcome. Direct your imagination towards profit, and suspend all thoughts of loss–once you’ve put your stops in.

“Don’t cry before you’re hurt.” says a proverb. I would add, don’t mourn a loss before you experience it. Don’t even mourn it after you take it, get on with the next trade, and the next, and the next. Anticipate profit. That’s what you’re there to experience. Ah yes, and as another proverb states: “Fortune favors the brave.”

Trading Wisdom

  
  Education
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We all need to be disciplined along with using good money and risk management skills, yet too much of anything can cause problems.

Sometimes we put so much attention on caution to ensure that we only make good trades that we reduce our actions to the point that we miss so many strong trading opportunities.

Every time we begin our trading sessions, we need to communicate to ourselves that we will be confident, prepared and most importantly… committed to executing trades when our analysis shows that a good trade is in front of us.

Never allow the market, the news, your friends, your past trading session or anything else send you a false signal that causes you to sit back and do nothing when you can easily see from your training that you should execute a trade right now.

There is a Difference Between What People Say and What They Think

  
  Education
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For many, there is a difference between how you think you will act in certain conditions and how you actually act when the time comes. The term used to describe this condition is called empathy gap.

There are two basic scenarios in which empathy gap can impact your performance as a trader/investor:

– you don’t cut your losses when they hit your pre-established exit level. This is the single biggest reason, so many people struggle in the capital markets. One solution to the issue is to enter exit orders, immediately after you initiate an opening order (caution: it does not work with illiquid names, where market makers can easily shake you out);
– you don’t take the signals from your watchlist when they are triggered. Some stocks can really move fast after they pass their tipping point. When that happens, many traders feel like a deer in headlights and are not willing to pay the market price. They’ll put a limit order, hoping that the desired stock will come back and their order will be filled. The best stocks don’t come back. Don’t be afraid to pay the market price for proper breakouts.

In today’s information overloaded world, evidence suggests that 95 per cent of our decisions are made without rational thought. So consciously asking people how they will behave unconsciously is at best naïve and, at worst, can be disastrous for a business. (more…)

Trading Psychology

  
  Education
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Your biggest enemy, when trading, is within yourself. Success will only  come when you learn to control your emotions. Edwin Lefevre’s

 Reminiscences of a Stock Operator (1923) offers advice that still applies  today.

 Caution
 Excitement (and fear of missing an opportunity) often persuade us to enter the market  before it is safe to do so. After a down-trend a number of rallies may fail before one  eventually carries through. Likewise, the emotional high of a profitable trade may blind  us to signs that the trend is reversing.

 Patience
 Wait for the right market conditions before trading. There are times when it is wise to  stay out of the market and observe from the sidelines.

 Conviction
 Have the courage of your convictions: Take steps to protect your profits when you see  that a trend is weakening, but sit tight and don’t let fear of losing part of your profit  cloud your judgment. There is a good chance that the trend will resume its upward  climb.

 Detachment
 Concentrate on the technical aspects rather than on the money. If your trades are  technically correct, the profits will follow.

 Stay emotionally detached from the market. Avoid getting caught up in the short-term  excitement. Screen-watching is a tell-tale sign: if you continually check prices or stare at  charts for hours it is a sign that you are unsure of your strategy and are likely to suffer  losses.

 Focus
 Focus on the longer time frames and do not try to catch every short-term fluctuation.  The most profitable trades are in catching the large trends.

 Expect the unexpected
 Investing involves dealing with probabilities ? not certainties. No one can predict the  market correctly every time. Avoid gamblers? logic.

 Average up – not down
 If you increase your position when price goes against you, you are liable to compound  your losses. When price starts to move it is likely to continue in that direction. Rather  increase your exposure when the market proves you right and moves in your favor.

 Limit your losses
 Use stop-losses to protect your funds. When the stop loss is triggered, act immediately  – don’t hesitate.

 The biggest mistake you can make is to hold on to falling stocks, hoping for a recovery.  Falling stocks have a habit of declining way below what you expected them to.  Eventually you are forced to sell, decimating your capital.

 Human nature being what it is, most traders and investors ignore these  rules when they first start out. It can be an expensive lesson.

 Control your emotions and avoid being swept along with the crowd. Make consistent  decisions based on sound technical analysis.

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