What is the overall direction the market is moving with in your time frame and the larger time frame?
- What time frame will you be trading with your next trade?
- What is your entry signal and what is its historical performance as a winning set up?
- How much money will you risk on this trade?
- How big will your position be for this trade?
- How will you know you are wrong and stop your loss?
- How much profit do you believe is possible if it moves in your favor?
- How will you know when it is time to exit with a profit?
- What is your ratio of reward versus risk?
How many trades will you have on at any one time?
Archives of “Classical mechanics” tag
rssGoals reduce your current happiness
When you’re working toward a goal, you are essentially saying, “I’m not good enough yet, but I will be when I reach my goal.”
The problem with this mindset is that you’re teaching yourself to always put happiness and success off until the next milestone is achieved. “Once I reach my goal, then I’ll be happy. Once I achieve my goal, then I’ll be successful.”
SOLUTION: Commit to a process, not a goal. (more…)
9 Rules For Traders
1. Don’t Fight the Tape – the trend is your friend, go with Mo (Momentum that is)
2. Don’t Fight the Fed – Fed policy influences interest rates and liquidity – money moves markets.
3. Beware of the Crowd at Extremes – psychology and liquidity are linked, relative relationships revert, valuation = long-term extremes in psychology, general crowd psychology impacts the markets
4. Rely on Objective Indicators – indicators are not perfect but objectively give you consistency, use observable evidence not theoretical
5. Be Disciplined – anchor exposure to facts not gut reaction
6. Practice Risk Management – being right is very difficult…thus, making money needs risk management
7. Remain Flexible – adapt to changes in data, the environment, and the markets
8. Money Management Rules – be humble and flexible – be able to turn emotions upside down, let profits run and cut losses short, think in terms of risk including opportunity risk of missing a bull market, buy the rumor and sell the news
9. Those Who Do Not Study History Are Condemned to Repeat Its Mistakes
6 Lessons from Paul Tudor Jones
- I approach every stock with the understanding that my knowledge is imperfect, that I could be wrong and I give myself permission to make mistakes.
- If something falls more than 10% versus the market, I force myself to re-evaluate my thesis and think about how I could be wrong – what is the price action trying to tell me.
- I ask myself if I didn’t own the stock here, would I buy it today. If the answer is no, I sell immediately.
- If something falls below its 200-day moving average I sell 50% of the position right away, and again re-evaluate my thesis.
- If a position is causing me a lot of stress or is consuming an undue amount of time on a weekly basis, I cut 50% – the position is obviously too big.
- If I wake up worried about a position repeatedly, I cut it 50% immediately.
