Archives of “commodity market” tag

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There are 3 Types of Traders

  
Analysis, Education
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What kind of person you are “outside the charts” will help determine what kind of trader you will be “inside the charts”.

If you are of the first kind, “the wills”,  you will overcome all the obstacles on your way to consistent success.  You will accept, even embrace, uncertainty as the driving force behind the next big opportunity for gain.  You will lose gracefully and move on to the next trade, knowing that trading is a game of probabilities and possibilities; not certainties and absolutes.  You will leave money on the table, thankful for what you were able to gain; not bitter by what was left.  If you are of the first kind you will succeed. You will indeed.

If you are of the second kind, “the won’ts”, you will look for the always elusive easy road to riches.  You won’t believe in the effort required to become a disciplined trader, driven by solid habits repeated daily. You won’t apply the skill necessary for managing risk as that would require planning and preparation, something you just do not have time for.   You won’t develop your own well defined trading edge, depending instead upon others to do it for you. If you are of the second kind your opposition to anything other than what is easy will make it quite difficult to succeed when times get tough, and they will but you won’t.

If you are of the third kind, “the can’ts”,  you will blame everyone and everything for your failures.  You can’t succeed because you are too busy finding fault in any trading strategy that produces a loss.  You can’t succeed because anyone who does so has some special knowledge or gift that you obviously cannot possess.  You can’t succeed because the market is rigged.  If you are of the third kind…quit. You are a quitter with a quitter’s attitude.  Be in the majority. Be a can’t. It’s easy.

So, what kind of person (trader) are you?

Neuroscience in Trading :Anirudh Sethi

  
Analysis, Education
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Image result for Neuroscience in tradingTrading is an interesting field to say the least. It revolves around a great deal of decision making, and a lot of choices which will have diverse effects. What is responsible for the decisions made? Naturally, the trader’s thoughts and considerations in relation to his or her trading experience. So, to a certain extent neuroscience comes into the picture.

Neuroscience refers to the way the brain works, along with its cognitive functions. In fact neuroscientists focus their studies on the human brain, and how it has an impact on behavior and thinking functions.

Financial decisions are very important, and it goes without saying that they are affected by the individual’s financial literacy, experience as well as cognitive constraints. Decisions are also affected by one’s level of confidence, level of objectivity, and the element of risk involved. The amount of money involved is also prevalent, as the higher it is, the bigger the risks are and the more cautious one is more likely to be, as long as greed and over confidence do not cloud one’s decision. Thus, there are several factors which all have an effect on the decision that is finally made.

Therefore the neuroscience behind trading decisions is a very complex matter. Despite efforts to try to understand how the brain works and how it effects trading psychology and the subsequent decisions made by traders, one cannot say for sure how it all works out as there are so many factors and issues involved. There are however some patterns and trends that were noted after neuroscientists conducted certain studies in this regard.

For instance, there is a general belief that traders invest in a diversified portfolio in order to limit risk, and once this is done, they are less pressured to make substantial trading decisions since they have their investments spread out quite well. There are others who prefer to take bigger risks because they want to stick to certain stocks only, because they have a belief that they are going to do better off that way. Evidently in this case pride and confidence comes into play. (more…)

THE 3 PHASES OF A TRADE

  
Analysis, Education
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The ANTICIPATION Phase:  this is where all the left hand chart reading takes place in preparation for the right hand chart battle. It’s the PROCESS that precedes the ACTION to put on a trade. A technical trader anticipates that a past price pattern will repeat again, so he identifies the pattern, locates a current one and determines a suitable match is present.  Technical analysis is nothing more than finding previous price patterns matched with current market conditions.  Traders anticipate such repetitive behavior based on human nature and seek to take advantage of it.

The ACTION phase involves hitting the BUY key based on the previous ANTICIPATION process.  Since no one can tell the future or what the right hand side of the chart will reveal, the ACTION is based on the confidence that the trader will do what is right once a trade is put on, which is to exit gracefully at a pre-determined loss line or exit humbly at a pre-determined profit target , fully accepting either/or, or an OUTCOME between one or the other, depending on current market conditions.

The REINFORCEMENT phase occurs after the trade is closed.  Whether or not the trade is a win, lose, or draw, the self-talk immediately following trade closure is vitally important for the next trade, and even the next series of trades, as future trades can be negatively or positively affected by building pathways to future success.  These pathways are neurologically based and can make or break a successful trading career.  While it is important to ANTICIPATE right side chart OUTCOMES, what is more important is DEVELOPING right side brain reinforcement.

Probability in Trading

  
Analysis, Education
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The indulgence of probability

Probability in day trading is an extremely flexible and equally subjective authority. It is one such aspect that provides for a comprehensive room in terms of making decisions and analysing the potential effects of the decision as well. It can be envisioned as a semi-mechanical process which is based on an automated system comprising of various probabilities that depict two possible results at the end of it all.

Application of the laws of probability to determine market curve

The laws of probability are majorly applied to the stock market arena in speculating the growth curve. One of the most common examples is the influence of present growth on a stock. For instance the laws of probability in stock market confers to the fact that a stock is expected to underperform following an adverse growth session since major players tend to reap in the benefits without further risk involvement.

The substantial loss is incurred since major proportions of the people seemingly think alike and want to either cash out with the profits they have made or simply by virtue of the fear of losing money. Either way the scenario is completely structured owing to the presumptuous thinking of the common people and the misguiding statistical analysis with probability at its core.

It is therefore easily understandable that probability plays a comprehensive role at the crux of shaping the stock market manoeuvres. Probability in day trading is completely speculative yet self-induced as well. In an easier and subtle language it can be envisioned as a pseudo element that helps to shape the movements. It is significantly a common entity that is extensively present at the back of the mind in each trader.  

Probability based trading (more…)

Market Gravitates or We Spot those LEVELS…. Mystery !!

  
Analysis, Education
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BANK NIFTY

Here in this very space we have written Y’day and updated today intra-day too: @ 9106 wrote to Sell CNX Bank INDEX on any Rise. It would tumble to 8719 level very shortly.  Bang on… just in 48 hrs it collapsed to exactly our level, precisely 8715, a whooping fall of 400 points. 

 In the same breathe you were forewarned that for NF not crossing 5165-68 would weaken it to 4994 – 4970 levels. Exactly from 5168 of y’day it has nosedived uptill 5017.

 

These are indices: Non-manipulatable, Non-influential. How did it happen, who did it, can there be any attributes at all !!!!  Its our ever dependable charts, Analytical skills and wisdom of Insight. Collectively Technical Analysis. Just Pure Intelligence.

Yesterday  I written about Bank stocks…Just click here

Read Yesterday’s Guesstimates

Many Traders had asked about MTNL…..and they say I don’t about failure calls.First of all about MTNL….Technically was /still looking hot …But I had written many times never act blindly in market and always consider price as Father of stock/Commodity.

-Now click here and see…the reason ..Why MTNL had crashed in yesterday’s trade.

Now about Failure calls.If I recommend any stock or do analysis then I always write Support/Resistance levels. (more…)

Reason For Trading Failure

  
  Education
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bellaquote

The quote above is from Mike Bellafiore’s  The Playbook: An Inside Look at How to Think Like a Professional Trader.

Unfortunately, too few make it in the trading business, not for lack of desire or want for success, but for ignorance of what is necessary for success.  Successful trading is not about predicting the future but about managing it.

If you find that each day your time is consumed with searching for the next great indicator or a combination thereof or with the endless search for the best time frame to use, then you are trying to predict.  If, on the other hand, you focus on a specific, well-defined price pattern for entry and exit on a specific time frame, allowing the price to dictate your future action (win, lose, or draw) then you are managing the future.

The former is a “path to trading failure”; the latter the road to success.

 

SUCCESSFUL TRADER THAT YOU WANT TO BECOME

  
  Education
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The successful trader that you want to become is a future projection of yourself that you have to grow into. Growth implies expansion, learning, and creating a new way of expressing yourself. This is true even if you’re already a successful trader and are reading this book to become more successful. Many of the new ways in which you will learn to express yourself will be in direct conflict with ideas and beliefs you presently hold about the nature of trading. You may or may not already be aware of some of these beliefs. In any case, what you currently hold to be true about the nature of trading will argue to keep things just the way they are, in spite of your frustrations and unsatisfying results. – Mark Douglas

Successful trader

EGO-The Trader’s biggest enemy

  
  Education
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The trader’s biggest enemy is their own EGO.

Ego: a person’s sense of self-esteem or self-importance.

1. The new traders with big egos always have but confidence in their trading ability before developing competence in trading. New traders that trade before educating themselves are ignorant of their own ignorance.

2. Ego driven traders think they are special and will beat the market, even without putting in the work. They feel this way even though there is no evidence from their past trading success.

3. Most stubbornness in traders arises from the egos refusal to change, to learn, or to accept they are wrong about something.

4. The ego will make you hold a trade that is going against you, in the hope that you can prove yourself right when it reverses.

5. The biggest cause of trading too big of a position size, is ignoring risk management in favor of confidence in an unknown outcome.

6. Arrogant traders will focus on being right about predictions more than developing a robust trading methodology.

7. Ego driven traders put being right above being profitable. Their goal is ego gratification, not profitable trading.

Successful traders trade a plan based on logic, reason, probabilities, historical prices, and risk management.

RISK in Trading -Anirudh Sethi

  
Analysis, Education
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Image result for risk gifLife is full of risks, and risks are all around you as a trader. In a perfect world there would be no risks and any decision you make will turn out to be the best one. You can hope for win after win, and not even have to worry about the prospect of losing. Yet this is an unrealistic and impossible scenario because as we all know trading is all about risk. However, there is no need to be afraid of risk. We need to accept the fact that it is there, and rather than focusing on fear we need to know how to deal with it and manage it.

This is where risk management comes into play. As a trader you need to be disciplined. You need to know how to understand the way you are thinking. At the end of the day it is all about trading psychology. Trading is not solely about getting an understanding of the market, and the trading skills such as recognizing trading patterns and managing risks. It is also about training yourself to be self-assured without being too risky. It is about being cautious, but not wait too long to take an action. It is about blocking emotions and sentiments which could impair your judgments. The market is constantly changing and you are going to be constantly faced with challenges, and so risk is inevitable. However the risk taht you tae can be calculated.

Thus as a trader you will need to balance out your trading skills with your trading psychology so as to master the mental game of trading. Here are some general rules which can help you in risk management:

  • Emotions have no place in trading. You need to make well planned and well calculated decisions that are not affected by sentiments. Otherwise your decision making process is going to take longer, and in all probability, be skewed.
  • You need to accept that you are not perfect, and so there are going to be times when you succeed, and other times when you fail and lose money. Successes and failures will result in different, and extreme emotions, but these emotions need to be controlled so as to keep thinking straight.
  • In order to minimize risks, many traders are well aware that it is best to opt for diversification. Having an diversified portfolio will help to reduce your risks. Money should be distributed across different kinds of investments so that in case a certain trading decision goes wrong it will be less likely to affect the trader in a dramatic way as one would still have other investments at one’s disposal.
  • Gaining experience is what many traders believe in in order to succeed. Through experience you gain more insight and knowledge, as well as trading skills. However despite their importance, they are not going to be enough to back your progression as a trader. You need to couple this up with clear thinking.
  • You need to have the willingness to take risks. However the risks that you take can be calculated and appropriate. Trading is risky, but in time you will learn how to go about it so as to minimize risks and the results thereafter. For instance, you should only risk money that you can afford to lose. Otherwise, it is best not to trade at all in such cases.

(more…)

20 Points of Successful Traders

  
  Education
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  • They have the resilience to come back from early losses and account blow ups.
  • They focus on what really matters in trading success.
  • They have developed a trading method that fits their own personality.
  • They trade with an edge.
  • The harder they work at trading the luckier they get.
  • They do the homework to develop a methodology through researching ideas.
  • The principles they use in their trading models are simple.
  • They have mental and emotional control is key while winning or losing.
  • They manage the risk to avoid failure and pain.
  • They have the discipline to follow their trading plan.
  • Market wizards have confidence and independence in themselves as traders
  • They are patient with winning trades and impatient with losing trades.
  • Emotions are dangerous masters to the trader; they know how to manage their own emotions.
  • Market wizards evolve as a trader to avoid eventually failing in a method that has lost its edge over time.
  • It is not the news but how the market reacts to that news is what they watch for.
  • The fully understand the right way to position size for their goals of returns and drawdowns based on their risk/reward and winning percentage.
  • Market wizards understand comfortable trades are usually losing trades while the more uncomfortable trades are usually the winners.
  • They are good losers. Cutting losses when proven wrong and even reversing the direction of their trades when the price action dictates it.
  • The best traders are always learning through their own mistakes.
  • Passion for trading was the fuel for their eventual success.
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