Archives of “consistent results” tag

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LESSONS FROM TRADING IN THE ZONE BY MARK DOUGLAS

  
  Education
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1.) When it comes to trading, it turns out that the skills we learn to earn high marks in school, advance our careers and create relationships with other people, turn out to be inappropriate for trading.  Traders must learn to think in terms of probabilities and surrender all of the skills acquired to achieve in virtually every other aspect of life.

2.) Within 9 months of moving to Chicago, I had lost nearly everything I owned.  My losses were the result of both my trading activities and my exorbitant lifestyle, which demanded that I make a lot of money as a trader.

3.) You don’t need to know what’s going to happen next to make money.  Anything can happen.  Every moment is unique, meaning every edge and outcome is truly a unique experience.  The trade either works or it doesn’t.

4.) More or better market analysis is not the solution to his trading difficulties or lack of consistent results.  It is attitude and “state of mind” that determine his results.  A winner’s mindset means learning how to think in probabilities.

5.) The edge means there’s a higher probability of one outcome than another.  The greater your confidence, the easier it will be to execute your trades.

6.) Do you ever feel compelled to make a trade because you are afraid that you might miss out?

7.) People , expressing their beliefs and expectations about the future, make prices move- not models.  The fact that a model makes a logical and reasonable projection based on all the relevant variables is not of much value if the traders who are responsible for most of the trading volume aren’t aware of the model or don’t believe in it.  In other words, people who trade don’t always act in a rational manner.

8.) Price movement could be so volatile that it would be very difficult, if not impossible, to stay in a trade in order to realize the fundamental analysts’ objective. (more…)

Quantifying Low/Risk High/Reward Trades

  
  Education
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lowriskQ:  How can do you quantify odds of 10-1 in your favor before you make a trade? Is it your profit goal is 10x more than your stop loss? 10 indicators that look good and one that does not look good? Can you share with the group how you get to 10-1 odds? It may not be an easy answer, but I wonder if you could expand.

Think of it this way. After I’ve performed my analysis of all of the things I look at (fundamentals, technicals, sentiment) and list them out at the price I’m considering making a specific trade, they must without any measure of doubt be highly tilted in my favor. In other words, it must fit my definition of what I consider to be a low/risk high/reward setup. For every negative I can find that argues against a specific trade, I need more than just a few positives to offset it.

What results from this analysis is that the total number of trades I make is lower than most, but the percentage of average winning trade is higher as well as my win/loss average. (more…)

5 Principles of Leadership and Trading

  
  Education
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What are these principles?

  1. Knowing why you are in the trading business

You can start by asking yourself:

    • Why are you in the trading business?
    • What was your initial attraction to trading?
    • Are you thinking about it as a business or a hobby?
    • Are you passionate about your trading?
    • Does trading feel like a lot of work?
    • What are your trading goals?
    • Are you enjoying the journey or just focusing on the end result?
    • What do you want to get out of trading?
      • Money
      • Excitement
      • Challenge
      • Power
      • Other things (more…)

    MARKET WISDOM

      
      Education
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    A list of golden sayings and rules I have gleaned from many sources:
    wisdom-thought

    • Plan your trades, trade your plan.
    • Trade Quality, Not Quantity.
    • Keep it simple.
    • Don’t look for a reason to enter the market, look for a reason NOT to enter.
    • Don’t act due to “Newbie Nerves”
    • Don’t make up a trade. If you have to look, it isn’t there.
    • Never play with scared money.
    • You are not the market.
    • Buy dips in an uptrend, sell rallies in a downtrend.
    • Do not try to pick tops and bottoms.
    • It is only divergence if it came off a retracement – not a sideways market.
    • Indicators warn, price action confirms.
    • Divergence is early, cross-overs are late.
    • You cannot expect your positions to go immediately into the money.
    • Divergence means a detour, but not necessarily a new trend.
    • No-one knows what will happen in the markets.
    • Standing aside is a position.
    • Subordinate your will to the will of the market.
    • Large ranges beget small ranges, small ranges beget large ranges.
    • Once a thing is set in motion, it tends to stay in motion.
    • Sniper-rifle, not a shotgun.
    • Cut your losses short, let your profits run.
    • Only move stops in the direction of your position.
    • Do not let a winner turn into a loser.
    • Never add to a losing position.
    • Forget losses quickly. Forget profits even quicker.
    • Consistent behavior equals consistent results.

    There are probably more, send ’em in…

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