The Trading Plan comes first and should account for the following parameters: 1. Entering a trade. 2. Exiting a trade. 3. Stop Placement. 4. Position Sizing. 5. Money Management. 6. What to Trade. 7. Trading Time Frames. 8. Back Testing. 9. Performance Review. 10. Risk vs. Reward. The Game Plan consists of putting the parameters of the Trading Plan to work in day to day trading with the following benefits: 1. It will force the trader to select a trading style. 2. It will encourage market study. 3. It will aide in helping pick the correct trades. 4. It will prepare the trader for what the market has to offer. 5. It will help in properly monitoring and exiting trades. 6. It will keep the trader from overtrading. 7. It will help with finances. 8. It will keep the trader focused. 9. It will take the gambling out of trading. 10. It will make a better trader out of you. |
Archives of “Day trading” tag
rss18 Trading Wisdom Thoughts for Traders
1. You will be tested mentally and emotionally this is not for the weak minded. 2. Master Traders are detached emotionally from profit or loss. 4. Haste is the enemy of great entry points. 5. Doubt is often followed by a lost opportunity. 6. The Trend will give you direction on your path. 7. Having an exit strategy prevents unnecessary pain. 9. Going against momentum brings forth the fools reward. 10. Better the bad trade that is unrewarding. 11. Habit is built on the principles of probability. 12. Know your exit point in the worst case scenario first. 15. Set realistic goals and let the good times role. 18. Times of great probability are like diamonds falling from the sky. |
49 Trading Rules for Traders
- Usually they liquidate the good trades and keep the bad ones. Many traders don’t realize the news they hear and read has, in many cases, already been discounted by the market.
- After several profitable trades, many speculators become wild and unconservative. They base their trades on hunches and long shots, rather than sound fundamental and technical reasoning, or put their money into one deal that “can’t fail.”
- Traders often try to carry too big a position with too little capital, and trade too frequently for the size of the account.
- Some traders try to “beat the market” by day-trading, nervous scalping, and getting greedy.
- They fail to pre-define risk, add to a losing position, and fail to use stops.
- They frequently have a directional bias; for example, always wanting to be long.
- Lack of experience in the market causes many traders to become emotionally and/or financially committed to one trade, and unwilling or unable to take a loss. They may be unable to admit they have made a mistake, or they look at the market in too short a timeframe.
- They overtrade.
- Many traders can’t (or don’t) take the small losses. They often stick with a loser until it really hurts, then take the loss. This is an undisciplined approach…a trader needs to develop and stick with a system.
- Many traders get a fundamental case and hang onto it, even after the market technically turns. Only believe fundamentals as long as the technical signals follow. Both must agree.
- Many traders break a cardinal rule: “Cut losses short. Let profits run.”
- Many people trade with their hearts instead of their heads. For some traders, adversity (or success) distorts judgment. That’s why they should have a plan first, and stick to it.
- Often traders have bad timing, and not enough capital to survive the shake out.
- Too many traders perceive futures markets as an intuitive arena. The inability to distinguish between price fluctuations which reflect a fundamental change and those which represent an interim change often causes losses.
- Not following a disciplined trading program leads to accepting large losses and small profits. Many traders do not define offensive and defensive plans when an initial position is taken.
- Emotion makes many traders hold a loser too long. Many traders don’t discipline themselves to take small losses and big gains.
- Too many traders are underfinanced, and get washed out at the extremes.
- Greed causes some traders to allow profits to dwindle into losses while hoping for larger profits. This is really lack of discipline. Also, having too many trades on at one time and overtrading for the amount of capital involved can stem from greed.
- Trying to trade inactive markets is dangerous.
- Taking too big a risk with too little profit potential is a sure way to losses. (more…)
1 Thing Critical To A Trader's Success
I think more than anything it has to be discipline. Because as important as finding a suitable methodology, developing a strategy, sound risk management, and position sizing is, it will be for nothing if you don’t have the discipline to consistently execute it and follow your rules.
Discipline is an integral part of all trading, whether systematic or discretionary, day trading or buy-and-hold, across all asset classes. I don’t believe you can be consistently successful without it.
Risk control based on risk per trade, risk control based on sector, risk control based on total portfolio.
You must know how much you can lose on a given trade, and the maximum loss to your entire portfolio at any one time. Only then can you take the necessary measures to manage these risks.
Almost equally important is correct trading psychology. Being able to accept trades that do not work. Staying focused and strong in the complete uncertainty of trading.
Because even the best trading system will have losing periods and this is when you need to remain discipline and continue executing your trades.
A trader must have many different ingredients to be successful in trading, but what is absolutely critical is that you must love the type of trading you do.
Many people think they have a passion for trading but the reality of trading; watching charts, managing risk all day, is not as exciting as many believe. If you are a day trader then you must actively enjoy this process.
If not, you must find another form of trading (or profession) that suits your style. That might be swing trading, automated trading, systems trading, whatever. But what you must have is passion!
Hope & Fear
In trading most new traders allow hope and fear to dictate their trading. They have a losing trade and instead of selling it and getting out they instead hope it will come back to even allowing the loss to grow. Another error for new traders is that when they have a winning trade they fear that the profit will disappear so they sell for a small gain and miss the big trend in their favor. When hope and fear controls the trader they end up with big losses and small gains. A formula for ruin.
Instead the rich trader is fearful of losses getting bigger so they sell quickly when losing, risking a maximum of 1% of their capital on any one trade. Rich traders are able to think clearly and trade rationally knowing exactly what they are risking, when their stop is hit, they get out. This enables them to keep all their losses small.
When a trade is immediately a winner for a rich trader they hope it will run 100 points in their favor. Rich traders enable this to be possible with a trailing stop, they do not get out of a winning trade until a key price reversal has happened that tells them that the trend is actually reversing.
Rich traders are fearful of losses growing bigger and hope that their winners will continue on a monster trend. This mindset allows them to be on the right side of trends and avoid any huge losses. This is why the best traders in the world are trend followers and win consistently. Do you want to join their club? Then do not let fear and hope dictate your trading decisions use them correctly.
6 Trading Behaviours For Traders
1) Fresh Ideas – I’ve yet to see a very successful trader utilize the common chart patterns and indicator functions on software (oscillators, trendline tools, etc.) as primary sources for trade ideas. Rather, they look at markets in fresh ways, interpreting shifts in supply and demand from the order book or from transacted volume; finding unique relationships among sectors and markets; uncovering historical trading patterns; etc. Looking at markets in creative ways helps provide them with a competitive edge.
2) Solid Execution – If they’re buying, they’re generally waiting for a pullback and taking advantage of weakness; if they’re selling, they patiently wait for a bounce to get a good price. On average, they don’t chase markets up or down, and they pick their price levels for entries and exits. They won’t lift a market offer if they feel there’s a reasonable opportunity to get filled on a bid.
3) Thoughtful Position Sizing – The successful traders aren’t trying to hit home runs, and they don’t double up after a losing period to try to make their money back. They trade smaller when they’re not seeing things well, and they become more aggressive when they see odds in their favor. They take reasonable levels of risk in each position to guard against scenarios in which one large loss can wipe out days worth of profits.
4) Maximizing Profits – The good traders don’t just come up with promising trade ideas; they have the conviction and fortitude to stick with those ideas. Many times, it’s leaving good trades early–not accumulating bad trades–that leads to mediocre trading results. Because successful traders understand their market edge and have demonstrated it through real trading, they have the confidence to let trades ride to their objectives.
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What Day Trading is all about ?
TRADING IS ALL ABOUT MANAGING WINNING AND LOSING STREAKS. THAT’S WHAT TRADING IS ALL ABOUT. THINK ABOUT THESE WORDS I JUST WROTE. TRADING IS ALL ABOUT MANAGING WINNING AND LOSING STREAKS.
Day Trading is emotional anesthesia
Day Trading is emotional anesthesia-the frenetic pace works well to keep people preoccupied from feelings they do not wish to experience. |
All Type of Traders Are Trying To Catch Trend Only
Long term trend followers are trying to be right about the long term trends in the markets they trade using mechanical systems.
Buy and hold investors are trying to be right about the stock market indexes and mutual funds being in a long term trend over their lifetime.
Value investors believe that under priced stocks will reverse and trend higher over the long term based on the cheap price they are getting based on a companies fundamentals.
Day traders are trying to capture the trend that happens in one day’s time frame.
Swing traders bet that the trend reverses off support or resistance levels and give them a profit.
Can Slim traders are trading the trend of a hot growth stock out of a base price range or cup with handle pattern
Bear are betting that the trend reverses and something goes down in value and they make money.
Call buyers are trying to capture an up trend, call sellers want to profit from a down trend.
Put buyers are trying to capture a down trend, put buyers want to profit from an up trend.
Traders buying long option strangles are betting on a trend either way bigger than what is priced in, Strangle sellers are betting the trend will be less than what is priced in.
All trading methods are simply an effort at trend identification and capturing profits by entering at a high probability moment and exiting with profits in place.Being on the right side of the trend in your time frame is what a successful trading method is all about.
TRADING MANTRA'S
Even the best traders in the market have trading sessions that are less than optimal. Human nature dictates that we make mistakes, and trading the stock market is no exception. Subsequently, there is always room for improvement, whether you are a novice trader or a seasoned veteran.
- Stick to Your Guns – Don’t try to run from the market. The only way to boost trading profits is to stay in the game and keep trading. Running from the trades and the action will keep you out of the market, whether it is hot or cold. Sticking to your trading plan and enacting trading discipline are the keys to producing profits.
- Set Stop Losses and Take Profits – “Set and forget” trading is generally profitable. When you place each trade, remember to place your exit and stop loss, and then let the market be your guide. Have a preset limit of how much you’re willing to win and how much you can lose. Technical analysis will tell you the best price for selling (near resistance) and the best place for buying (near support). Support and resistance points are the best places to put limit orders. (more…)