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14 Questions for Traders

  
  Education
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1)       Do I treat my trading/investing like a business?  Have I prepared for it the way I would for any other business?

2)      Do I have a business plan – a working document to guide my trading business?

3)      Do I have a set of written rules to follow?

4)      Am I following a regular procedure to prevent mistakes?  A mistake means not following your rules that you have laid out for yourself.

5)      Do I have a tested trading methodology?

6)      Do I know how my methodology will perform in different kinds of markets?

7)      Do I know what kind of market we are currently in now and what to expect from my methods in such a market?  Should I be trading these markets?

8)      Do I trade with exact exit points that are preplanned for every trade (position) I take?

9)      Have I developed specific objectives for my trading/investing?

10)    Do I understand that I achieve my objectives through a POSITION SIZING METHOD?   Have I developed a specific position sizing method to meet my objectives?

11)   Do I truly understand the importance of all the questions mentioned above?

12)   Do I understand that I create my own trading/investment results through my thoughts and beliefs?

13)   Do I accept full responsibility for that creation?

14)   Do I regularly work on myself to make sure that I follow the very important points (questions) above? (more…)

4 Faiths For Traders

  
  Education
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While trading is a game of math, probabilities, charts, and earnings it is also a mind game. Many times a trader’s beliefs will determine their success more than anything else. All traders start out believing it is possible to make money in the markets. Many want to earn their living one day by trading. However it is perseverance, beliefs, and mental determination that will determine who wins and who just quits. Shockingly the majority of millionaire traders lost most of their accounts when they started or they experienced huge draw downs while learning lessons the hard way.

 

  1. You must have faith in yourself. You must believe that you can trade as well as anyone else.. This belief arises from doing your homework and staying disciplined in your system. Understanding that it is not you, that it is your system that wins and loses based on market action will keep the negative self talk at bay.
  2. You must have faith in your method. You must study the historical performance of your trading method so you can see how it works on charts. Also it is possible to quantify and back test mechanical trading systems for specific historical  performance in different kinds of markets.
  3. You must have faith in your risk management. You must manage your risk per trade so it brings you to a 0% mathematical probability of ruin. A 1% to 2% of total capital at risk per trade will give almost any system a 0% risk of ruin.
  4. You must have faith that you will win in the long term if you stay on course. Reading the stories of successful traders and how they did it will give you a sense that if they can do it you can to. If trading is something you are passionate about all that separates you from success is time.

Five Faiths Needed for Trading Success

  
  Education
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  1. You must have faith in yourself. You must believe that you can trade as well as anyone else.. This belief arises from doing your homework and staying disciplined in your system. Understanding that it is not you, that it is your system that wins and loses based on market action will keep the negative self talk at bay.
  2. You must have faith in your method. You must study the historical performance of your trading method so you can see how it works on charts. Also it is possible to quantify and back test mechanical trading systems for specific historical  performance in different kinds of markets.
  3. You must have faith in your risk management. You must manage your risk per trade so it brings you to a 0% mathematical probability of ruin. A 1% to 2% of total capital at risk per trade will give almost any system a 0% risk of ruin.
  4. You must have faith that you will win in the long term if you stay on course. Reading the stories of successful traders and how they did it will give you a sense that if they can do it you can to. If trading is something you are passionate about all that separates you from success is time.
  5. You need faith in your stock. It helps in your trading if you trade stocks, commodities, or currencies that you 100% believe in. Traders tend to have no trouble trading a bullish system with $AAPL if they believe it is the greatest company to ever exist and will go to $500 within six months. It is much easier to follow an always in trend reversal system with Gold if you believe it tends to trend strongly one way or the other. Of course you have to follow a defined system and take the signals even if it goes against your opinions but believing in your trading vehicle helps tremendously.
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