Archives of “discipline” tag

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An Ironic Trick for Trading Better

  
  Education
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Everyone knows what they /SHOULD/ do… and everyone has trouble doing it. Why? Lots of reasons –

Market ambiguity compels you to make impulsive judgments … . Not enough sleep… . I can go on and on and on… and talk to you about your emotional architectures and using emotion analytics to better manage your risk as well as better deduce opportunity.

But here is a little “emotion analytics” trick –

Ask yourself – as you are contemplating entering or exiting a position “How will I feel if…. ?” … and then play out the scenarios, #1) the trade continues in my direction, #2) it pulls back and takes away some of my money, #3) it ….

By putting yourself into your potential future emotional contexts, you can make better “risk” judgments in the here and now.

(And oh yes, I know to some of you this sounds absurd…that is OK. Everyone that I have taught to do it, makes more money than when they just tried to use so-called discipline to intellectually overpower their desires to get in or out or… in and out … or ….)

Trading Game is Simple It’s Just not easy

  
  Education
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 I believe that good traders are able to trade the markets effortlessly – it’s simple to them. But getting to the point of doing anything effortlessly is not easy. In fact, it’s really hard. A good analogy would be describing an athletes ability to perform his or her skill. If we took two people – one being a person who runs two miles everyday versus a person who hasn’t ran for the past two months, who will have the easier time running one mile? The answer is simple of course. The person who runs everyday will be able to run one mile easily – it will be effortless to them. However, the person who hasn’t ran in two months will find it extremely hard to and likely have to take breaks in-between so that he or she can finish.

In order for trading to become simple, there are some crucial and necessary steps that need to be taken. There needs to be consistency in the traders approach to the markets. It’s unfortunate, but we are in a day and age where traders are obsessed with just “trading for the fun of it”, and they aren’t realizing that that’s what’s preventing them from being consistent and successful. Again, if we go back to our analogy, does a great athlete deter from their routine? No. In fact, they have routines that boil down to eating, and sleeping habits in order to keep themselves moving in the right direction. It’s really not a mystery, but for whatever reason most traders seem to fail that this approach is what’s needed if you want to be good.

There really is a direct correlation between traders who are good and traders who are not. There is a direct correlation between traders who are consistent and traders who ride the roller coaster. That difference is preparation. Preparation and repetition is what makes anyone great at what they do. But preparing is not easy. It takes focus, will, and a lot of discipline. In trading that translates to having a very specific trading plan, with specific rules and the discipline to do it every single day. And as you prepare yourself everyday in your approach to the markets, you’ll find that trading becomes simple. It becomes effortless.

So if you want to be a good trader, scratch that – if you want to become a great trader, step back and think about what it really takes, and prepare yourself. It won’t be easy, but sooner or later you’ll realize how simple it really is.

Think Like A Fundamentalist & Trade Like A Technician

  
  Education
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emailSomeone once said that to trade successfully, you must think like a fundamentalist but trade like a technician. Do you agree?

A:  Yes, I agree with it. Understanding the context and fundamentals, even when you trade the technicals can be helpful as long as you’re able to separate the two when needed. The problem is that many traders will have a bias toward one discipline over the other and will justify poor technicals with faith for the fundamentals. How traders handle these conflicts that arise from time to time and how flexible they are based on market conditions will make a huge difference.

20 Trading Rules for your weekend

  
  Education
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1.        KNOW THYSELF
What kind of trading style fits your personality…Trend following? Day Trading? Buy and hold (please NO)? Next, what do you want to accomplish with your trading…Monthly Income? Long-Term Growth? Risk Aversion? And finally, you must have a grip on your emotions, because you will experience failure and success in trading and you need to know how you will react to both.
 
2.        KEEP IT SIMPLE
You should be able to describe each trading strategy in your war chest on a 3×5 index card.  There are so many different trading tools and indicators out there that it is easy to make trading and investing harder than it is. Find a few technical and/or fundamental indicators that you can apply to your trading, and master them.
 
3.        DIVERSIFY 
Specialize in a few different trading strategies and then spread your risk out across multiple asset classes using those trading strategies. Make sure all of your trades are not dependent on the same sector, commodity, industry, or idea. 
 
4.        LOSERS AVERAGE LOSERS
Only losers add to losing positions. If a trade is going against you, move on and find another trade. It’s not about pride, it’s about profits.
 
5.       NEVER STOP LEARNING
 You must constantly make an investment in your trading education. Read books, go to seminars, or talk to other traders, because over time the traders that make a commitment to never stop learning will be the traders that stay in the game and are able to adjust their trading style to any market environment.   
 
6.        CREATE A TRADING PLAN
Having a trading plan creates discipline. Why are you making this trade? What’s your risk? What’s your reward? How much margin is required? What will you do if things get bad, or really good? These are questions you should be able to answer on every trade you execute.   
 
7.        BAD TRADE MOVE ON
I don’t care who you are, you are going to have bad trades. When you have a bad trade, take a break from trading, go to a movie, or kick the dog (once), but don’t sit around and pout.   It’s important that you move on and start planning how you are going to get it back. 
 
8.        TRADE WITH CONFIDENCE
Trust your research, feel confident in the time and energy you have put into your trading strategy and know that no matter what the market does in the short term, you have the ability to make money in the long term. 
 
9.        THE MARKET IS GOING…????
Nobody knows where the market is going and you don’t either.    So pick trading strategies that allow a little wiggle room in case you wake up one morning and the market doesn’t do exactly what you told it to. (See trade schools)
 
10.    DICSIPLINE
 This word sums up a long term trader. You must have the discipline to follow your systems and manage your emotions hour after hour, day after day, year after year. If you are undisciplined in other areas of your life, don’t be surprised if one day you break your trading rules. You must practice discipline 24 hours a day.  (more…)

Self-Control and Discipline

  
  Education
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Cultivating discipline and self-control is vital for consistent and profitable trading. You implement proven trading strategies, over and over, so that across a series of trades, the strategies work enough to produce an overall profit. It’s like making shot after shot on the basketball court so as to accumulate a winning number of points. The more shots you take, the more likely you will amass points. But the winning player is the person who first develops the skill to make the shot consistently, so that at every possible opportunity, the ball is likely to go through the basket. To a great extent, consistency is the key. If the player uses one approach one time and a different approach at another time, performance is haphazard. 
It’s the same for trading. One must trade consistently, following a specific trading plan on each and every single trade. This allows the law of averages to work in your favor, so that across the series of trades, you will make an overall profit. If you follow the plan sometimes and abandon it at other times, you throw off the probabilities. Suppose you used a strategy that had a track record of 80%. Under the best-case scenario, you could only expect to win 80% of the time. But since history doesn’t always repeat itself, it’s likely that you will win less than 80% of the time. If you don’t execute the trading strategy the same way each time, you will decrease your winning odds. And fewer winning trades may mean an overall loss. That’s why discipline and self-control are so important.  (more…)

Patience and Discipline

  
  Education
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While these two virtues are over-worked and very often mentioned when determining what unsuccessful traders lack, not many will argue with their merits. Indeed. Don’t trade just for the sake of trading or just because you haven’t traded for a while. Let those very good trading “set-ups” come to you, and then act upon them in a prudent way. The market will do what the market wants to do — and nobody can force the market’s hand.

EMOTIONS-GREED and FEAR

  
  Education
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Emotions, emotions and emotions, trading will always full of them, movement of the market based on them. Our rush to buy or sell sometimes overflow our plans. The common Forex traders question was “Why did I do this or do that?”

What is driving us to get into the market when we are not prepared and exit on completely different prices, which completely disagree with our plans? Two major factors, Greed and Fear.

Greed come when market goes as we expected then we want more! We believe it will continue for very long time. We forgot that everything changes. For successful trading you need a good strategy and discipline to execute that strategy. No matter how good it is, trading is completely useless without proper execution of the strategy.

We Fear when we afraid to miss the profitable move or to loose the money. And until fear and greed will dominate us, our results will be very unstable. And worse if our money management is not the strongest point, this is the weakest point for emotional traders, will soon will be out of money, before we even had a chance to establish ourself as a trader.

Trading Wisdom – Paul Tudor Jones

  
  Education
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Paul Tudor Jones
Turned $1.5 million into $300 million in five years
“That cotton trade was almost the deal breaker for me. It was at that point that I said, “Mr. Stupid, why risk everything on one trade? Why not make your life a pursuit of happiness rather than pain?”
I had to learn discipline and money management. I decided that I was going to become very disciplined and businesslike about my trading. I spend my day trying to make myself as happy and relaxed as I can be.
If I have positions going against me, I get right out; if they are going for me, I keep them. I am always thinking about losing money as opposed to making money. Risk control is the most important thing in trading. I keep cutting my position size down as I have losing trades. (more…)

SELF DISCIPLINE

  
Education, Life
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Developing Self-Discipline is something that you can start doing right NOW. It doesn’t take vigorous special forces training, nor does it require being related to the almighty samurai bloodline. Instead it requires will, devotion and regular action.

  1. Start by cultivating a desire. Do that by understanding the incredible benefits of such an achievement. The majority of human endeavors fail because humans themselves quit; they quit because their mind and emotion subdues their will and discipline. Such a trait shall make you unstoppable.
  2. Use what is coined by NLP (Neuro-Linguistic Programming) as an Incantation. Stand up and energetically state that you shall achieve this regardless of anything, it’s crucial to incorporate physical movements as well. This molds a stronger message in your mind due to the incorporation of emotion and physicality. Repeat this daily.
  3. Analyze yourself; know where your discipline falls short and is mostly likely to fail. Is it exercising, or facing fears, or maintaining dietary habits?  This will create the targets which you shall work upon. Fast results will come from major concentrated action and not from minimal diffused efforts.
  4. Start, initiate your pursuit by working directly on the weaknesses that keep you away from being self-disciplined. Start small and gradually proceed to making big chances. Day by day incorporate more change but avoid overloading yourself.
  5. Once you have tackled one weakness proceed to the other. The conquest for self-discipline is a never-ending one. Acquiring it requires a constant stream of action, otherwise it shall simply leak from your possession.
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