Archives of “emotion” tag

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Trading Thought

  
  Education
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Know what your tolerance for risk is.Traders who are able to make smart decisions can beat the market. However, the greatest hurdle to doing so is overcoming the emotional traps that cause traders to make bad decisions.The reason we succumb to our emotions is because we are afraid of losing. It is the risk we take that creates emotion; take too much risk and you are likely to make bad decisions.Therefore, you need to know what your limits are. What dollar amount of risk causes you anxiety? If you can not make a trade with out fear then you are taking too much risk. For some, that means never trading since they simply can not handle the risk of financial loss. However, over time and with success you will begin to build up your tolerance for risk, just take it one step at a time.

DAY TRADING LESSONS

  
  Education
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daytradinglessons-update

  • Trading is a continuous learning process

  • Don’t trade without a plan. Be as prepared as possible. Don’t try to be right
  • Emotion is a much bigger influence in stock prices than any other factor
  • The market reacts more to sentiment than facts. Herd mentality rules
  • Sell into strength and buy into weakness
  • Market always rewards minority, not the crowd. The trick to figure out if the mass perception is wrong and WHEN it will be proved to be wrong.
  • Technical setups and money management are more important than fundamental catalysts when trading
  • Always ask: What beliefs are you acting upon? What is the basis for those beliefs? Why do you have those beliefs now? Would those beliefs be different if your recent gain/loss record had been reversed? Can you clearly enumerate what could happen that would cause you to change your mind?”
  • Extreme emotions cause extreme pain. I’ve learned how not to get overly bullish or bearish
  • Be mindful of higher trading volume on down days prior to a future catalyst as bad news can and often does leaks out
  • Take responsibility for your own trading
  • Cut your losses, let your winners run, and this is more easily said than done
  • If you can’t focus, you can’t trade. Be in the zone or stay sidelined
  • Buy below value and well below value if possible
  • Being flexible can be fruitful
  • Let the market come to me and don’t force trades
  • It is never “different” this time
  • Just more……….very soon ,Till then just read these and learn something new.
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    • 8 Trading Tips

      
      Education
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    1. Know that you can’t control the markets: but you can be well-prepared.

    2. Set aside time to prepare: Block out an hour before the markets open through the first hour of trading to make final plans for the day and focus only on your markets.

    3. Generate a Trading Plan: Create a Trading Plan and stick to it! Having a plan in place can ease your mind, give you direction and help focus your efforts for profitability. It allows you to control how you will use your trading time.

    4. Take a deep breath: You know you can’t control the markets so take a deep breath knowing what you can control – your trading decisions – and don’t let emotion or anxiety get in the way. You can also take a few moments to clear your mind with relaxation and meditation exercises.

    5. Turn off all potential distractions: Avoid all potential distractions. When your day starts, make sure you don’t begin it with a potentially distracting activity like Twittering and checking email. Start with a focus on the markets and on how you will perform today. You will feel good about yourself for being well-prepared.

    6. Stay positive! There is plenty of research proving the power of positive thinking and general thought on one’s life. Creating a positive approach right from the start of the trading day will have a positive influence on your trading during the rest of the day.

    7. Separate emotion, anxiety and the facts: The one reason people feel like trading failures is because they allow their emotions and anxiety to control their actions rather than sticking to the facts of charts and information.

    8. Admit that you will win some and lose some: Not everyone can win every time in the markets, but allowing yourself to accept that you will win some and lose some will help you brush off any emotions and anxiety that you feel so you can focus back on winning.

    Controlling your Emotions

      
      Education
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    Emotions-asr1The fact is, the majority of traders lose because they cannot control their emotions – and their emotions cause them to make irrational trades and lose.

    Trading psychology is one of the keys to investment success, but its impact is not understood by many investors, who simply think they need a good trading method, but this is only part of the equation for winning at currency trading.

    The influence Of Hope and Fear

    In currency trading psychology, two emotions that are constantly present are:Hope and fear. One of the traders who recognized this was the legendary trader W D Gann.

    Hope and fear are destructive emotions and all traders are influenced by them, they are part of all traders’ psychology.

    Hope and fear can make traders act irrationally, they know what they should do, but they simply can’t do it.

    Executing a trading method with discipline is the only way to overcome destructive emotions.

    Human Nature Is Constant – Exploit It for Trading Success It doesn’t matter what market you trade:

    Commodities, stocks, currencies, or what type of trader you are, a day or position trader, the fact is, trading psychology influences the majority of traders.

    If you can control your emotions and trade with a disciplined plan you can gain a trading edge. (more…)

    The Secret To Success

      
      Education
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    Never forget: This very moment, we can change our lives. There never was a moment, and never will be, when we are without the power to alter our destiny. – Steven Pressfield

    One of the greatest powers of Resistance and procrastination is that they compound themselves over years and decades. They can build to the point where they make you feel as if you have no control over your own destiny. They make it easier to just give up and be normal.

    Pressfield reminds us that we are always in possession of the power to change the course of our lives. At any single moment of our lives, we are capable of completely altering the way things are going. 

    After years of allowing the Resistance to hold us back in our trading, the chances of ever achieving trading success might seem bleak. It is important to keep in mind that we always possess the power to change that. We can beat the Resistance and procrastination through diligent and consistent work.

    That is the one and only secret to trading success. It is also the one and only secret to success in just about any other field you might want to pursue.

    Desire and Fear

      
      Education
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    Desire and fear alternate in the minds of traders as they go through the day.  But let me ask you whether desire or fear dominates your thoughts and feelings as you trade? 

    For many traders the primary emotion is fear.  They fear loss: losing profits, losing money, losing equity and even their margin.  Some fear losing their touch, their feel for the market, their focus, their luck, the respect of their boss, colleagues, or mate, or worse, their own self esteem.

    Other traders are flooded with the emotion of desire.  They look forward to what the day will produce.  They like the thrill of the chase.  They have a sense of unlimited potential and abundant opportunities for profit.  They anticipate improving their skills, intuition, and understanding as they go through the trading day and week.

    Keep in mind that desire is not greed.  Greed is an inordinate wanting.  It is excessive desire and comes from a sense of scarcity, a feeling that there is not and will not be enough.  Desire is healthy: greed is unhealthy.

    What you feel depends upon your mental focus.  Do you place your conscious and unconscious attention on the possibility of loss or the probability (hopefully) of gain? (more…)

    3 Habits every trader must avoid.

      
      Education
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    Not having a plan. Get a plan, who cares if it is bad, start with something. You can build off of it and refine it. You have to be willing to spend the time to make the plan yours. You do not start anything without some level of planning. Trading is hard; your brain spends a lot of time in fast forward, affecting your memory. You can slow it down by having a plan and increase your brains ability to remember.  A plan makes it possible to improve. Most importantly, a plan gives you a chance at removing emotion.

    Forgetting why you are trading.  The purpose of trading is to make money.  Every action should bend to that goal. That does not mean every trade makes money.  It means every trade gets to closer. If you are looking for comfort, get a teddy bear. If you are looking to be right, play trivial pursuit.  If you want excitement, drive fast.

    Letting it go. It is really important to separate what happened from how you felt. The more distance between the two the less time it takes to learn from that situation.  Admitting you made a mistake or are wrong are necessary for letting it go.  Unlike life, you get no credit for admitting you are wrong, it is just a part of trading. Neither matter unless you take action.

    Partly of emotion…

      
      Education
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    The market is not a weighing machine, on which the value of each issue is recorded by an exact impersonal mechanism, in accordance with its specific qualities. Rather, should we say that the market is a voting machine, whereon countless individuals register choices which are the product partly of reason and partly of emotion. (emphasis mine).

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