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Trading wisdom and strategies

Trading System – According to Howard Abell: The trading system gives the trader the ability to control his or her emotional states rather than allowing them to control him. A system is a disciplined method for organizing dynamic, ever-changing market phenomena.

Risk Control – According to Paul Tudor Jones: If I have positions going against me, I get right out; if they are going for me, I keep them… Risk control is the most important thing in trading. If you have a losing position that is making you uncomfortable, the solution is very simple: Get out, because you can always get back in.

Psychological Makeup – According to Leo Melamed: You learn to distinguish the good traders from the bad, the successful techniques from the unsuccessful, and the good habits from the faulty. You also learn to distinguish the lover from the fighter, the winners from the losers, the serious from the frivolous, the cerebral from the superficial, and the friend from the foe. But above all, you learn that the psychological makeup of the trader is the single most critical element of success.

The Easy Middle – According to Randy McKay: The beginning of a price move is usually hard to trade because you are not sure whether you are right about the direction of the trend. The end is hard because people start taking profits and the market gets very choppy. The middle of the move is what I call the easy part.

Cut Back Trading Size When Losing – According to Bill Lipschutz: When you are in a losing streak, your ability to properly assimilate and analyze information starts to become distorted because of the impairment of the confidence factor, which is a by-product of a losing streak. You have to work very hard to restore that confidence, and cutting back trading helps achieve that goal.

Have A Predetermined Stop – According to Bruce Kovner: Whenever I enter a position, I have a predetermined stop. That is the only way I can sleep. I know where I am getting out before I get in. The position size on a trade is determined by the stop, and the stop is determined on a technical basis.

Accept the Risk – According to Mark Douglas: To whatever degree you haven’t accepted the risk, is the same degree to which you will avoid the risk. Trying to avoid something that is unavoidable will have disastrous effects on your ability to trade successfully.

Making Mistakes Is Part of Business – According to Bruce Kovner: Michael Marcus [another top trader] taught me one other thing that is absolutely critical: You have to be willing to make mistakes regularly; there is nothing wrong with it. Michael taught me about making your best judgement, being wrong, making your next best judgement, being wrong, making your third best judgement, and then doubling your money.

Ten Secrets

  • THE FIRST SECRET
    The Power of Thought.Love begins with our thoughts. We become what we think about. Loving thoughts create loving experiences and loving relationships. Affirmations can change our beliefs and thoughts about ourselves and others. If we want to love someone, we need to consider their needs and desires. Thinking about your ideal partner will help you recognize him or her when you meet him or her.
  • THE SECOND SECRET
    The Power of Respect.You cannot love anyone or anything unless you first respect them. The first person you need to respect is yourself. To begin to gain self-respect ask yourself: “What do I respect about myself?” To gain respect for others, even those you may dislike, ask yourself: “What do I respect about them?”
  • THE THIRD SECRET
    The Power of Giving.If you want to receive love, all you have to do is give it! The more love you give, the more you will receive. To love is to give of yourself, freely and unconditionally. Practice random acts of kindness. Before committing to a relationship ask not what the other person will be able to give to you, but rather what will you be able to give them. The secret formula of a happy, lifelong, loving relationship is to always focus on what you can give instead of what you can take.
  • THE FOURTH SECRET
    The Power of Friendship.To find a true love, you must first find a true friend. Love does not consist of gazing into each other’s eyes, but rather looking outward together in the same direction. To love someone completely you must love them for who they are, not what they look like. Friendship is the soil through which love’s seeds grow. If you want to bring love into a relationship, you must first bring friendship. (more…)

Conquering your emotions

When a trader experiences the emotional roller coaster associated with real time trading, he soon learns that, no matter how good his system is, he will need to conquer his emotions if he is going to be able to follow it. But, a master trader is also a master of his emotions. Again, this means that he must be willing to address any issues he has that create emotional states that cause sabotaging behaviors.
Working on conquering emotions can be done on one’s own if the trader is well balanced and does not have moderate to serious emotional issues to address. But, if not, he must find an outside resource to help him resolve his emotional issues.

Timeless Trading Wisdom

Trading wisdomTrading System –  The trading system gives the trader the ability to control his or her emotional states rather than allowing them to control him. A system is a disciplined method for organizing dynamic, ever-changing market phenomena.

Risk Control – If I have positions going against me, I get right out; if they are going for me, I keep them… Risk control is the most important thing in trading. If you have a losing position that is making you uncomfortable, the solution is very simple: Get out, because you can always get back in.

Psychological Makeup – You learn to distinguish the good traders from the bad, the successful techniques from the unsuccessful, and the good habits from the faulty. You also learn to distinguish the lover from the fighter, the winners from the losers, the serious from the frivolous, the cerebral from the superficial, and the friend from the foe. But above all, you learn that the psychological makeup of the trader is the single most critical element of success.

The Easy Middle – The beginning of a price move is usually hard to trade because you are not sure whether you are right about the direction of the trend. The end is hard because people start taking profits and the market gets very choppy. The middle of the move is what I call the easy part.

Cut Back Trading Size When Losing – When you are in a losing streak, your ability to properly assimilate and analyze information starts to become distorted because of the impairment of the confidence factor, which is a by-product of a losing streak. You have to work very hard to restore that confidence, and cutting back trading helps achieve that goal.

Have A Predetermined Stop – Whenever I enter a position, I have a predetermined stop. That is the only way I can sleep. I know where I am getting out before I get in. The position size on a trade is determined by the stop, and the stop is determined on a technical basis.

Accept the Risk – To whatever degree you haven’t accepted the risk, is the same degree to which you will avoid the risk. Trying to avoid something that is unavoidable will have disastrous effects on your ability to trade successfully.

Making Mistakes Is Part of Business – According to Bruce Kovner: Michael Marcus [another top trader] taught me one other thing that is absolutely critical: You have to be willing to make mistakes regularly; there is nothing wrong with it. Michael taught me about making your best judgement, being wrong, making your next best judgement, being wrong, making your third best judgement, and then doubling your money.