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7 Things for Traders

  
  Education
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The definition of man·age:number7

  • To direct or control the use of; handle.
  • To exert control over.
  • To make submissive to one’s authority, discipline, or persuasion.
  • To direct the affairs or interests of.
  • To succeed in accomplishing or achieving, especially with difficulty; contrive or arrange.

1. Traders must be great risk managers.

“At the end of the day, the most important thing is how good are you at risk control.” -Paul Tudor Jones

2. Traders must manage their own stress.

 Trade position sizes that keep your stress level manageable, if you can’t talk calmly to someone while trading you are trading too big.

3. Traders have to be able to manger their emotions, we have to trade our plan not our greed or fear

“There is nothing more important than your emotional balance.” – Jesse Livermore (more…)

Trading Do's and Dont's

  
  Education
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In no particular order of importance

  1. Forget the news, remember the chart. You’re not smart enough to know how news will affect price. The chart already knows the news is coming.
  2. Buy the first pullback from a new high. Sell the first pullback from a new low. There’s always a crowd that missed the first boat.
  3. Buy at support, sell at resistance. Everyone sees the same thing and they’re all just waiting to jump in the pool.
  4. Short rallies not selloffs. When markets drop, shorts finally turn a profit and get ready to cover.
  5. Don’t buy up into a major moving average or sell down into one. See #3.
  6. Don’t chase momentum if you can’t find the exit. Assume the market will reverse the minute you get in. If it’s a long way to the door, you’re in big trouble.
  7. Exhaustion gaps get filled. Breakaway and continuation gaps don’t. The old traders’ wisdom is a lie. Trade in the direction of gap support whenever you can.
  8. Trends test the point of last support/resistance. Enter here even if it hurts.
  9. Trade with the TICK not against it. Don’t be a hero. Go with the money flow.
  10. If you have to look, it isn’t there. Forget your college degree and trust your instincts. (more…)

Risk, fear and worry

  
  Education
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They’re not the same.

Risk is all around us. When we encounter potential points of failure, we’re face to face with risk. And nothing courts risk more than art, the desire to do something for the first time–to make a difference.

Fear is a natural reaction to risk. While risk is real and external, fear exists only in our imagination. Fear is the workout we give ourselves imagining what will happen if things don’t work out.

And worry? Worry is the hard work of actively (and mentally) working against the fear. Worry is our effort to imagine every possible way to avoid the outcome that is causing us fear, and failing that, to survive the thing that we fear if it comes to fruition.

If you’ve persuaded yourself that risk is sufficient cause for fear, and that fear is sufficient cause for worry, you’re in for some long nights and soon you’ll abandon your art out of exhaustion. On the other hand, you can choose to see the three as completely separate phenomena, and realize that it’s possible to have risk (a good thing) without debilitating fear or its best friend, obsessive worry.

Separate first, eliminate false causation, then go ahead and do your best work.

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