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Perspective

  
  Education
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When you trade, know why you are trading that position. You can listen to others, and remember that you are the ultimate decision maker.

I remember a client of mine who is very brilliant; he knew why he was getting into a trade. Then he would trust others much more than himself, and as a result, he would change his mind and would lose. Needless to say, he has learned to trust himself and develop his mental edge. I am very happy to say that these days he is doing very well.

What are the key points for keeping your own perspective?

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    • Believe in yourself.
    • Know your strategies.
    • Know your entry and exit points.
    • Be cognizant of who or what news sources you listen to.
    • Be aware of who you surround yourself with.

Fear and Greed

  
  Education
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Day trading is a system based on rules, but as charts are analyzed and prices fluctuate, traders may find that they have a difficult time sticking to those rules when fear or greed become involved in the analysis. Successful traders are able to buy despite feelings of fear and sell despite feelings of wanting to prolong the holding of a stock.

A confident trader will still take the time to test and re-test a stock. At first glance a stock might look like it’s in top shape and performing as expected, but a successful trader will not solely rely on first glance appearances. Those who day trade stocks know that in an instant the market can change and it’s important to stay abreast of company information as well as market news and conditions. A successful trader will stick to the rules set up in day trading systems to ensure that his or her reactions remain unbiased throughout the trade.

Effective day trading strategies focus on providing consistent and disciplined actions. Successful traders have a consistent approach to the market and trading. They will take the time to systematically build up their own trading system that takes into account their own personal elements of risk control and they will take the time to stick to their original trading plan. It’s not that traders shouldn’t make changes based on market information, but that the changes made should be based on established trading rules that help traders determine what their entry and exit points on a trade should be.

Some of the best day trading tips that a trader can get help them deal with fear and greed. Many traders find that they may be able to memorize the rules and familiarize themselves with knowing how to accurately interpret stock charts, but they also need to learn how to prepare themselves to deal with fear and greed.

Fear in trading primarily takes on two basic forms – the fear of loss and the fear of missing out. The fear of loss leads to selling stocks prematurely and as a result, they aren’t able to capitalize and recover fully on the trade. When they start to enter into trades, the trade isn’t given enough time to mature and the trader sells so that more isn’t risked.

The fear of missing out is another form of fear that compels people to abandon their rules so that they don’t lose out on another major stock move. These fears need to be dealt with because they will impact a trader’s entry and exit decisions.

Greed is the motivation for over-confidence. Dreams of “making it big” in trading can cloud a trader’s perspective. Again, they abandon the rules of their trading system in the hopes that more money will come their way. Traders need to learn how to deal with greed so they can maintain their focus and not have their thoughts be swept away with illusions.

Anirudh Sethi's Lessons From 2008 : Part – I

  
  Education
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 aslessons2008

Last week …Many Traders had asked me :Dear Anirudh Sethi… “What would you say is the most important thing you’ve learned about investing and/or trading in 2008?”
Here are some of the replies ….I had given (more…)

Risk Management for Traders

  
  Education
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RISK-MANAGEMENT

  • Your first loss is the best loss.
  • Let winning positions run and cut losing positions short. The market is always right.
  • I finally understand why Kirk always says risk management is the most important thing.
  • Always know your exit. Before any trade is made, you must always identify your stop beforehand and then follow it without hesitation if it triggers.
  • Patterns and trends matter more than I thought…paying attention to them can provide better entry/exit points.
  • Patterns and measured moves are key but you have to wait until a pattern is triggered and the trigger holds.
  • Being patient and waiting for confirmation instead of trying to anticipate market movements.
  • Risk is greatest when everyone who wants to buy has already done so – Apple is the latest example!
  • Position sizing is my first and last line of defense.
  • Leverage is for losers.
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