| Traders who are eternal optimists get absolutely killed because they have a habit of staying in long after the trade has turned into a loser. – Dan Zanger |
| Good trading is not about being right, it’s about trading right. If you want to be successful, you need to think of the long run and ignore the outcomes of individual trades. – Curtis Faith |
| Human beings are risk seekers when faced with negative outcomes and risk averse when faced with positive outcomes. |
| Great traders offer no excuses. |
| The less I cared about whether or not I was wrong, the clearer things became, making it much easier to move in and out of positions, cutting my losses short to make myself mentally available to take the next opportunity. – Mark Douglas |
Archives of “faith” tag
rssTrading Wisdom
| Traders who are eternal optimists get absolutely killed because they have a habit of staying in long after the trade has turned into a loser. – Dan Zanger Good trading is not about being right, it’s about trading right. If you want to be successful, you need to think of the long run and ignore the outcomes of individual trades. – Curtis Faith Human beings are risk seekers when faced with negative outcomes and risk averse when faced with positive outcomes. If you can’t wait for good setups, you will be ready for them with less cash to trade. – Dan Zanger |
6 Trading Rules
1.IF YOU DON’T LIKE THE TRADE YOU’RE HOLDING, GET OUT.
2.AFTER TWO HOURS OF TRADING, ASK YOURSELF: “DO I FEEL GOOD ABOUT MYTRADING TODAY?” Once two hours have passed, A day trader should have made at least two, or perhaps more, trades, “but enough to evaluate what you have done.” If the trader feels good about the day’s trading, continue. If not, stop trading that day.
3.ALL CYLINDERS OF THE ENGINE MUST BE RUNNING EFFICIENTLY. “Day-trading is a job, and your paycheck is determined by your ability. You can only maximize your ability if you have all the information you need to make trading decisions. “If a piece of equipment that one uses for trading is not working, stop trading.
4.HAVE COMPLETE FAITH IN YOUR INDICATORS.This is a must for success.Many times your indicators give you a buy or sell signal, and you don’t follow it because you don’t have the confidence the signal is right this time. Successful day traders believe in their indicators, but also are aware that nothing is 100% foolproof.
5. TO ANYONE WHO ASPIRES TO BECOME A DAY TRADER, OBSERVE THOSE WHO ARE SUCCESSFUL. “Any information you can procure on the trading philosophies, mechanics and techniques is well worth your while.”
6.DAY-TRADING IS A LONG-TERM COMMITMENT. “I fervently believe it takes several years to become a true professional”
Trading Principles
• In life, as in trading, the right mindset is crucial for success. You must be confident in your decisions because they are based on cause and effect, not on emotions or opinion. Negative people who are unsure of themselves are not successful in any field. You need faith in yourself and your methods to be able to persevere and not give up before reaching success.
• You can risk too much and lose it all in your business, life, marriage, friendships or family. You have to measure the potential cost of every action. One affair can cost you your marriage, just like one big trade with too much risk can cost you all your capital.
• In business there are certain methods which bring in customers and turn a profit, and others which cause a business to turn away customers and lose money. Trading is similar: methods which turn a consistent and long-term profit are essential for success.
• Having unrealistic expectations in a marriage, job, or business will lead to unhappiness and failure just like it will in trading. You have to set realistic expectations so
you do not get discouraged easily and quit in any of these areas. You have to be satisfied that the results are worth your effort over the long term. You need to understand what to expect before you begin a marriage, a job, a business, or trading.
• Those who succeed in all areas of life are the ones who can manage stress the best. The best way to manage stress is to increase what you can handle step by step so that you grow into new circumstances. Another way to manage stress is to avoid actions which get you into situations you are uncomfortable with.
The 10 Keys to Winning the Mental Game of Trading
To win the mental game you must have…
- …faith in yourself.
- …faith in your system.
- … an understanding of what trading size you can handle.
- …an understanding of the level of losses you can deal with mentally and emotionally.
- …a love and passion for trading.
- …the belief that it is possible to win in trading.
- …the belief that all your hard work will be worth it.
- …that you are a trader, that is what you do.
- …the ability to have your butt kicked over and over but keep coming back.
- …the perseverance to keep trying until you are successful.
Trade with Discipline
“Without discipline, you will be unable to master your ego, create empowering beliefs, have faith, and develop confidence in your abilities. The lack of discipline will prevent your skill as a trader from progressing.”
Making an occasional winning trade, that ignores your trading plan, may provide short-term pleasure, but entering trades unsystematically can adversely influence your ability to maintain discipline over the long term. Why? When you stop following your plan, you are being rewarded for a lack of discipline. You may start believing that abandoning your plan is therefore not a big deal. Then, whether consciously or unconsciously, you’ll begin to think: “I was rewarded once; maybe I will be rewarded again. I’ll take a chance.” Positive outcomes from undisciplined trading are most often short-lived, and the lack of discipline will ultimately produce trading losses.
Who cares if the win is from my plan or not? It’s still a win, right! A win that results from following a trading plan reinforces discipline. A win that occurs by chance (deviating from your plan) will increase your bottom line temporarily, but may cause harm to your psyche and be responsible for future unexplained losses. It reinforces undisciplined trading. (more…)
One Liners
1. Once, all villagers decided to pray for rain, on the day of prayer all the People gathered but only one boy came with an umbrella…THAT’S FAITH
2. When you throw a baby in the air, she laughs because she knows you will catch her…THAT’S TRUST
3. Every night we go to bed, without any assurance of being alive the next Morning but still we set the alarms in our watch to wake up…THAT’S HOPE
4. We plan big things for tomorrow in spite of zero knowledge of the future or having any certainty of uncertainties…THAT’S CONFIDENCE
5. We see the world suffering. We know there is every possibility of same or similar things happening to us. But still we get married??..THAT’S OVER CONFIDENCE!!
10 Trend Commandments
You shall learn from successful trend followers to make big returns in the market.
- You shall follow the trend only, and have no guru that you bow down to.
- You shall not try to predict the future in vain, but follow the current price trend.
- You shall remember the stop loss to keep your capital safe, you shall know your exit before your entry is taken.
- Follow your trend following system all the days that you are trading, so that through discipline you will be successful.
- You shall not give up on trading because of a draw down.
- You shall not change a winning system because it has had a few losing trades.
- You shall trade with the principles that have proven to work for successful traders.
- You shall keep faith in your trend following even in range bound markets, a trend will begin anew eventually.
- You shall not covet fundamentalists valuations, Blue Channels talking heads, newsletter predictions, holy grails, or the false claims of black box systems.
If you want news and entertainment watch BLUE CHANNELS, if you want to learn how to trade & Mint Money then Read www.AnirudhSethiReport.com
Trading Quotes for Traders
The tape tells the truth, but often there is a lie buried in the human interpretation
~~Jesse Livermore~~
Your human nature prepares you to give up your independence under stress. when you put on a trade, you feel the desire to imitate others and overlook objective trading signals. This is why you need to develop and follow trading systems and money management rules. They represent your rational individual decisions, made before you enter a trade and become a crowd member.
~~A. Elder~~
Charts not only tell what was, they tell what is; and a trend from was to is (projected linearly into the will be) contains better percentages than clumsy guessing
~~R. A. Levy~~
The biggest risk in trading is missing major opportunities, most of enormous gains on my accounts came from 5% of trades.
~~Richard Dennis~~
Take every gain without showing remorse about missed profits, because an eel may escape sooner than you think
~~Joseph de la Vega~~
Losing is part of trading. The best traders don’t get perturbed by losing trades, since over the long run they know they will be successful more often than not. When you are afraid of losing, you end up losing or missing opportunities because you are afraid to trade.
~~Trading to Win, Ari Kiev~~
In trading, the vast market consists of neophytes who are looking for magical answers to make lots of money quickly and with little risk. They want specific ideas. They want to be told exactly what to do. Those looking for such things will not find them. They will not be successful as long as they continue to favor the easy over the
truth.
~~Curtis Faith ~~
The difficulty in trading lies not in the concepts but in the application.
Curtis M. Faith
My Trading Resolutions for next 3 months
Think for myself - Stay focused on the reasons why I bought a stock and sell when those reasons are no longer compelling
- Don’t let successful trades turn into losses
- Be ruled less by emotion and fear and more by logic and knowledge
- Read some good books on trading
- To avoid being whipsawed, I will give myself more room for the trade to work
- Follow my own rules
- Be easier on myself when I screw up and don’t let my ego inflate when I’m right
- Don’t force trades – there will always be another opportunity
- Honor thy stops!
- Stop chasing hot and popular stocks
- Do my own research
- Keep learning
- Learn to be less nervous and take more risks
- Remember that lost opportunity is better than lost capital
- Trade less – don’t overtrade
- To try and limit the number of opinions I allow to affect my trading. Paralysis by analysis has hurt me
- Avoid any trade where I use the word “hope” in my reasoning process
- To follow my logical, well-conceived, long-term game plan, without making irrational changes due to short-term market conditions
- Tune out the daily noise and useless banter
- Reduce the number of positions currently held
- Have more faith in my own abilities
- In trading, learn to be fearless
- Don’t be too greedy
- Slow down!
- Incorporate the use of smart trailing stops
- Use ETFs to properly diversify
- Remove my ego from my trading decisions
- Avoid getting easily frustrated or impatient
- Control and limit my losses
- Focus on making the next trade, instead of the last one
- I will not average down into losing positions
- Create more careful and detailed records with a commitment to review them regularly
- Learn to incorporate a systematic screening method like you
- Use emotions (both personal and market) to my own advantage
- Know my exits before making any trade
- Don’t be swayed by the latest and greatest strategy I hear about
- Keep it simple. Complex strategies are no better
- Avoid crowded trades
- Take time to look for reasons NOT to buy
- Let profits run longer. take losses quicker
- Trade what I see, not what I want to see
- Be more proactive and react faster to situations I find
- Make bigger, but less frequent trades
- Stay patient
- Focus on value of companies and not on the temporary market emotions
- Be more nimble
- Keep better notes
- Adopt an opportunistic versus a rigid bull or bear bias toward the market
- Enjoy the game more
- To quit counting the value of my account on a daily basis
- Stop looking for the holy grail
- Figure out what trade related information to consume on a daily basis and keep what is useful and leave out that which is not
- Avoid information overload by limiting what I read
- Don’t read stock blogs
- Turn off the TV and dedicate more of my time to become a better trader
- Set up a lazy portfolio
- Focus on proper asset allocation
- Never forget that “when you are through learning you are through”
- Recognize mistakes early, exit, and move on
- Take partial profits routinely, but keep money on high-performing stocks
- Follow my system
- To screen & scan my watchlist in a consistent manner each and every time
- Take routine breaks away from the market to refresh and gain more perspective
- Add more fundamental research to my technical research
- Concentrate on finding just one really good idea per year like Warren Buffett
- Stop searching for shortcuts or quick fixes – take baby steps
- Read at least 3 more trading books in next 3 months
- Focus, focus, focus – ignore all outside distractions
- When a strategy works, have the courage to follow it through, when it does not work, to have the wisdom to stop trading
- Find and exploit long-range sector themes
- Open my ears and keep my mouth shut
- Never panic
- Be humble
Think for myself