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18 Trading Wisdom for Traders

  
  Education
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1. You will be tested mentally and emotionally this is not for the weak minded.

 2. Master Traders are detached emotionally from profit or loss.

3. Boredom is the enemy of the master opportunist.

 4. Haste is the enemy of great entry points.

5. Doubt is often followed by a lost opportunity.

6. The Trend will give you direction on your path.

 7. Having an exit strategy prevents unnecessary pain.

8. The laws of probability give strength to your fingers.

 9. Going against momentum brings forth the fools reward.

 10. Better the bad trade that is unrewarding.

 11. Habit is built on the principles of probability.

12. Know your exit point in the worst case scenario first.

13. The master trader is an escape artist.

14. When one knows the present they master the futures.

 15. Set realistic goals and let the good times role.

16. A loss can be turned into a win when one is swift.

17. A master in day trading trades in an egoless state.

 18. Times of great probability are like diamonds falling from the sky.

Learning to Trade from a Legend-Victor Niederhoffer

  
  Education
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Study horse racing books. The odds against winning at a parimutuel racetrack are overwhelming. Yet some touts have systems that produce a profit (against all odds). Can you apply any of these horse racing principles to your trading?

• Write down trading prices (by hand). There were a ton of computers in Victor’s trading room. Yet Victor made me do price analysis by hand. He felt there was enormous virtue about getting close and comfortable with trading figures.

• All markets are related. Learn what a move in bonds does to gold. And to S&P futures or the Japanese yen. Don’t trade markets in isolation

• Only make a trade when the odds are at least 60% in your favor.

• Don’t take losses to heart. I lost $20,000 on a Friday, the first day I traded real money for Victor. I wiped out my trading account. After stewing over my losses all weekend, I offered to resign and refund my losses. Victor refused my resignation and put $20,000 back in my trading account.

• Don’t take wins to heart. I remember making a lot of money following (I thought) Victor’s instructions while he was away. When Victor returned, he was not impressed by the fact the firm made money. He told me that I had traded erroneously and was lucky to have survived my trades.

• Be a mentor. Victor was generous with his time and advice. Despite the fact that several employees exploited his generosity, Victor continued to help new traders.

•  Get out when the trade is over. All trades have a beginning and end (based on time and price). Get out whether you’re winning or losing when the time or price has been met.

• Write down your moves. Learn from your mistakes.

• Learn concentration and game strategy from champions in other disciplines (such as ping-pong and checkers).

A Monster $69 Trillion Order Wreaked Havoc On The Stockholm Stock Exchange

  
Analysis, Education
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Trading was halted in index derivatives on the Stockholm Stock Exchange today after a monster futures order valued at around $69 trillion appeared in the system, according to Swedish business newspaper SvD Näringsliv.

 The “trade” was a buy order for nearly 4.3 billion OMXS30 warrants (valued at nearly 460 trillion kronor), an amount over 131 times Sweden’s GDP. The OMXS30 is the exchange’s flagship stock index, and the error apparently caused enough problems to force a closure of the market.

A report in Investment Europe said that despite safeguards, “somehow the order made its way into the order book, causing chaos for traders.”

SvD Näringsliv’s Gustaf Palm reports (via Google Translate):

According to the Exchange spokesman Carl Norell has no order of that size team into the system. Instead, it is about a parsing incurred in exchange system due to a technical error. The order, Norell writes in an email, anullerades, but still remains a problem why the index derivatives market is closed since just before 10 am this morning.

We Dare to Challenge

  
  Education
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Always Remember –The principles of successful stock speculation are based on the supposition that people will continue in the future to make the mistakes that they have made in the past.

Yes.  Its confidence in our work than any aberration.  None else in 100 crore Indians have told u about the bear onslaught, not only on Indian Exchanges but across the Globe. Check our web-site, with normal eyes or with magnifiers too. We are cautioning since Last Week about the emerging Bear-spell.

 Yesterday under the caption “Dil Se” this was our adverbatim:  Time Theory Indicates freefall could start tomorrow and heavy selling across the globe in next 4-5 sessions.  On Rise SELL-SELL-SELL is my Mantra.

You all can Click here & see the Yesterday’s written article 

Do I need to enumerate about todays “Descending Triangle Formation” that would break Nifty Futures by 250 points to 4950 levels !!!!!!

 I don’t know if the readers have at least spent 5-10 minutes to read and act upon.  But all our subscribers have minted money by following shorting-calls.  The newly enrolled members must have earned back their entire fee paid to me in single session. 

 Now u all tell: Is it not an understatement that we are unique, special, perfect, accurate, superb, bewildering, …!!!!!  This is precisely the reason why we have crossed 1 Million clicks in just 9 months.

 Others are singing:   

 But Our Members are Bubbling: 

 Technically Yours

Anirudh Sethi/Baroda

Mark Douglas : Trading in the Zone

  
  Education
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Without doubt the foremost reading, it seems, in trading circles. Douglas’ book, in my view, deserves its place at the top of a traders reading list. Whether you are trading currencies, commodities, stocks or futures this book will have something for everyone. The book tackles the psychology involved in being a successful trader. The book attempts to give the reader the tools to develop the Confidence and discipline to become and consistent winner.

I think the book is a superb read and although I cannot say right now how succesful it has been, it is one of the few books that I pick up nearly every day and read another chapter again and remind myself of some of Douglas’  inspiring ideas and thoughts.

The book ends with a great 20 trades learning excercise that is a must.

The key learnings I get from reading this book :

1)The market is random; you cannot predict it. Unless you know every individual who has a position in the market and you know their strategy for each trade it is impossible to know what will happen next.Give up trying to predict, and focus on the now moment and managing yourself , your money and your strategy.

2)The Power of Association. Douglas uses throughout the book a story about a boy and his fear of  dogs. He uses this analogy to describe how previous experiences that have given pain, or expected pain, to us will mean that our mind will do everything possible to protect itself from future pain when it is exposed to similar circumstances at some point again in the future. i.e. If you recognise a market pattern where previously you lost a trade you will be compelled to exit the trade at that point or not take that trade on; because you will not want to experience pain. Douglas again talks about the here and now and describes how we can overcome these internal obstacles.

101%….Don’t miss to Read this Book !!!!

18 Trading Wisdom Thoughts for Traders

  
  Education
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1. You will be tested mentally and emotionally this is not for the weak minded.

 2. Master Traders are detached emotionally from profit or loss. 
3. Boredom is the enemy of the master opportunist.

 4. Haste is the enemy of great entry points.

5. Doubt is often followed by a lost opportunity.

6. The Trend will give you direction on your path.

 7. Having an exit strategy prevents unnecessary pain.
8. The laws of probability give strength to your fingers.

 9. Going against momentum brings forth the fools reward.

 10. Better the bad trade that is unrewarding.

 11. Habit is built on the principles of probability.

12. Know your exit point in the worst case scenario first.
13. The master trader is an escape artist.
14. When one knows the present they master the futures.

 15. Set realistic goals and let the good times role.
16. A loss can be turned into a win when one is swift.
17. A master in day trading trades in an egoless state.

 18. Times of great probability are like diamonds falling from the sky.

Donchian rules

  
  Education
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Richard Donchian is known as the father of trend following. His original trend following ideas form the basis for all trend following success that has followed. Below in an excerpt from an article written in 1995 about his 5 and 20 day moving average system:

Title: Donchian’s five- and 20-day moving averages. 
Author: Richard Donchian
Publication: Futures (Cedar Falls, Iowa) (Magazine/Journal)
Date: November 15, 1995
Publisher: Oster Communications, Inc.
Volume: v24 Issue: n13 Page: p32: ISSN: 0746-2468

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On Wall Street there are two conflicting adages:
1. “You’ll never go broke taking a profit.”

2. “Cut your losses short and let your profits ride.”

Experience has shown that in commodities trading, the first of these “old saws” is dangerous and misleading, while the second may well be regarded as the one lesson the inexperienced commodity trader should learn if he wishes to have a better-than-even chance to come out ahead.

Every well-designed, trend-following, loss-limiting method for trading in futures (or stocks) rests on the basic principle that a trend in either direction, once established, has a strong tendency to persist, at least for a time. Among the many trend-following approaches now in use are the Dow Theory, point-and-figure chart techniques, swing methods (other than the Dow Theory), trendline methods, weekly-rule methods and moving average methods. We’ll focus on moving average methods and, in particular, the comparatively simple five- and 20-day moving average method.

The Method (more…)

Loss Aversion

  
  Education
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Changing behavior is one of the hardest things one can do, but as most successful marketers will tell you, it can be done in almost any circumstance. There are apps for the iPhone (I can’t speak for Android) which have succeeded in getting people to exercise or lose weight. Perhaps you might adapt one of them to suit your need.

Yes. If loss aversion is pervasive, then it should show up in regularities relating to price moves. The situation is complicated in futures where one person’s long profit when price goes up is the short’s loss. The endowment effect which is caused by loss aversion or the tendency to connect with what you own, could lead to holding something too long. The reference point effect, which is that people base their decisions on where they are, a variant of holding onto the status quo is also a factor. When there is a profit, a different type of endowment effect plays then when there is a loss. Especially when there has been a big loss and it turns into a profit, the loss aversion effect is greatest I believe. (more…)

Book Review :Elder, The New Sell & Sell Short

  
Analysis, Education
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Most traders have read Alexander Elder’s Trading for a Living, originally published in 1993. Elder has, of course, written other popular books such as Come into My Trading Room (2002) and Entries and Exits (2006). His latest work, The New Sell & Sell Short: How to Take Profits, Cut Losses, and Benefit from Price Declines (Wiley, 2011) is an expanded second edition of his 2008 book. It comes with a built-in study guide: three sets of questions and answers. Although it is a paperback, the charts and graphs are printed in color and the stock is of high quality.

The first part of the book covers Elder’s signature contributions to the trading literature: psychology, risk management, and record-keeping. It is brief because we’ve been there before, but Elder does describe some new ways to keep records—an ongoing project because he believes that “the single most important factor in your success or failure is the quality of your records.” (p. 341)

Part two tackles the all-important question of how to exit a (long) trade. Elder offers three alternative scenarios: sell at a target above the market, be prepared to sell below the market using a protective stop, and “sell before the stock hits either a target or a stop—because market conditions have changed and you no longer want to hold it.” (p. 59)

Elder then moves on to shorting stocks, futures, and forex; he also has a section on writing options. Finally, he points out some lessons of the 2007-2009 bear market. (more…)

Job Losses Accelerate

  
Analysis, Education, US Market
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JobWanted

Good morning. The long-awaited jobs report is out and it came as worse than expected (as Goldman predicted). 263,000 jobs were lost and unemployment rate came in at 9.8%. Futures were trading lower ahead of the report and have stayed that way since.

Other news include the World Bank’s warning of a wobble ahead for the global economy, a strong dollar is very important to Geithner, Bernanke suggests a Board of Regulators, Meredith Whitney says small business credit crunch continues and Comcast & NBC are apparently in deal talksAt 10:AM we have Factory Orders for August and news of the Chicago Olympic Bid will also come out today between 12:30PM to 1:PM EST.

Already this fall I had expected and written to have cautious approach.Now just will watch S&P 500.Below 1031 will take to 1014-1009 level and there after retest of 991 level.

Will update more about DOW ,Nasdaq Compostite and S&P very shortly.

Iam personally Bearish for Stocks/Commodity from last 15 days and will not buy anything.

Technically Yours

Anirudh Sethi

 

 

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