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The emotions in markets are off-the-charts

Do you feel it?

comic about warnings
Fear is the strongest emotion but greed isn’t far behind.
What we’re seeing in the markets and in the world right now is extreme emotion. Collectively, I believe that COVID-19 has left everyone an emotional wreck.
We all agree that the fears from the virus have diminished but what has replaced that is a mess. It’s all anecdotal but I’ve come to believe the series of events around the coronavirus has elevated individual and collective emotions — like every day is a full moon.
The fear around the virus has left some kind vacuum and people are trying to fill it.
You see it in people’s lives, in protests, in anger but you’re also seeing it in markets. There has never been a market like this. People are throwing away their hard-earned savings on idiotic gambles on bankrupt companies.
But it’s not just the stupidest of the stupid. The uncertainty in the world is extreme and there’s no reflection of that in risk assets. The transition from fear to greed to euphoria is nonsense.

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30 Trading Rules

1. Buying a weak stock is like betting on a slow horse. It is retarded.
2.
Stocks are only cheap if they are going higher after you buy them.
3.
Never trust a person more than the market. People lie, the market does not.
4.
Controlling losers is a must; let your winners run out of control.
5.
Simplicity in trading demonstrates wisdom. Complexity is the sign of inexperience.
6.
Have loyalty to your family, your dog, your team. Have no loyalty to your stocks.
7.
Emotional traders want to give the disciplined their money.
8.
Trends have counter trends to shake the weak hands out of the market.
9.
The market is usually efficient and can not be beat. Exploit inefficiencies.
10.
To beat the market, you must have an edge.
11.
Being wrong is a necessary part of trading profitably. Admit when you are wrong.
12.
If you do what everyone is doing you will be average, so goes the definition.
13.
Information is only valuable if no one knows about it.
14.
Lower your risk till you sleep like a baby.
15.
There is always a reason why stocks go up or down, we usually only learn the reason when it is too late.
16.
Trades that make a lot of intellectual sense are likely to be losers.
17.
You do not have to be right more than you are wrong to make money in the market.
18.
Don’t worry about the trades that you miss, there will always be another.
19.
Fear is more powerful than greed and so down trends are sharper than up trends.
20.
Analyze the people, not the stock.
21.
Trading is a dictators game; you can not trade by committee.
22.
The best traders are the ones who do not care about the money.
23.
Do not think you are smarter than the market, you are not.
24.
For most traders, profits are short term loans from the market.
25.
The stock market can not be predicted, we can only play the probabilities.
26.
The farther price is from a linear trend, the more likely it is to correct.
27
. Learn from your losses, you paid for them.
28.
The market is cruel, it gives the test first and the lesson afterward.
29.
Trading is simple but it is not easy.
30.
The easiest time to make money is when there is a trend.

15 Common Sense Rules For Traders

Common sense can be brutally honest sometimes. As traders we get so focused on the little inconsequential detaisl sometimes that we miss the world around us. I have had this discussion with too many people over the last two months that told me they were bearish on the market and were taking a beating on the “high probability” that the market would reverse. Who sets those odds by the way? Are trends more likely to reverse than persist? If so, why the hell are we studying technical analysis?

Take a look over these trading rules I stumbled across last year and see if there are any realities that surface from them. Each time I look these over it reminds me of the realities of what we do here.

1. No matter what you read about trading, until you use an approach and test it with your money on the line you will never learn how to trade. Paper Trading is NOT Trading!

2. If it were really possible to “Buy Low Sell High” or “Cut your Losses and Let your Winners Run”, then almost everyone would be making money rather than losing it.

3. Remember that there is ALWAYS someone on the other side of your trade who is using a trading technique exactly the opposite of yours who hopes to make money with his system.

4. If 90% of all traders lose money, they must be following generally accepted trading rules. The 10% who win do not!

5. You trade your beliefs and your beliefs about your system. If you have a problem with yourself, fix yourself first.

6. Impatience, Fear and Greed will make you poor. Any need to trade is rooted in greed and impatience.

7. If you really understand the markets then YOU KNOW that there is the same opportunity on every time frame, in every market, every single day.

8. Waiting for the perfect trade is “chickening out”, and caused by your lack of faith in yourself or your system.

9. Any hardwired, automated trading system sold that truly works 70 or 80 or 90 percent of the time in every market would be worth hundreds of millions of dollars and would not be for sale at any price. (more…)

"The Confident Trader "

Confidence overcomes fear. Confidence also overcomes greed because a component of greed is an underlying sense of scarcity. To be confident doesn’t mean that every trade or trading day will be profitable. What it does mean is that when you look to where you want to go, you know that you can figure out a strategy that will get you there. And you know you can execute that strategy in a consistent manner. A successful strategy doesn’t mean anything if you don’t or can’t or won’t employ it.

Theoretically we should be as successful at trading and investing as our trading and investing strategies. Unfortunately the vast majority of traders and investors fall far short of the results of their strategies. They trip over themselves again and again on the way to employing their methods. My work as a trading coach is to enable traders around the world to become as good as their methods.

Confidence need not waver when you have dips and troughs and plateaus in your trading. Confidence is developed when you realize you can correct mistakes and learn from failures. You don’t persist in failing. You learn and move on. You don’t fear repeating the failure either, you simply anticipate correcting it.

Self esteem is basically the sum total of all the thoughts we have about ourselves. This is quite important because we do tend to become what we think about ourselves. The noted philosopher and psychologist, William James, said, “People, in general, become what they think of themselves.” Not only did he say this but he added that this was the essence of all we had learned in psychology in the prior 100 years.

What do you think of yourself as a trader? Do you believe that your dream of excelling as a trader is possible? Do you have a set of philosophies that support your dream? Are you as good as your methods? If not, it’s time to do something about it.

Consider my coaching program. I speak for an hour on the phone each week with the traders I coach. We review your trading, beliefs, attitudes, habits, and philosophies. I help you do more of what works and stop doing what doesn’t work. Through exercises, assignments, and repetitive listening to the CD’s I send, you can become as good as your methods. The money you invest in yourself—especially in difficult times—is truly the best investment you can make. It will pay you exponentially because you never leave yourself. Call me at 800-692-0080, and we’ll discuss it.

Are you a Trader or Gambler?

gamblerortrader
Why do you trade ?

Let me guess…

Because you want to make a crapload of money and be able to buy anything you wish?

While this is a perfectly valid reason, it will most likely lead to excessive greed and ultimately lead to your trading account’s destruction.

You might as well take your money to Vegas instead, and gamble it away.

Once your money is all gone, at least it was entertaining.

Greed is the worst motivation for trading. The market will always punish greed and will always reward moderation.

Never try to make all of your money on one trade.

Never try to make all of your money on one trade.

If you do, you are not trading, you are gambling!

There is a fine line between traders and gamblers. When there is real money on the line, there are always those who take blind chances.

If you want to be a successful, do NOT think like a gambler, do NOT take blind chances and do NOT solely rely on luck.

Luck comes and goes just like the gambler.

It’s the trader who remains.

Trading obstacles

Trading obstacles

Have you ever been to a situation when you moved the stop because you couldn’t accept the lose, but ended up losing big chunk. Or you were too sure about the direction of the trade, you didn’t even put a stop loss but trade went opposite your way and ended up losing ten times more then what you suppose to lose. What about this scenario, you were sitting on big profit; you didn’t partial because of greed or overconfidence and ended up giving every thing to the market. Never been to this kind of situation, that’s great, but if been through this kind of horrible situation and still having this problem then you are not alone. We human naturally like that, can’t accept loses or in other word we like to win. In the trading word it is impossible to win 100% of the time, trading is game of probability .Very simple concept which part of the probability we don’t understand. Probably we understand probability but when we involve in a trade our ego overleaps the logical part of our brain.
What should we do, we will let our ego to ruin our trading career or we will say good bye to our ego.

1.Be honest to your self
2.Admit you mistake
3.Overconfidence is you enemy
4.Think logically
5.Try to keep record of every trade
6.Never revenge trade
7.Market is always right not you.

Discipline-Risk Management-Passion

DISCIPLINE: The trader must have the ability to control themselves and follow a plan. Discipline is a required skill in trading without it there is no edge, you are either a gambler or simply trading off fear and greed. You will not be successful, instead you will be gamed by those in control of their emotions.
RISK MANAGEMENT: Risk management must be a top skill for a trader to even survive in the markets. You must structure your risk per trade to be no more than risking 1% or 2% of your trading capital. You have to be able to survive 10 losses in a row. These strings of losses come around more often than a new trader would suspect. If you lose just 5% of your trading capital in each of ten trades you will be down almost 50% and need a 100% return just to get back to even. At this point you are ruined.
PASSION: A trader must love to trade, without a passion for the markets and trading the new trader will not survive the learning process because anyone with common sense would believe that it was not worth the struggle. Passion will be needed to bring a trader through the learning curve and later the losing streak.

7 Things You Must Do to Win at Trading.

1. Managing the risk of ruin.
Do not risk so much on any one trade that 10 losing trades in a row will destroy your account. risking 1% to 2% of your trading capital per trade  is a great baseline for eliminating the risk of ruin.
2. Only trade with a positive risk/reward ratio.
Only take trades where your possible reward is at least two or three times the amount of capital you are risking in the trade.
3. Always trade in the direction of the prevailing trend.
Always trade in the direction of the flow of capital for your specific time frame. Shorting rockets and catching falling knives is not profitable in the long run.
4. Trade a robust system.
Back test and study your trading method, system, or style to ensure it is a winning system historically. The key is that it had bigger winners than losers over the long run in the past.
5. You must have the discipline to take your entries and exits as they are triggered.
You must take your entries when they trigger, your losses when they are hit, and your profits when a run is over to be a successful trader.
6. You must persevere through losing periods.
All successful traders were able to overcome their losing periods to come back and make the big money. If you quit you will not be around for the opportunity to win big.
7. If you want to be a winning trader you must follow your trading plan not your fear and greed.
Emotions will undo a trader more than anything else. Trading too big is due to greed, missing a winning trade due to no entry is a sign of fear, traders must trade the math and probabilities not their own opinions or emotions.