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Overcoming the top 10 Pains of Trading.

  
  Education
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PAIN-ASE

Here are 7 painful aspects of trading and what to do about them.

  1. The pain of losing money. (Trade smaller so it is not painful, it is just an outcome)
  2. The pain of being wrong about a trade you were sure about. (You lost simply because the market didn’t match your trade, trend followers lose money in choppy markets, swing traders lose money in trending markets, it’s the market not you.)
  3. The pain of a draw down in capital.(Even the world’s best money managers do not continually hit all time equity highs. Your path may look like this $10,000 to $20,000 to $15,000 to $25,000 to $20,000 to $30,000.  Mine was rockier than most, and after blood, sweat and tears I am now able to trade with $250,000.)
  4. Consecutive trading losses hurt. They make you doubt yourself, your method, and your system. (You need to remember your winning trades, your winning years, or your back-testing, or paper trading of the method.)
  5. The embarrassment of public losses. You told everyone who would listen about a great trade, and you were wrong. (Never be overconfident in any trade, but always be sure of your stop loss.)
  6. The pain of of admitting you were wrong. (Cut your loss and move on to the next trade, trade reality not your ego.)
  7. Losing paper profits, you are up 20% on a trade then a massive whip saw takes back those profits in one move. (Take your trailing stop and move on to the next trade, there is truly no reason to cry over spilled milk.)
  8. You are following a guru and come to realize he truly is a salesman not a trader. (You stop following gurus and look to learn how to trade you yourself.)
  9. You buy a super hot stock that you have researched for many weeks then it goes down due to a bear market. (Only trade stocks long in up-trending markets)
  10. You start trading a system that did amazing in back-testing and promptly lose 10% of your account. (You have to stick with it so it can win in the long term, you may need to make slight adjustments in position sizing or stops to account for volatility that you may have missed.)

Whatever the pain, just don’t quit, there is gold to be found in trading right over the long term.

Trading Mistakes

  
  Education
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Letting small losses turn into large losses.
— Refusing to take a loss at all.
— Overbetting.
— Bottom fishing/Catching falling knives.
— Averaging down.
— Shorting bulls and buying bears.
— Confusing the company with its stock.
— Falling in love with a “story.”
— Following the leader.
— Buying IPOs.
— Finding the Holy Grail.
— Overtrading.
— Excessive tape watching.
— Being undercapitalized.
— Letting the tax tail wag the stock dog.
— Relying on Blue Channels and Website Analysts
— Thinking this market stuff is easy.
— Thinking rather than looking.

Eight Questions That Go Bump in the Night

  
  Education
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Why do the gurus who proclaim a “feel” for the market tell us to eliminate emotions from trading?

Would 80% of traders make money instead of losing it by placing trades through “enrichers” instead of “brokers”?

Why do people who offer programs on making a living from trading make their livings from offering programs?

Why do beginners think they’d have an easier time beating professionals at trading than at golf, boxing, racecar driving, or chess?

Why are so many market newsletters bullish or bearish, when the most common market outcome is little or no change?

What happens when contrary opinion is the dominant school of thought?

Why do trend followers follow trend following once it goes out of favor?

If exchanges make more money than brokers; brokers make more money than market makers; and market makers make more money than traders, is the answer to success in the markets to always have people who are your customers?

Be Responsible

  
  Education
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Be responsible for your own trading destiny. Analyze your trading behavior. Understand your own motivations. Traders come into commodity trading with a view to making money. After awhile they find the trading process to be fascinating, entertaining and intellectually challenging. Pretty soon the motivation to make money becomes subordinated to the desire to have fun and meet the challenge. The more you trade to have fun and massage your ego, the more likely you are to lose. The kinds of trading behaviors that are the most entertaining are also the least effective. The more you can emphasize making money over having a good time, the more likely it is you will be successful.

Be wary of depending on others for your success. Most of the people you are likely to trust are probably not effective traders. For instance: brokers, gurus, advisors, system vendors, friends. There are exceptions, but not many. Depend on others only for clerical help or to support your own decision-making process.

Don’t blame others for your failures. This is an easy trap to fall into. No matter what happens, you put yourself into the situation. Therefore, you are responsible for the ultimate result. Until you accept responsibility for everything, you will not be able to change your incorrect behaviors.

10 ways to Master the Trade

  
  Education
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How do you know you’re making progress on the road to successful trading? There’s one obvious answer: Check your financial  results. There is little doubt you’re doing well if you’re booking consistent profits. Thump

 But raw capital production may not be the best way to judge your growth as a trader. The road to success has many detours  where profitability isn’t the best measure of results. For example, we all go through phases in which introspection and skill  development are more urgent than short-term profits. So let’s look at 10 ways to know you’re making solid progress on the road  to market mastery: 

 1. Money management becomes your lifeline, and all your trading strategies start to revolve around its core. Risk control  becomes a key aspect of every position you take. You accept that controlling losses has a far-greater impact on your bottom line  than chasing gains. 

 2. You develop your own trading plans and strategies rather than relying on books, gurus or other people’s opinions. You notice  how you’re finding more opportunities than you have time to trade while looking through your charts. You look forward to the  trading day with a growing sense of confidence and empowerment. 

 3. You feel more like a student than a master. You learn new things every day and can’t wait to apply them to real-life trading  scenarios. You listen closely to everything you hear, trying to pick up hints and concepts that will improve your performance. You expand your studies into everything market-related, including economics, fundamentals and balance sheets. 

 4. You stop visiting stock boards and chatrooms, because they don’t add anything to your trading goals. You realize that  everyone in those places has ulterior motives. You develop a healthy skepticism about companies, market-makers and even  other traders. You realize that no one is really interested in your success as a trader, except for you.  (more…)

How to Trade Through the Pain

  
  Education
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10 painful aspects of trading and what to do about them.

  1. The pain of losing money. (Trade smaller so it is not as painful, it is just an outcome not an emotion).

  2. The pain of being wrong about a trade you were sure about. (You lost simply because the market didn’t match your trade, trend followers lose money in choppy markets, swing traders lose money in trending markets, it’s the market not you. As long as you followed your own plan.)
  3. The pain of a draw down in capital.
  4. Consecutive trading losses hurt. They make you doubt yourself, your method, and your system. (You need to remember your winning trades, your winning years, or your back-testing, or paper trading of the method. You have to keep the faith or get with a method you have faith in).
  5. The embarrassment of public losses. You told everyone who would listen about a great trade you were taking and you were wrong. Social media has given us all the ability to embarrass ourselves anytime we want. (Never be overconfident in any trade, but always be sure of your stop loss.)
  6. The pain of of admitting you were wrong. (Cut your loss and move on to the next trade, trade reality not your ego.)
  7. Losing paper profits, you are up 20% on a trade then a massive whip saw takes back those profits in one move. (Take your trailing stop and move on to the next trade, there is truly no reason to cry over spilled milk.)
  8. You are following a guru and come to realize he truly is a salesman not a trader. (You stop following gurus and look to learn how to trade for yourself using a method and a trading plan).
  9. You buy a super hot stock that you have researched for many weeks then it goes down due to a bear market. (Only trade stocks long in up-trending markets)

  10. You start trading a system that did amazing in back-testing and promptly lose 10% of your account. (You have to stick with it so it can win in the long term, you may need to make slight adjustments in position sizing or stops to account for volatility that you may have missed.)

The Mind of the Greatest Trader-Livermore

  
  Education
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As revolutionary as this early-day stock guru’s approach to trading was for his time, in truth, Jesse’s stock trading “secrets” just came down to good, sound basics. His success stands as a testament to the fact that the further we wander away from trading breakout stocks and a simple, disciplined approach to trading stocks, the less success we’re inclined to have. Just how unconventional was Jesse Livermore? Take a look:

  • He believed in trading top quality stocks, not “weaker sister” stocks.
  • A stock hitting new highs was a signal of a stock’s strength to Livermore, and meant the stock had broken through its overhead supply of sellers. Today, we call this a “breakout stock”.
  • He was one of the first stock traders to realize that stocks tend to move in industry groups not in isolation.
  • Unlike today’s self-appointed stock pick gurus, Jesse Livermore was a humble student of the market, and never considered himself a master.

Livermore was ever conscious of the part one’s psychology played in achieving stock trading success, so he never spoke about what he was doing to anybody, and actually was known to ask people to keep their stock tips to themselves! He was so protective of his trading psychology that he would not even use the words “bullish” or “bearish,” thinking they would create an emotional mindset that he wanted to avoid. (more…)

Be responsible

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #

Be responsible for your own trading destiny. Analyze your trading behavior. Understand your own motivations. Traders come into Future  trading with a view to making money. After awhile they find the trading process to be fascinating, entertaining and intellectually challenging. Pretty soon the motivation to make money becomes subordinated to the desire to have fun and meet the challenge. The more you trade to have fun and massage your ego, the more likely you are to lose. The kinds of trading behaviors that are the most entertaining are also the least effective. The more you can emphasize making money over having a good time, the more likely it is you will be successful.

Be wary of depending on others for your success. Most of the people you are likely to trust are probably not effective traders. For instance: brokers, gurus, advisors, system vendors, friends. There are exceptions, but not many. Depend on others only for clerical help or to support your own decision-making process.

Don’t blame others for your failures. This is an easy trap to fall into. No matter what happens, you put yourself into the situation. Therefore, you are responsible for the ultimate result. Until you accept responsibility for everything, you will not be able to change your incorrect behaviors.

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