Most people like to stay within a range of relative comfort; a range that is self imposed. This is known as your comfort zone. For most of us, the grand majority of our experiences and daily life’s routines are within the limits of what we already know; the boundaries that we set, the fence that we build around us to feel safe.
We tend to ignore the outer limits of this circle of comfort almost all of the time. The unknown is a scary proposition for most. The CLUM principle simply states that COMFORTABLE = LESS OPPORTUNITY ANDUNCOMFORTABLE = MORE OPPORTUNITY; C=L U=M
The simple fact is: opportunity is in the areas that few are willing to venture. In the circle of humanity, you’re part of the circle. And, in order for you to take advantage of inefficiencies in the so-called system, you must go outside the system. You must, at some point, be a lone wolf. This requires you to be a little different than the “norm.” (more…)
Archives of “holes” tag
rssNew Trading Rules for Traders
Play to win, not for a score. Traders who desire only to make money versus simply trying to trade well and their best ability will struggle. This is a money-focused game, but trading well requires you to focus on goals beyond the money to achieve the performance you really desire.
Recognize a real gamble. When you are trading well, take the possibility of a major loss out of the equation whenever you can. It is true, when we are the most vulnerable is when everything is going right and it seems like we can do no wrong. Moreover, there are times to make the big aggressive trade, and times when doing so is foolhardy. Recognizing the difference is so very important.
Root hard for yourself. When everything goes wrong, the quickest way to turn it around is to force yourself to be optimistic and enthusiastic. Even after making the so-so trades which only pay out puny returns, you’ve got to pat yourself on the back and slowly gain your confidence back. confidence is everything in trading and you need a steady supply of reassuring confidence to trade at your very best.
Forget the holes up ahead. Focus on today’s trade, not the next one or the one you think you see is falling into place weeks from now. As Hunter recommends, “You really have to stay in the present.” Traders often let big picture themes and views prevent them from seeing setups that occur daily. This tunnel vision can really limit overall returns. Find the next trade, focus on that trade, and after that, move to the next. Don’t let issues you see so far down the road prevent you from making profits today.
The right way to play safe. If you play chicken, you’ll invite bad trades and disaster. As others have said, you’ve always got to trade to win, instead of trading not to lose. There’s a tremendous difference. I know traders who try to hedge every trade they make and ultimately don’t achieve the returns they should. If your approach is sound, hedging should only be a tool to use sparingly, not as an entire strategy substitute or for protecting your ego when you are wrong.
Trading is an art
Once, there were two farmers who lived in the desert. Both desperately needed to acquire water so they could survive the desert and support their families. After working together to search the area, they concluded there was water somewhere in the area but they were not sure where. So, they set out to find a water well. They started digging in similar locations between their properties. After they both dug for several days, the second farmer finally struck water. As soon as this happened, the first farmer could see it from a distance and ran over to the second farmer. Seeing that he had stuck a huge water well, he asked the farmer, “You and I had the same tools for digging and have been digging in similar locations. How did you find water and I did not?”
The second farmer asked him, “How did you dig for water?”
The first farmer responded, “I went and dug 50 holes 1 foot deep trying to get maximum coverage of my area. What did you end up doing?”
The second farmer replies, “Oh! That is very interesting. I dug one hole, 50 feet deep.”
Many traders set out on the path of trading and do exactly what the first farmer did – they dig 50 holes 1 foot deep. If you are going to strike water, gold or oil, you will have to dig one hole, 50 feet deep. The reason for this is a matter of mastery. To be a master at anything, you have to become so familiar with it, know how it works inside and out to the point you understand every aspect of what you are doing. (more…)
3 Trading Wisdom Thoughts
1) Focus on being profitable for the week – Individual trades may go against you and individual trading days can offer little opportunity. As a senior trader once explained to me, for the active trader, however, there are enough fresh opportunities in a week to make it reasonable to set a goal of being profitable for the week. You won’t reach your goal every single week, but the mere act of setting the goal keeps you focused. For example, you don’t want to lose so much money in a single day that you can’t make it back during the other days of the week. You also don’t want to lose so much money on a single trade that you can’t come back during the remainder of the day. When you really push yourself to be profitable every week, you don’t let individual days get away from you. And when you don’t let individual days get away from you, you start managing each trade carefully to ensure that your largest loss won’t exceed your largest gain. Time and again I’ve seen a consistent sign of progress among developing traders: they stop digging themselves into holes.
2) Take what the market gives you – Today I peeled out of several short positions after a spate of very negative TICK readings in the afternoon. I’ve learned that such concentrated selling often precedes nasty short-covering rallies. My S&P position hadn’t made as much profit as my NASDAQ and Russell positions, but the market doesn’t care about that. I took what the market gave me and started the week green. Did the market go down even further after I exited? Absolutely. As one experienced trader explained to me, when the market rewards your position right off the bat, you want to take something off the table. You might let a piece of your position ride if you have a longer-term opinion, but never give green a chance to become red. A winner that turns into a loser is a double loss. (more…)
The natural laws of golf
1) If you want to get better at golf, go back and take it up at an earlier age
2) The game of golf is 90% mental and 10% mental
3) Since bad shots come in groups of three, a fourth bad shot is actually the beginning of the next group of three
4) When you look up, causing an awful shot, you will always look down again at exactly the moment when you ought to start watching the ball if you ever want to see it again
5) Any change works for a maximum of three holes – or at a minimum of not at all
6) No matter how bad you are playing, it is always possible to play worse
7) Never try to keep more than 200 separate thoughts in your mind during your swing
8) When your shot has to carry over a water hazard, you can either hit one more club or two more balls
9) If you’re afraid a full shot might reach the green while the foursome ahead of you is still putting out, you have two options: you can immediately shank a lay-up, or you can wait until the green is clear and top a ball halfway there
10) The less skilled the player the more likely he is to share his ideas about the golf swing (more…)