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7 Trading Rules for Flash Traders

  
  Education
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1. Keep adding to losing positions. 
What the heck, price bound to turn soon. Martingale method sounds great. Consider adding on double to loosing trades. When price turns I’ll laughing all the way to the bank even I have to close my initial entries at loss.

2. Don’t use any stop-loss
Why bother with stop-loss. It’s for pussies anyways

3. Don’t waste time with money management
Thank you very much but I already know how to manage my own money. Why bother with money management nonsense.

I can use my time doing more trading and making money instead delving into all that mumbo-jumbo technical jargon.

4. Keep trading
I cannot afford to loose any opportunities. I need to be always in markets, day in day out. After all life is to short to waste golden opportunities. I cannot afford them passing by me.

5. I trust my great indicators
Why bother to learn to read charts and all that price action garbage while my sweet indicators are doing it for me. Leave the hard work to those suckers.

6. Buy the bottoms and sell the tops
I cannot understand why those people wasting their time trying to read charts. When price moves up significantly I sell, when price moves down I buy. Simple, buy low sell high as the saying goes.

7. Always check media and internet for good tips.
Let those suckers do the hard work again and I just use their work. After all all those experienced people in media cannot be far of from the truth as they have the insight knowledge.

The Ten Best Things Ed Seykota Ever Said.

  
  Education
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Arguably one of the greatest traders of all time with his trend following system.

Charles Faulkner tells a story about Seykota’s finely honed intuition when it comes to trading: I am reminded of an experience that Ed Seykota shared with a group. He said that when he looks at a market, that everyone else thinks has exhausted its up trend, that is often when he likes to get in. When I asked him how he made this determination, he said he just puts the chart on the other side of the room and if it looked like it was going up, then he would buy it… Of course this trade was seen through the eyes of someone with deep insight into the market behavior

The Ten Best Things Ed Seykota Ever Said:

Psychology

“To avoid whipsaw losses, stop trading.”

“It can be very expensive to try to convince the markets you are right.”

“A fish at one with the water sees nothing between himself and his prey. A trader at one with his feelings feels nothing between himself and executing his method.”

Risk Management

“The elements of good trading are cutting losses, cutting losses, and cutting losses.”

“Here’s the essence of risk management: Risk no more than you can afford to lose, and also risk enough so that a win is meaningful. If there is no such amount, don’t play.”

“In your recipe for success, don’t forget commitment – and a deep belief in the inevitability of your success.”

Trading System

“The trend is your friend except at the end when it bends.”

“If you want to know everything about the market, go to the beach. Push and pull your hands with the waves. Some are bigger waves, some are smaller. But if you try to push the wave out when it’s coming in, it’ll never happen. The market is always right.”

“Systems don’t need to be changed. The trick is for a trader to develop a system with which he is compatible.”

“I don’t predict a nonexisting future.”

Ed Seykota is a legend in the trend following community and has returns that would make Bernie Madoff  jealous, because his are real. If you can fully grasp what Ed is saying in these quotes it will improve your trading dramatically.

Traits of a Successful Trader

  
  Education
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We urge you to use this checklist for your own trading and investing preparation.  We truly feel that these traits are very important for you to understand.  These trader traits coupled with the proper psychology can make a huge positive difference in your overall trading performance.     

•  The ability to act on your decisions.

•  The ability to accept responsibility for your actions.

•  You must have emotional detachment from the markets.

•  The ability to accept risk and take losses (you’ll never be right 100% of the time). (more…)

Why do 90% get washed out?

  
  Education
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They say that 90% or more of new traders get washed out of the market in six months – why would that be? I just had an insight into my own current state and the implications of it long term if it were left as an unconscious process…

The fact is that learning to trade is hard; very hard – but on top of that, it is a zero feedback learning curve. You don’t get marked or a pat on the back for your efforts; the only feedback you get is:

You lose…
You lose…
You lose…

You think you are building up knowledge and skill in your conscious mind, but unbeknownst to you, in the dark invisible depths of your subconscious, you are slowly training yourself to HATE TRADING…

It is like constantly sticking your hand in the fire and going “Ouch! Ouch! Ouch!”

Your interest and passion for it is being quietly eroded. There eventually comes a day where you would rather do something else than trade that day; your instincts are telling you to avoid the pain.

It eventually becomes a DRAG…

Attracted by more pleasurable pursuits you realize one day that you haven’t traded for a week or two, but the very thought of it gives you a pain in the solar plexus… You brush the whole thing aside as an old hobby that was a large expensive waste of time.

You’ve been washed out. You are a statistic, but by now you couldn’t care less!

Market Gravitates or We Spot those LEVELS…. Mystery !!

  
Analysis, Education
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BANK NIFTY

Here in this very space we have written Y’day and updated today intra-day too: @ 9106 wrote to Sell CNX Bank INDEX on any Rise. It would tumble to 8719 level very shortly.  Bang on… just in 48 hrs it collapsed to exactly our level, precisely 8715, a whooping fall of 400 points. 

 In the same breathe you were forewarned that for NF not crossing 5165-68 would weaken it to 4994 – 4970 levels. Exactly from 5168 of y’day it has nosedived uptill 5017.

 

These are indices: Non-manipulatable, Non-influential. How did it happen, who did it, can there be any attributes at all !!!!  Its our ever dependable charts, Analytical skills and wisdom of Insight. Collectively Technical Analysis. Just Pure Intelligence.

Yesterday  I written about Bank stocks…Just click here

Read Yesterday’s Guesstimates

Many Traders had asked about MTNL…..and they say I don’t about failure calls.First of all about MTNL….Technically was /still looking hot …But I had written many times never act blindly in market and always consider price as Father of stock/Commodity.

-Now click here and see…the reason ..Why MTNL had crashed in yesterday’s trade.

Now about Failure calls.If I recommend any stock or do analysis then I always write Support/Resistance levels. (more…)

Justin Mamis: ‚When to Sell’ – Inside Strategies For Stock market Profits

  
  Education
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Time for another excerpt post taken from “When to sell” from Justin Mamis. Probably my favourite author. Do yourself a favour. Buy all his books and read them. Repeat the process. The best education you can get. This will make you a better trader and will provide you with tremendous insight into how markets work and how to deal with all the psychological aspects of trading.

Justin Mamis: ‚When to Sell’ – Inside Strategies For Stock market Profits

Chapter 2: ‘Right is wrong’ pages 23-24

With experience, and with some grasp of what has consistently affected your judgment in the past, you should be able to determine at which times and under what conditions you function best…and when you should be extra-careful, or even stay away entirely. One important thing every professional knows, or ought to know since it is his business to know, is that he doesn’t have to play the game every single minute of every day. The advent of desktop machines and their ability to present right in your face what is actually happening every single minute of every day – and some with bells and whistles to call your attention to some petty and momentary thing that has just happened – has had its effect, though: the less experienced, the less disciplined, have become increasingly short-term oriented and excitable, more, in fact, akin to what we believed in the past that the public could be criticized for, of playing a game, of having a predilection for continually being in the market in one way or another. “Isn’t there one stock worth buying?” was a common question during the massive 1973-74 bear market, and still is. There is no rule that says you always have to have action; yet that is perhaps the most disastrous of all the common errors we’ve noticed. Rather than continually confronting the market on its own inscrutable terms, stop and ask yourself what you know, whether what you know is enough to act upon, and how you are relating to it. Maybe it is a period when the market’s personality conflicts with yours, or something in your extra-market life is hampering your ability to view stock action objectively, or, simply, perhaps it’s a time when the market’s course isn’t clear to anyone. Then it is best to step aside. You owe it to yourself to find out exactly how ready and able you are to play, because it’s yourself you end up playing against.

THE MOST COMMON ERROR IN STOCK MARKET RESEARCH

  
  Education
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Jeff Miller of Dash of Insight wrote a brilliant post on common research mistakes. It can be found here.

He breaks it down into two things:  Selecting the Right Data and Comparison.

Selecting the Right Data.  As the saying goes, if you torture the data for long enough it will tell you anything.  There is so much data out there that you can make it say whatever you want.  The most important thing about finding the right data is accepting the limitations of it and understanding it.  Look at this way, I like a fast car but insurance and gas will cost more. Does that justify the tradeoffs for me?  Yes.  You?  Maybe.  All data is local.

Comparison.  Mr. Miller calls is comparison but I prefer the word context.  Most anyone can look at a data or chart and come to a reasonable outcome.  Data records it does not tell the story.  It can can tell a story but for the most part they are without context.  Yes you can throw a couple more pieces of data in and get closer but who knows.  Think about how ridiculous it would sound if I showed you a picture from 1950′s Chicago and asked you what it was like.

What Mr. Miller didn’t mention, probably because of time or my inabilities, is that data is secondary to what we do with it.  For the most part we are untrained at using it.  We are 14 year olds at the Playboy mansions. We get data F@#%&ed, data blocked, data complacent or whatever you want to call it.

Why 95% fail

  
  Education
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When setting a grand goal, (such as total financial freedom via trading world markets) we are mentally prepared at the outset to encounter some kind of difficulty. When we get to it, it can psychologically look something like this:


A large barrier blocks the way to our goal, yet we KNOW that the realization of our goal lies somewhere on the other side if we can surmount this obstacle. With great efforts then we focus our attention and do the necessary work to get over it.

Yet what we then find is another obstacle; the next block. At this, a small percentage might become discouraged and quit, but others tackle this new obstacle with the same determination that they did on the last one. The problem lies in our inability to consider the enormity of the task at hand. If we could look around the wall to see forwards in time, we may see something like this:


If we had the benefit of such insight we might be able to accurately guess at just how far we had to go and how many more difficulties we have to get over, but we don’t. At each wall, a tiny percentage fall by the wayside, exhausted by these seemingly continual fruitless efforts. The only question is at what point do we jack it in at take up some other pursuit? Interestingly no matter how far we got, once we decide to quit and join the 95% we are no different from someone who gave up at the first obstacle, even if we gave up at the very last wall.

Or do we just doggedly keep going over wall after wall? Its obvious that the only option we have is to either quit or keep going at it and never giving up. Which will you be?

Ed Seykota Quotes

  
  Education
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Markets
The markets are the same now as they were five or ten years ago because they keep changing-just like they did then.
Short-Term Trading
The elements of good trading are cutting losses, cutting losses, and cutting losses.
Outcomes
Win or lose, everybody gets what they want out of the market. Some people seem to like to lose, so they win by losing money.
I think that if people look deeply enough into their trading patterns, they find that, on balance, including all their goals, they are really getting what they want, even though they may not understand it or want to admit it.
Market Trends
The trend is your friend except at the end where it bends.
Charles Faulkner tells a story about Seykota’s finely honed intuition when it comes to trading: I am reminded of an experience that Ed Seykota shared with a group. He said that when he looks at a market, that everyone else thinks has exhausted its up trend, that is often when he likes to get in. When I asked him how he made this determination, he said he just puts the chart on the other side of the room and if it looked like it was going up, then he would buy it… Of course this trade was seen through the eyes of someone with deep insight into the market behavior.
Predicting the Future
If you want to know everything about the market, go to the beach. Push and pull your hands with the waves. Some are bigger waves, some are smaller. But if you try to push the wave out when it’s coming in, it’ll never happen. The market is always right.
Trading
To avoid whipsaw losses, stop trading.
Here’s the essence of risk management: Risk no more than you can afford to lose, and also risk enough so that a win is meaningful. If there is no such amount, don’t play.
Pyramiding instructions appear on dollar bills. Add smaller and smaller amounts on the way up. Keep your eye open at the top.
Markets are fundamentally volatile. No way around it. Your prolem is not in the math. There is no math to ge you out of having to experience uncertainty.
It can be very expensive to try to convince the markets you are right.
System Trading
Systems don’t need to be changed. The trick is for a trader to develop a system with which he is compatible. (more…)

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