- The less I trade the more money I make.
- All my biggest profits were made on option contracts I bought not ones I sold.
- My number one job as a trader is to manage risks not make money.
- The best traders in history were the best risk managers not the best at entries and exits.
- The ability to admit you are wrong about a trade and get out is more important than being confident in a wining trade and staying in no matter what.
- Winning traders think like a casino losing traders think like gamblers.
- Opinions, projections, and predictions are worthless, trade the price action.
- At times fundamentals are good helpers to a trader but they are always terrible masters.
- Only date trading vehicles but marry your risk management and positive mind set.
- The smaller and more focused my watch list the better I trade what is on my watch list.
Archives of “job” tag
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Trade To Win, Not To Lose!
When athletes are consumed by not losing rather than by winning, the game is over, often before it has even started. The same precept applies to trading. As crazy as it sounds, most traders aren’t making the money they could be — and the reason, I’d argue, is the fear of losing it. Traders are far too worried about giving money back. This paralyzing phobia can transform talented, elite professionals into disappointing underperformers.
How many times have you been up in a trade and started to think about the money? Your head tells you to bank it quickly and then play it safe. After all, you made your mark for the day, or even the week, so your job is complete. That’s not the mark of a trader; that’s the mark of an accountant.
Trading is an occupation based on fleeting moments of opportunity. (more…)
Trading should be boring
Perfect description of what trading should be all about. As you might have heard from lots of great and successful traders, trading should be boring. Don’t get me wrong. You need to be passionate about trading in order to succeed. That applies to all things in life. For me, the research I do, all the stuff I read in order to improve my trading, increase my knowledge and my technical skills is what I am passionate about. The process of putting on trades and doing what the charts tell me to do is what is boring.
My trading philosophy is really simple. If I had to put it in one sentence it would be the following: ‘There is no way I am going to argue with price.’ The gist of it really is that opinions do not matter. I do have very strong opinions but when the charts tell me otherwise I change my mind. No hard feelings. A great quote dealing with the subject is the following:
When the facts change, I change my mind. What do you do Sir? – Lord Maynard Keynes
So why the ’same old, same old’ title? Because today was one of those days where I did what I have to do. My job as a trader is to be objective in my analysis of what is going on. The most important part is looking at my portfolio positions and sort them in descending order. The first one on the list is the one with the highest profit. The last one is the worst performer. I change the order in the streaming watch list of my broker whenever the ranking changes. Doing this manually is a ‘conscious and active’ process, as it literally forces me to ignore my opinions and therefore forces me to acknowledge the strength or weakness of a stock. Remember:
There are no good or bad stocks. There are only stocks that make you money and stocks that don’t.
Personal strengths and Weakness
We all have different personal strengths and weakness. Many people focus on transforming a weakness into a strength. While that is admirable, the reality is that it’s not always possible.
Although I agree with the basic idea of brain plasticity, and I whole-heartedly agree with the idea of always striving for self-improvement, I also know that as humans we have a certain degree of natural-born temperament and not everything about us can be changed.
Although we can’t always build or change every weakness into strength, the good news is that we can always leverage our strengths, if we know how. And that is mighty powerful. It’s so powerful that if you leverage the right strengths in the right way they can do an excellent job of not just counter-balancing your weaknesses, but can propel you so far ahead that those weaknesses pale in comparison.
One of the most powerful things you can do for yourself is identifying your natural strengths and then work to see how you can build on them.
We all have different personal strengths, and knowing how to leverage them is an important part of successful trading. A major consideration here is that you try to identify and leverage your own personal strengths, and not simply copy someone else’s. All too often I see struggling traders running from one style to another style whenever they see someone else’s success. One of the primary reasons why copying someone else’s trading style doesn’t always pay off in trading is because of different personal strengths.
Is Money The Rationale Or The Motivation For Trading?
| Here’s an interesting thought experiment: Suppose you find a trading system that made money consistently in all market conditions. It was backtested objectively during independent time periods and handily beat your own trading performance. It also took less risk to obtain these results, with minimal drawdowns. The system’s price is quite reasonable. The catch? The system trades four times a year.Would you obtain the system? Would you trade it? Would you buy it and then try to tweak it in various ways? Would you be able to follow its rules faithfully, or would you convince yourself in the middle of trades to take sure gains or limit losses?Such a system would not meet the needs of many traders: needs for action, needs to figure out the market on your own, needs to feel like *you* were beating the market. Money is the rationale for trading, but it is not the only motivation. Traders also trade to make themselves feel good, to validate themselves, to avoid a 9-5 job, and so much more. This is truly the source of most problems with “trading discipline”: what we need to do to make money conflicts with the other needs that we impose upon trading. If we bring a host of unmet emotional needs to the perfect trading method, we will inevitably sabotage that method. A rich and fulfilling life outside of trading might just be the best trading strategy of all. |
7 Mantras For Successful Trading
1. Losing traders fear losses and crave profits. Winning traders eliminate both fear and greed.
Great traders experienced a lot of losses and drawdowns in their lifes, so they don’t fear them. Losses are already familiar to them.
They know, that the biggest enemy of a trader are emotions. So the best attitude is not to be influenced by fear of loss or desire for profits. The more you fear something, the more you’ll experience it. The more you desire something, the less benefits you’ll have from it.
If you’re scared of driving at high speeds, Formula 1 career will never be a good option for you. If you’re scared of losses, trading will also never be a activity suited for you.
2. Losing traders care where the market will move in an hour, today or tomorrow. Winning traders don’t care where the market will go.
Why manual traders are so attached to their positions or market direction? The deep psychological reason behind it, is that they’ve made the trades with their own hands and heads. So they start worrying about the outcome. The automated systematic traders on the other hand, let computer programs do the job, so they cannot blame themselves or the market for the outcome of particular trades.
Why it is important in trading? The less you worry about the positions and about market direction, the less emotions can negatively impact your trading.
3. Losing traders look for 100% return a month. Winning traders look for 100% return a year (without compounding).
To achieve 100% return in a month, you have to trade with very high leverage. The most probable result trading with too high leverage is -100%. Winning traders use medium to low leverage. They may lose 30% from time to time, but with proper strategies, they are able to double the account every year. And if they combine medium leverage with the power of compounding , returns can be much higher. (more…)
Habits :Read them daily
1) The market will instruct us what to do. Can we learn?
2) Participants’ humanity will cause typical price structures to arise.
3) Our primary job is risk manager…that’s why I believe in managing my resources. Most managers have too much career risk on the line. That is, they can lose more by being ‘out’ when it is perceived as a time to be ‘in’, than by losing money. The old saying “I’d rather lose half my clients than half my clients’ money” isn’t in their lexicon.
4) CASH IS A POSITION
5) The markets spend most of their time not trending
6) Multiple time frames allow more precise determination of decision-making
7) More ‘precise’ decisions may allow for smaller losses
8) The slope and direction of the 50 period moving average are telling
9) Our job is simple: make money.
10) Having a regular routine (preparation routine) is vital
The Secret to Trading Success
The most important thing you must learn in every market cycle is where the money is flowing. It is flowing into the companies where the earnings are growing. As long as mutual funds have capital in flows instead of net out flows then they must put new money to work investing in stocks. If you want to make your job as a trader much easier then find where the flow is going. Mutual fund managers can not go to an all cash position they can only move money around. A bear market sinks most stocks because managers have to sell everything to raise money to redeem shares. In an uptrend they have to buy stocks with the incoming money flows. Where does this money go? It goes into the sectors and stocks that are in favor due to increased earnings in a sector and individual stocks that are dominating their sector and changing the world in the process. You want the leaders not the has been. You want the best the market has to offer. Where are consumers dollars flowing into? That is where the money is going. What companies have the best growth prospects? The stock can only grow in price if the underlying company does. Mutual fund managers are the biggest customers in the market when they start buying a stock that increases huge demand and price support.
Your job is to follow the big money, shorting in bear markets, going long in bull markets. Following the trend of what is in favor. Do not fight the action, flow with it.
Quit having opinions and start being a detective looking for the smart money, the fast money, the big money and where it is going now.
10 Trading Thoughts
1. You only have three choices when you are in a bad position, and it is not hard to figure out what to do:
(1) Get out
(2) Double up, or
(3) Spread it off.
I have always found getting out to be the best of all three choices.
- No opinion on the market or you are doubtful about market direction? Then stay out. Remember, when in doubt, stay out.
- Don’t ever let anyone know how big your wallet is, and don’t ever let anyone know how small it is either.
- If you snooze, you lose. Know your markets, when they trade, and what reports will affect the market price.
- The markets will always let you in on the losers; the market’s job is to keep you out of winners. Dump the dogs and ride the winning tide.
- Stops are not for sissies.
- Plan your trade, then trade your plan. He who fails to plan, plans to fail.
- Buy the rumor and sell the fact. Watch for volatility in these situations; it usually marks tops or bottoms in the markets.
- Buy low, sell high. Or buy it when nobody wants it, and sell it when everybody has to have it!
- It’s okay to lose your shirt, just don’t lose your pants; that is where your wallet is.
One last thought to leave with you. It applies not only to every-day life but to trading the markets as well:
Success is measured not so much by the wealth or position you have gained, but rather by the obstacles you have overcome to succeed!