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3 Alexander Elder’s Words of Wisdom

  
  Education
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You can be free. You can live and work anywhere in the world. You can be independent from routine and not answer to anybody. This is the life of a successful trader. Many aspire to this but few succeed. An amateur looks at a quote screen and sees millions of dollars sparkle in front of his face. He reaches for the money – and loses. He reaches again – and loses more. Traders lose because the game is hard, or out of ignorance, or lack of discipline or because of both. – ALEXANDER ELDER

Every winner needs to master three essential components of trading; a sound individual psychology, a logical trading system and good money management. These essentials are like three legs of a stool – remove one and the stool will fall, together with the person who sits on it. Losers try to build a stool with only one leg, or two at the most. They usually focus exclusively on trading systems. Your trades must be based on clearly defined rules. You have to analyze your feelings as you trade, to make sure that your decisions are intellectually sound. You have to structure your money management so that no string of losses can kick you out of the game. – ALEXANDER ELDER

Markets offer unlimited opportunities for self-sabotage, as well as for self-fulfillment. Acting out your internal conflicts in the marketplace is an expensive proposition. Traders who are not at peace with themselves often try to fulfill their contradictory wishes in their market. If you do not know where you are going, you will wind up somewhere you never wanted to be. You can succeed in trading only if you can handle it as a serious intellectual pursuit. Emotional trading is lethal. To help ensure success, practice defensive money management. A good trader watches his or her capital as successfully as a professional scuba-diver watches his or her air supply. – ALEXANDER ELDER

Three Essential Components Of Trading

  
  Education
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These essentials are three legs of a stool – remove one and the stool will fall together with the person who sits on it.

Losers try to build a stool with only one leg, or two at the most. They usually focus exclusively on trading systems.

Your trade must be based on clearly defined rules.
You have to analyze your feelings as you trade, to make sure that your decisions are intellectually sound.
You have to structure your money management so that no string of losses can kick you out of the game.
Every winner needs three essential components of trading: a sound individual psychology, a logical trading system and a good money management.

Gann's trading rules

  
  Education
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  • Never risk more than 10% of your trading capital in a single trade.
  • Always use stop-loss orders.
  • Never overtrade.
  • Never let a profit run into a loss.
  • Don ‘t enter a trade if you are unsure of the trend. Never buck the trend.
  • When in doubt, get out, and don’t get in when in doubt.
  • Only trade active markets.
  • Distribute your risk equally among different markets.
  • Never limit your orders. Trade at the market.
  • Don’t close trades without a good reason.
  • Extra monies from successful trades should be placed in a separate account.
  • Never trade to scalp a profit.
  • Never average a loss.
  • Never get out of the market because you have lost patience or get in because you are anxious from waiting.
  • Avoid taking small profits and large losses.
  • Never cancel a stop loss after you have placed the trade.
  • Avoid getting in and out of the market too often.
  • Be willing to make money from both sides of the market.
  • Never buy or sell just because the price is low or high.
  • Pyramiding should be accomplished once it has crossed resistance levels and broken zones of distribution.
  • Pyramid issues that have a strong trend.
  • Never hedge a losing position.
  • Never change your position without a good reason.
  • Avoid trading after long periods of success or failure.
  • Don’t try to guess tops or bottoms.
  • Don’t follow a blind man’s advice.
  • Reduce trading after the first loss; never increase.
  • Avoid getting in wrong and out wrong; or getting in right and out wrong. This is making a double mistake.

10 Things A Trader Needs to START DOING …To Mint Money

  
  Education
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There are many trading principles that are common among  successful rich traders. It is important to learn the things that allow them to win so we can follow in their footsteps and make money. There are 10 things that new traders can start doing tomorrow to improve their results immediately. If you have been trading for awhile but have not been profitable these  may be things that you need to start doing to stop losing money.

 1. Start trading the price action by using charts. The market doesn’t care about your opinions but the chart expresses the collective actions of all market participants. Learn to understand what the chart is saying.

Start to understand that the market determines whether any single trade wins or loses not you and not an imaginary “they”.

2. We can only surf the price waves not control them. 

Start to take 100% responsibility for your losses.

3. You enter the trade, you exit the trade, the wins and losses are yours alone. The blame game is a losing game in the markets.

Start to bounce back from losing trades quickly, move on don’t ruminate.

4. If your position size and risk management are correct no one losing trade should emotionally devastate you it should be only one of the next hundred trades with little significance by itself.

Start caring more about what the market is doing and less about what you think it should be doing.

5. ALL that really matters is current price action not your opinion of what might be price action later.  (more…)

Top Ten Side Effects of Greedy Trading

  
  Education
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  1. Greed causes the trader to only look at the best case scenario for profits and ignore the worst case scenario for losses in every trade.
  2. Greedy traders trade WAY to big a position size.
  3. A Greedy trader’s #1 priority is getting rich quick while ignoring the risk of ruin.
  4. Traders that are greedy tend to believe they can have returns bigger than the best traders in the world right at the beginning.
  5. Greed makes traders have absurd targets for their trades.
  6. Greedy traders tend to buy stocks that are down 50% believing they will double and go back to where they were.
  7. Greed distorts a trader to focus on the money not the homework involved to make the money.
  8. Traders take trades where the odds are way against them because of the greed of wanting to make huge returns on one trade. (Far out of the money options)
  9. Greedy traders trade with no plan and no method they are just pursuing profits randomly.
  10. Greedy traders are always looking for the easy path to money not to the real path of hard work and experience.

Ten Side Effects of Greedy Trading

  
  Education
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  1. Greed causes the trader to only look at the best case scenario for profits and ignore the worst case scenario for losses in every trade.
  2. Greedy traders trade WAY to big a position size.
  3. A Greedy trader’s #1 priority is getting rich quick while ignoring the risk of ruin.
  4. Traders that are greedy tend to believe they can have returns bigger than the best traders in the world right at the beginning.
  5. Greed makes traders have absurd targets for their trades.
  6. Greedy traders tend to buy stocks that are down 50% believing they will double and go back to where they were.
  7. Greed distorts a trader to focus on the money not the homework involved to make the money.
  8. Traders take trades where the odds are way against them becasue of the greed of wanting to make huge returns on one trade. (Far out of the money options)
  9. Greedy traders trade with no plan and no method they are just pursuing profits randomly.
  10. Greedy traders are always looking for the easy path to money to the real path of hard work and experience.

Focus on Being

  
  Education
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The one thing that is at the core of every person’s trading, no matter what tools are utilized, is a human being. The Professional Traders recognize that being is the start of the entire process, who they are as people, as traders. By focusing on yourself first and then on the rest, you address the core of your trading business. Just like every sports team looks up to its coach for direction or like a company looking up to its CEO for direction the results of your trading all begin and end with you as you are the captain of your own ship. It is you, the human being, making all the decisions about trading like what to trade, when to trade, what resources to use, what strategy to use, the knowledge you will acquire, who to listen to and so on. Professional Traders develop and maintain a very high quality of being. Being is more important than doing. If you are fatigued or stressed, your judgment can be impaired. If you are naive or ignorant you are more likely going to make mistakes. If you are anxious or scared you will not be able to think clearly as you would when relaxed. If you are emotional in trading you will see losses in your account. No matter what you do if you are not at 100% of what you should be you will not the results you wish for. (more…)

Be Patient

  
  Education
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Be patient. If a trade is missed, wait for a correction to occur before putting the trade on.

Be patient. Once a trade is put on, allow it time to develop and give the most worthless piece of advice ever given. Taking small profits is the surest way to ultimate loss I can think of, for small profits are never allowedit time to create the profits you expected.
Be patient. The old adage that “you never go broke taking a profit” is maybe to develop into enormous profits. The real money in trading is made from the one, two or three large trades that develop each year. You must develop the ability to patiently stay with winning trades to allow them to develop into that sort of trade.
Be patient. Once a trade is put on, give it time to work; give it time to insulate itself from random noise; give it time for others to see the merit of what you saw earlier than they.
Be impatient. As always, small loses and quick losses are the best losses. It is not the loss of money that is important. Rather, it is the mental capital that is used up when you sit with a losing trade that is important. –

My Trading Resolutions for next 3 months

  
  Education
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  • Think for myself
  • Stay focused on the reasons why I bought a stock and sell when those reasons are no longer compelling
  • Don’t let successful trades turn into losses
  • Be ruled less by emotion and fear and more by logic and knowledge
  • Read some good books on trading
  • To avoid being whipsawed, I will give myself more room for the trade to work
  • Follow my own rules
  • Be easier on myself when I screw up and don’t let my ego inflate when I’m right
  • Don’t force trades – there will always be another opportunity
  • Honor thy stops!
  • Stop chasing hot and popular stocks
  • Do my own research
  • Keep learning
  • Learn to be less nervous and take more risks
  • Remember that lost opportunity is better than lost capital
  • Trade less – don’t overtrade
  • To try and limit the number of opinions I allow to affect my trading. Paralysis by analysis has hurt me
  • Avoid any trade where I use the word “hope” in my reasoning process
  • To follow my logical, well-conceived, long-term game plan, without making irrational changes due to short-term market conditions
  • Tune out the daily noise and useless banter
  • Reduce the number of positions currently held
  • Have more faith in my own abilities
  • In trading, learn to be fearless
  • Don’t be too greedy
  • Slow down!
  • Incorporate the use of smart trailing stops
  • Use ETFs to properly diversify
  • Remove my ego from my trading decisions
  • Avoid getting easily frustrated or impatient
  • Control and limit my losses
  • Focus on making the next trade, instead of the last one
  • I will not average down into losing positions
  • Create more careful and detailed records with a commitment to review them regularly
  • Learn to incorporate a systematic screening method like you
  • Use emotions (both personal and market) to my own advantage
  • Know my exits before making any trade
  • Don’t be swayed by the latest and greatest strategy I hear about
  • Keep it simple. Complex strategies are no better
  • Avoid crowded trades
  • Take time to look for reasons NOT to buy
  • Let profits run longer. take losses quicker
  • Trade what I see, not what I want to see
  • Be more proactive and react faster to situations I find
  • Make bigger, but less frequent trades
  • Stay patient
  • Focus on value of companies and not on the temporary market emotions
  • Be more nimble
  • Keep better notes
  • Adopt an opportunistic versus a rigid bull or bear bias toward the market
  • Enjoy the game more
  • To quit counting the value of my account on a daily basis
  • Stop looking for the holy grail
  • Figure out what trade related information to consume on a daily basis and keep what is useful and leave out that which is not
  • Avoid information overload by limiting what I read
  • Don’t read stock blogs
  • Turn off the TV and dedicate more of my time to become a better trader
  • Set up a lazy portfolio
  • Focus on proper asset allocation
  • Never forget that “when you are through learning you are through”
  • Recognize mistakes early, exit, and move on
  • Take partial profits routinely, but keep money on high-performing stocks
  • Follow my system
  • To screen & scan my watchlist in a consistent manner each and every time
  • Take routine breaks away from the market to refresh and gain more perspective
  • Add more fundamental research to my technical research
  • Concentrate on finding just one really good idea per year like Warren Buffett
  • Stop searching for shortcuts or quick fixes – take baby steps
  • Read at least 3 more trading books in next 3 months
  • Focus, focus, focus – ignore all outside distractions
  • When a strategy works, have the courage to follow it through, when it does not work, to have the wisdom to stop trading
  • Find and exploit long-range sector themes
  • Open my ears and keep my mouth shut
  • Never panic
  • Be humble

Trading Wisdom

  
  Education
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THE 5 FUNDAMENTAL TRUTHS OF TRADING:

 1. Anything can happen.
2. You don’t need to know what is going to happen next to make money.
3. There is a random distribution between wins and losses for any given set of
variables that define an edge.
4. An edge is nothing more than an indication of a higher probability of one thing
happening over another.
5. Every moment in the market is unique.

THE 7 PRINCIPLES OF CONSISTENCY:

 
1. I objectively identify my edges.
2. I predefine the risk of every trade.
3. I completely accept the risk or I am willing to let go of the trade.
4. I act on my edges without reservation or hesitation.
5. I pay myself as the market makes money available to me.
6. I continually monitor my susceptibility for making errors.
7. I understand the absolute necessity of these principles of consistent success
and, therefore, I never violate them.

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