– Losses are a simple cost of doing business
– Since you always limit your lose to an amount of your account can withstand, there is nothing to fear.
– You have the courage to do whatever it takes to succeed at trading
– Each Trade is but one of many
– You keep your focus in the present because this is where the action is
– The potential profits are worth the risk
– Trading is about money, it’s not about your survival.
– Trading is only one way in which you can make money.
– You learn and grow stronger with each trading experience
– The future of your trading is bright.
Archives of “losses” tag
rssSAVE YOURSELF!!
Many of us will sit at our screens, cursing, praying, begging, but the best thing to do is to save yourself, by cutting bad trades quickly. DON’T DEPEND ON THE MERCY OF THE BANKS TO DO IT!!!!!! THEY ARE OUT TO EAT YOUR LUNCH ALWAYS ! THEY ARE YOUR ENEMY, AND THEY ARE RUTHLESS WITHOUT MERCY!!!!!
#1. DON’T LEAVE OPEN POSITIONS! Trade what You can see. When You are not in the market take your money out with You. That way You can save on all of those foul words to Your broker when he tries to explain the price slippage that caused price to go beyond Your stop loss.
#2. If You must leave trades opened, put in a physical stop losses..
#GRANDDADDY OF THEM ALL!!!!!!!!!
NEVER LET LOSSES RUN !!!!!!
NEVER LET LOSSES RUN !!!!!!
NEVER LET LOSSES RUN !!!!!!
CUT THE LEGS FROM UNDER THAT BEAST AS SOON AS POSSIBLE!!!!!!!!!!
Two things are essential if You are going to enjoy a very successful and lucrative trading career.
#1 Wait for a proper trade set-up
#2 Learn to save yourself. CUT BAD TRADES QUICKLY!!!!!! So what if it comes back in your favor, many times it will, but it only takes one good shakeout to leave your lifestyle in jeopardy.
Cut bad trades to leave the most capital possible for a more profitable trade set-up. THE MARKET IS VERY VERY GENEROUS, IT WILL ALWAYS GIVE YOU ANOTHER OPPORTUNITY TO MAKE SOME PAPER, BUT YOU HAVE TO CUT YOUR LOSSES QUICKLY SO THAT YOU HAVE THE MAXIMUM CAPITAL TO TAKE ADVANTAGE OF THE RIGHT OPPORTUNITY WHEN IT PRESENTS ITSELF!!!
The market is swim, float or sink. Don’t let them sink You. SAVE YOURSELF!
Lose your money,but keep your discipline.
Trading is about following a method, system, or rules that give you an advantage over other market participants in the long run. There are good bets and bad bets. There are traders who follow a trading plan with discipline and others that start trading out of fear and greed after strings of losses or wins. Just because you lost money does not mean you made a mistake. Just because you made money does not mean you did not make a mistake. The goal of trading is to make money over the long term not be right every time. Losses are a part of trading. There is a big difference between a loss after following your plan versus a loss after a loss of discipline.
Losses are simply getting out of a trade with less capital than you entered it. The question is was the loss due to your method or your lack of discipline?
A mistake however can be many things, and mistakes can be profitable which is dangerous to the long term health of your trading account.
- Trading a position size so big that your risk of ruin is inevitable is a big mistake whether your individual trades are a win or a loss.
- Abandoning your method to start trading a different time frame or style than you have researched is a mistake because your edge is gone.
- Adding to a losing position is a big mistake because eventually you will be in the trade that does not revert to the mean and you lose your whole account.
- Believing that you are above your own trading plan and can start just trading as you wish is a death wish for your account.
- Trading based on beliefs instead of reality is a dangerous place to trade and is a mistake.
- Taking your entries a little sooner than they are triggered or an exit a little later than your stop loss is a mistake.
- Diversifying traded markets or stocks before doing the proper research is a mistake.
- Trading so big that your emotions interfere with your trading plan is a mistake.
- Trading when you are very sick or going through emotional personal problems is a mistake.
- Making trading decisions based solely on ego, fear, or greed is always a mistake whether you win or lose.
Top 26 Quotes From Ed Seykota On Trend Following, Trading And Life
Quote 1:
“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.”
Quote 2:
“Fundamentals that you read about are typically useless as the market has already discounted the price, and I call them “funny-mentals”. However, if you catch on early, before others believe, you might have valuable “surprise-a-mentals”.”
Quote 3:
“If you can’t measure it, you probably can’t manage it… Things you measure tend to improve.”
Quote 4:
“The key to long-term survival and prosperity has a lot to do with the money management techniques incorporated into the technical system.”
Quote 5:
“There are old traders and there are bold traders, but there are very few old, bold traders.”
Quote 6:
“”I would add that I consider myself and how I do things as a kind of system which, by definition, I always follow.”
Quote 7:
“Systems trading is ultimately discretionary. The manager still has to decide how much risk to accept, which markets to play, and how aggressively to increase and decrease the trading base as a function of equity change.”
Quote 8:
“Trying to trade during a losing streak is emotionally devastating. Trying to play “catch up” is lethal.”
Quote 9:
“The elements of good trading are: 1, cutting losses. 2, cutting losses. And 3, cutting losses. If you can follow these three rules, you may have a chance.” (more…)
Trading Emotions
Confidence Without confidence it is not possible to achieve much in other streams of life. In the equity markets, it is doubly true. If you lack in self-confidence, doubts may creep up in your mind. This may lead to indecision, which in turn lead to missed opportunities and losses. For day-trading and short interval trades, confidence is of utmost importance.On the other hand, on down days be careful. In many instances, you may be tempted to book small profits just to make your day balance sheet look pretty. This is not the issue. When you are faced with loss-making trades sooner or later, that same daily balance sheet will not look pretty at all.Never be far away from the correct principles of trading no matter what your mind is tempted to think. It is just too painful to reinvent the wheel.
Discipline
In order to be a successful investor/trader, you must be very disciplined. Stick to the plan of action. This means that you will stick to trading policies, trading plans and so on. Know your objective and work accordingly.
Ideas
Do not seek to implement new ideas that come all the time during markets. Remember, ideas are just ideas. If you feel there is value in them, they have to be thought about, refined, tested and then brought to the trading room. If you try to implement new ideas immediately to trading all you will do is to erode capital and confidence.
Hope
Do not allow hope to loiter anywhere close to your trading system. Hope has the potential to do maximum damage to your capital.
New Trading Rules
Never marry a woman you wouldn’t wish to divorce, i.e. never get into a position you couldn’t get out of with ease, and think of this before you make the commitment. I would add that the selfish wife or selfish price or selfish dog should never marry a man that will leave her in oblivion if things don’t work out. Imagine the great harm that the selfish dog did itself by killing a human. Now they’re all likely to be rounded up.
Never admit to having made a profit, but always emphasize your losses.
Surround yourself with big and powerful players so that your positions will be with the forces when you disseminate or implement them.
Ten Ways to Trade With an Edge
An edge is an advantage that a trader has over his competitors, allowing him to generate and retain profits from other traders . There can be many types of trading edges through risk management, psychological management, and through better trading methods.
Here are a few:
- A selective trader that only trades the best set ups, trends, and stocks has the advantage of waiting for the fat pitch and not just swinging at every ball thrown his way.
- Simply using correct position sizing can put you in the top 10% of traders simply by not blowing out your account and staying in the game by maximizing winners and minimizing losers..
- Risking no more than 1% of your capital per trade brings your risk of ruin down to almost zero and allows the trader to survive losing streaks. You have the edge of being around to have a winning streak later on.
- Only taking trades with a risk-to-reward of 3 to 1 or better gives the opportunity to have bigger winners than losers in the long run which is needed to be profitable.
- Trading in the direction of the trend in your time frame gives you an edge over those losing money by fighting the trend.
- Having the discipline to follow a trading plan gives you an edge over those that trade based on fear and greed. (more…)
Three Essential Components
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.”
Wisdom from Legendary Traders
“I absolutely believe that price movement patterns are being repeated; they are recurring patterns that appear over and over. This is because the stocks were being driven by humans- and human nature never changes”. -Richard Dennis (Turned 400 dollars into a fortune of at least 200 million dollars by using his remarkable trading skills). |
Managing Risk
Over the years I’ve been fortunate enough to get to know thousands of market participants. Some are long-term investors others are scalping pennies per trade on thousands of shares while others manage millions of other people’s money. The interesting theme I picked up on with nearly every one of them is that they each experienced panic and uncertainty at certain times in the market. Oftentimes, this panic stems from the inability to make sense of the market, to gain control of market participation. Thoughts such as whether or not too much capital is at work or perhaps not enough or even whether or not to be in the market at all seemed to consume them.
This ambivalence can consume and debilitate even the best market participants. The uncertainty or self-doubt about market participation is common yet finding a solution is not. The greater the level of uncertainty felt the higher the odds are that risk is being misperceived. Here are some questions that I’ve asked to assess whether risk was real or perceived:
- What are your reactions, both physical and emotional, to a losing trade? A winning trade?
- Have you rationalized recent losses?
- Has your out-of-market homework/research fallen behind?
- Do you monitor your positions by dollars or percentages?
- Have you ever not taken a trade that made sense simply because you were burned before?
- Has the number of indicators you use to enter/manage/exit a position increased/decreased lately?
- Do you know the Beta of your portfolio?
- What would others say about you when asked about your risk management?
In a sense, managing risk involves managing the emotional side of trading so that the focus can be on the cognitive side of trading. As an example, if I’m concerned with the direction of the market because my traditional analysis methods are giving unclear signals then it probably doesn’t make much sense for me to participate. My biases will impact the data, whether it’s of a technical or fundamental nature, and lead to poor decisions. If I’m unable to clearly define what sectors are leading and which are lagging and, more importantly, why they are moving in the direction they are, then my risk is skewed. It’s times like these that large losses can accrue as objectivity is clouded by subjectivity.
I’ve always used sleep as a gauge to help me know if I’m in-line with real risk. If I’m able to sleep at night and wake up excited to participate in the market then I know that the odds are good I’m managing my risk. If I’m unable to get a good night’s sleep and lay awake wondering about positions I have on the odds are good that my risk management is off. Yea, I’m pretty simple.