| How do you build confidence? There are many ways but only one process: multiple small successes. I am very much an advocate for boring trading. What I mean by that is I trade the same edge over and over again without variation. By trading the same edge over and over again I know when to get in and when to get out. I know what to look for when a trade is working and I can safely add to my position. On the other hand, I know what to look for when the trade is not working and I can exit with a small loss. By following the rules EVERY TIME you can succeed, not in making money every time (impossible!), but by following the same plan every time. These small successes give you the confidence to trust yourself each and every time your edge presents itself. This is true in any new venture, whether it be golf, bowling, drawing, flying, etc. Each small success gives birth to greater confidence which in turn brings further successes. You can then replace a vicious circle of failure with a confident circle of success. It is so EASY to want the lottery ticket or the home run every time at bat but HARD to accept when the numbers do not add up or when all the preparation leads to nothing more than the hard earned single. |
Archives of “making money” tag
rssPerspective
The goal of a good trader, paradoxically, is not to make money. His goal is to trade well. If he trades right, money follows almost as an afterthought. Successful traders keep honing their skills. Trying to reach their personal best is more important to them than making money.”
Trading Wisdom
This (Trading) is not a job where you get paid by the hour. You get paid for doing the right thing”
-“Forget that your money is at stake. Money in trading account is just a tool for making money. Preserve your tool. You need it to make money”
-“Don’t let the outcome of one trade alter your trading discipline. One trade doesn’t make a system…”
-“Trading is a game of probabilities. You don’t have to be right every time. You just have to follow your rules”
-“You decide your fate; the market doesn’t”
-“Pure followers of stock pickers will never be around…Learn or you are bankrupt”
-“Be aggressive in trending market and conservative in choppy market”
“Take home runs when you can, but don’t beat yourself up about missing a few. One trade should never make or break your account”
The Market Is Never Wrong In What It Does
“The market is never wrong in what it does; it just is. Therefore, you as an individual trader interacting with the market—first as an observer to perceive opportunity, then as a participant executing a trade, contributing to the overall market behavior—have to confront an environment where only you can be wrong, and it’s never the other way around. As a trader, you have to decide what is more important—being right or making money—because the two are not always compatible or consistent with one another.”
Mark Douglas, in The Disciplined Trader
Anyone can get lucky in the short term, only good traders succeed in the long term
| Don’t confuse making money in the stock market with knowing what you are doing. It is easy to get lucky on a stock or on a sector and enjoy gains that give credence to your analysis method. However, short term winners often give back all of their gains because they fail to recognize their success as luck. |
Great Hunter, Lousy Trader
Making money in the market is an unnatural act. We humans are predators and hunters evolved to track game on the horizon of an African savanna. Modern humans are maybe 5 million years old, but civilization has been around for only 10,000 years. Our brains have not had time to make the adjustment. In the market, this means that if a stock has gone up, you believe it will continue. This is why market tops and bottoms see volume spikes. To make money, you have to go against these innate instincts. Some people are born with this ability, while others can only learn it through decades of training.
Trading Wisdom – Paul Tudor Jones
Paul Tudor Jones
Turned $1.5 million into $300 million in five years
“That cotton trade was almost the deal breaker for me. It was at that point that I said, “Mr. Stupid, why risk everything on one trade? Why not make your life a pursuit of happiness rather than pain?”
I had to learn discipline and money management. I decided that I was going to become very disciplined and businesslike about my trading. I spend my day trying to make myself as happy and relaxed as I can be.
If I have positions going against me, I get right out; if they are going for me, I keep them. I am always thinking about losing money as opposed to making money. Risk control is the most important thing in trading. I keep cutting my position size down as I have losing trades. (more…)
Techniques of Tape Reading
This (Trading) is not a job where you get paid by the hour.
You get paid for doing the right thing.
Forget that your money is at stake. Money in trading account is just a tool for making money. Preserve your tool. You need it to make money.
Don’t let the outcome of one trade alter your trading discipline. One trade doesn’t make a system…
Trading is a game of probabilities. You don’t have to be right every time. You just have to follow your rules.
You decide your fate; the market doesn’t.
Pure followers of stock pickers will never be around… Learn or you are bankrupt.
Be aggressive in trending market and conservative in choppy market.
Take home runs when you can, but don’t beat yourself up about missing a few.
One trade should never make or break your account.
14 Symptoms of Stock Trading Addiction
- You know every stock symbol on the top of your head.
- You’re not satisfied until you can make a profitable trade to make up for bad trades.
- You enjoy the challenge of trading over actually making money.
- You are constantly flustered by the ups and downs of a stock in a given day.
- You start to make crazy excuses and blame others for your bad trades.
- You frequent message boards and social networks to try and pump up your stock.
- You are glued to the Twitter stream to see what traders are actively buying and selling.
- First thing you do when you get up and last thing before you go to sleep is check your stocks.
- You find and follow a new stock everyday.
- You start buying based solely on what somebody says.
- You bet large portions of your portfolio on a few stocks.
- You check your account balance every 5 minutes of market hours.
- You scoff at the trading strategies of other people.
- You never really actually get better at trading.
Four Phases of Traders
1. Being unconsciously incompetent. That’s when you don’t know anything about the markets. Unfortunately most people get in the markets, on the last wave of a bull market. The only thing required is to be in the markets. Everything is going up.
2.Consciously incompetent. That’s when you’ve realised that making money in the markets has nothing to do with buying low and sell it higher. So you start learning technical analysis. But you still loose money.
3. Consciously competent. If you haven’t given up by now. You have started to gain experience. You can read the markets and feel the pulse. You’re discovering that there are more advanced things that you can use;Indicators. But unfortunately you still lose money.
4. Unconsciously competent. That’s the zone guys. That’s where you’ve managed to put all the pieces together. You’ve been through it all. You’ve learned to master yourself, and you’ve done such a great job, that you’re trading without forcing yourself to do it. You’re relaxed, and all the pieces, are there. Think of the way you guys drive your cars. You don’t think of it, you just do it!