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The Trader’s Mindset-ABC

  
  Education
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ABC

In the classic play-adapted movie Glengarry Glenn Ross, the successful big shot from Mitch & Murray is called in to pep talk a group of sad-sack real estate salesmen. His immortal manta for sales success is “ABC.: Always Be Closing.”

The trader’s version of this mantra is slightly different. For us it’s not Always Be Closing, butAlways Be Climbing.

What does it mean to “ABC,” or Always Be Climbing?

It means you always want to be in shooting distance of new equity highs. Not just from a cumulative profits standpoint, but from a knowledge standpoint as well.

Half the reason risk management is so important is to keep you in the mix, with new equity highs either currently being exceeded or not a far distance away. And when market conditions are challenging or sluggish, there’s no better time to book new highs on the knowledge and research side. (Many traders say their best research — and their biggest breakthroughs — were achieved in adverse conditions.)

The Climbing Mindset (more…)

4 Trading Mistakes

  
  Education
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  • Don’t over-leverage yourself or have all of your money tied into one position. Keeping cash on hand is okay as a trader. These days brokers are offering extremely competitive margin requirements for day trading futures, but low margins can be a wolf in sheep’s clothing.
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  • Don’t trade to trade. Understand that there are 3 positions you can take as a trader: a long position, a short position and a position to NOT be in a position. There will be plenty of trading opportunities that will come along. Don’t give money to the markets simply because you are bored!
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  • Avoid trading a strategy without having a good understanding of how the strategy works. What is the typical winning percentage? What is the largest drawdown? In general, high winning percentage strategies have smaller average profits per trade. Lower winning percentage strategies might not have as many winners, but when you are a winner, you typically win big. If you expect your strategy to bring big profits without losses, you can also expect a check made out to “REALITY” to come your way any day.

  • The market will always go higher and it will always go lower. Don’t try to pick tops and bottoms on a hunch. This is where most new traders get burned.

    • 4 Trading Mistakes

      
      Education
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    • Don’t over-leverage yourself or have all of your money tied into one position. Keeping cash on hand is okay as a trader. These days brokers are offering extremely competitive margin requirements for day trading futures, but low margins can be a wolf in sheep’s clothing.
      .
    • Don’t trade to trade. Understand that there are 3 positions you can take as a trader: a long position, a short position and a position to NOT be in a position. There will be plenty of trading opportunities that will come along. Don’t give money to the markets simply because you are bored!
      .
    • Avoid trading a strategy without having a good understanding of how the strategy works. What is the typical winning percentage? What is the largest drawdown? In general, high winning percentage strategies have smaller average profits per trade. Lower winning percentage strategies might not have as many winners, but when you are a winner, you typically win big. If you expect your strategy to bring big profits without losses, you can also expect a check made out to “REALITY” to come your way any day. 
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    • Don’t get cocky after a few wins. The market WILL humble you and make fools out of those with egos.

    Trading, Gambling, Praying

      
    Analysis, Education
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    Intuition is not free

    If you are thinking about exiting, it is too late. You are praying at that point. If it is in your plan for your targets to get hit, up or down, continue what you are doing. If you are just hoping your stop does not get hit, on behalf of the market, thank you. I am making the assumption that those who post or say that their stop is going to get hit have discretion in their system. The problem is not this trade it is the hundreds or thousands you will take after that. There is a reason you wanted to get it, that is intuition. If you cannot afford to not make money on a trade, you are fucked anyways.

    You lost the lesson too

    The market is constantly giving feedback. What happens after the “my stop is going to get hit” statement? What if the market goes in your direction? Are you going to get out at breakeven? Let it run? Take a small lost/gain? What are you going to do next time? The time after that? The outcome will affect your decision. The outcome you remember best will be the one that gives you the best psychological reward not financial rewards. Trading is about answers, not questions. Unanswered question impedes reactions and forces decisions. Decisions are bad over the long term.

    Get out already (more…)

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