1. You will be tested mentally and emotionally this is not for the weak minded. 2. Master Traders are detached emotionally from profit or loss. 4. Haste is the enemy of great entry points. 5. Doubt is often followed by a lost opportunity. 6. The Trend will give you direction on your path. 7. Having an exit strategy prevents unnecessary pain. 9. Going against momentum brings forth the fools reward. 10. Better the bad trade that is unrewarding. 11. Habit is built on the principles of probability. 12. Know your exit point in the worst case scenario first. 15. Set realistic goals and let the good times role. 18. Times of great probability are like diamonds falling from the sky. |
Archives of “master trader” tag
rssHOW BELIEFS DRIVE TRADING
What you believe, consciously or unconsciously, propels your trading in its many directions. It might be so simple a matter as whether you believe a market is going up or down or nowhere. Traders have biases that distort their perceptions and effect their actions, and they need to guard against these with various protections and bias detectors.
Other beliefs are more veiled and ubiquitous. For example, you may consciously intend to make money, but you have a counter impulse that thwarts you due to unconscious beliefs that go against that intention. Perhaps you unconsciously believe that money is the root of all evil, or that rich people are corrupt, or that there isn’t enough to go around and so you shouldn’t be greedy, or that you should be laying up your treasure in heaven, and not on this earth. Perhaps on some level you believe you shouldn’t make more money than your parents.
When you want something, you have to really want it and not be ambivalent about it. It has to be your desire, and not some alien value set by your parents or society. The flower loves the sun, and stretches to receive its rays. The plant loves water and digs its roots deep seeking the object of its desire. If you want to make money trading, you really have to admire money and have good purposes for its use. If you want to be a master trader, you have to be comfortable with that role, and not see trading as wasteful gambling, or an unworthy profession.
Perhaps you believe that you don’t deserve to make money trading, or that you have to work hard for your rewards. Maybe you believe that only the big boys win, that the market is stacked against the ordinary trader. Maybe you believe that it’s impossible to make money in the futures markets or, worse, any market. Maybe you believe it’s possible to make money trading, but it’s not probable that you can keep your winnings. All such ideas run in opposition to easy and effective trading.
Just as insidiously you may doubt that your system really works, or that it won’t work this time. Some traders get superstitious: for example, they believe that they always, or tend to, lose money on Fridays, and so, of course, they do. When any of their superstitious factors occur, somehow they manage to lose.
Strong emotions also get in the way of winning. Underlying each emotion is some belief about what is happening. The interpretations you give events color your reality. Underneath each interpretation is a rock core belief. “That’s just the way it is.” you say. Such a statement flags a belief. Is it really the way it is? Do you feel guilty, scared, angry, or depressed after a losing trade? Perhaps you believe that you shouldn’t lose, that one losing trade implies you can’t trade, that one losing trade portends many more losing trades, or that you’ve jinxed yourself for the rest of the day or week.
Equally or possibly even more important are the positive conscious and unconscious beliefs that you hold about trading and investing.
To begin with, to do anything well, you need to believe that it can be done, that you can do it, and that you deserve to do it. You’re in trouble if you doubt any of these three. Your trading is at risk if you don’t firmly believe that money can be made trading, that you can make money trading, and that you deserve to make money trading. (more…)
Bernard Baruch’s 10 Trading Rules
While pure trend followers and technical analysts will not agree with all of Mr. Baruch’s principles it is interesting to read through them, they are the same as some of the top traders and investors of our age. Some of these all traders can agree on.
Bernard Baruch was a millionaire in his early thirties after a few good runs in the stock market and devoted the remainder of his life serving the public and helping the U.S. win World Was I and World War II. He was a big believer in serving his country and that was the main purpose for the remainder of his life after he made his fortune.
Here is a summary of his 10 rules summarized:
1. Only speculate if you can do it full time.
2. Ignore inside information and tips.
3. Have a complete understanding of a companies fundamentals before you buy the stock.
4. Don’t try to buy bottoms or sell tops.
5. Cut your losses quickly.
6. Focus on and buy only a few stocks.
7. Review and update your investments periodically for changes.
8. Study your tax position to know when to sell at greatest advantage.
9. Never invest all your funds. Keep a reserve.
10. Stick to the field you know best in investments.
His biography is a great read for anyone interested in this great man and master trader who counseled presidents and was a close associate of Winston Churchill. It is interesting that it shows how far ahead of his time Mr. Baruch was in not only stock speculating but also discrimination and economics. If you are reading it for only his advice on stocks just read Chapter 19: My investment philosophy. It is one of the greatest chapters you will find anywhere on advice for successful market speculation. He will explains to readers that economic conditions do not drive prices, peoples perceptions do. Cut your losses fast. Sell your worst performers and keep your best. Know what you are investing in. You can only truly learn the rules of stock trading by experiencing the losses personally.
Reduce Your Trading Loss
Trading is an evolutionary process. Nobody can wake up being a Master Trader. Unfortunately there is no book or magic trick that can turn you into the highly profitable trader. Although the belief and the hope to obtain those skills instantly is still in place.
The statistics say that only the ones with the self-dedication and discipline succeed in this business.
The most common mistakes leading to losses:
-Trading against the market;
-No trade potential;
-No serious buyers or sellers in the stock;
-Wide stop-loss;
-Fear of loss. (more…)