Archives of “money” tag

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Weakest Part of Trading

  
  Education
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The weakest part of any trading method is the trader themselves. There are many, many, robust trading systems and methods that do make money in the long term. The problem is the trader having the discipline and mental toughness to trade one of them consistently. The vast majority of time it is not a system failure but traders that fail in this game through one of seven common errors. If you can understand these error and overcome them you could make a lot of money in the right market conditions.

  1. The trader must have the discipline to take the system’s entries and exits.
  2. The trader must have the discipline to take the stop loss on a losing trade when it is hit and not keep holding and start hoping.
  3. No matter the method the trader has to manage risk through proper position sizing, getting greedy and trading too big will blow up even the best systems.
  4. It is the trader that must have the perseverance to stick to the method even during losing periods, and also stick with trading until success is reached.
  5. If a trader can not manage their mind then the stress will break them, I have seen this happen many times. If you can’t handle losing you can’t trade.
  6. The trader must find a robust method, must understand why it has an edge, and must believe in their methodology.
  7. The trader has to know themselves and trade the method that fits their risk tolerance levels and own psychology.

The good news is that if none of these error fit you when you lose money in a trade then the market was just not conducive to your methodology, and it is not your fault so don’t dwell on it.

100 TRADING TIPS

  
  Education
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experience2

1)Nobody is bigger than the market.

 2)The challenge is not to be the market, but to read the market. Riding the  wave is much more rewarding than being hit by it.
 
 3)Trade with the trends, rather than trying to pick tops and bottoms. 
    
 4)There are at least three types of markets: up trending, range bound, and  down. Have different trading strategies for each.
 
 5)In uptrends, buy the dips ;in downtrends, sell bounces. 
    
 6)In a Bull market, never sell a dull market, in Bear market, never buy a dull  market. 

    7)Up market and down market patterns are ALWAYS present, merely one is  more dominant. In an up market, for example, it is very easy to take sell  signal after sell signal, only to be stopped out time and again. Select trades  with the trend. 
  
 
 8)A buy signal that fails is a sell signal. A sell signal that fails is a buy signal. 
   (more…)

4 Types of Traders

  
  Education
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The first type of profitable discretionary trader is the one who has a natural feel for the market.  When you talk to one of these traders and ask them about their trading at some point you’ll hear them say something about ‘feeling the market was this way or that….’. These are traders who over the years have acquired a lot of implicit knowledge of the market and its participants. They understand what moves markets and they also have the required self-trust to act on their ideas and to protect themselves when they are wrong.  Their personalities allow them to have the self-trust to know their limits and believe in their capabilities. We could call them a ‘natural born trader’; and there are very few of them. Although Jesse Livermore eventually blew-out, he’s an example of this rare type of natural trader.

 The second type of profitable trader – or more accurately temporarily profitable – is the lucky trader; the trader who’s P&L is currently in an up swing but they’ll soon be negative. Often these traders either got lucky with a number of trades and can not replicate it, or they learned the habit of holding onto losing trades and they got lucky when those positions came back. This accounts for the largest number of “profitable traders” – but for these traders the money often leaves faster than it arrived. (more…)

Top 10 list from billionaires as to be successful

  
Education, Life
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1. Figure out what you’re so passionate about that you’d be happy doing it for 10 years, even if you never made any money from it. That’s what you should be doing.
2. Always be true to yourself.
3. Figure out what your values are and live by them, in business and in life.
4. Rather than focus on work-life separation, focus on work-life integration.
5. Don’t network. Focus on building real relationships and friendships where the relationship itself is its own reward, instead of trying to get something out of the relationship to benefit your business or yourself.
6. Remember to maximize for happiness, not money or status.
7. Get ready for rejection.
8. Success unshared is failure. Give back — share your wealth.
10. Successful people do all the things unsuccessful people don’t want to do.

What would you add to the “Billionaire’s Secrets” List?

9 Skills to be Acquired by Traders

  
  Education
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1)Learning the dynamics of goal achievement so you can stay positively focused on what u want-not what u fear.

2)Learning how to recognize the skills you need to progress as a trader and then stay focused on the development of those skills,instead of the money ,which is merely a by product of your skills.

3)Learning how to adapt yourself to respond to fundamental changes in market condtions more readily.

4)Identifying the amount of risk you are comfortable with -your “risk comfort level”-and the learn how to expand is in a way that is consistent with your ability to maintain an objective perspective of market activity.

5)Learning how to execte your trades immediately upon your perception of an opportunity.

6)Learning how to let the market tell you how much s enough instead of assessing the potential from your personal value system of how much is enough.

7)Learning how to structure your belieds to control your perception of market movement.

8)Learning how to achieve and maintain a state of objectivity.

9)Learning how to recognie “true ” intutive information and then learning how to act on it consistenly.

Is stock trading difficult? Depends on who you ask.

  
  Education
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Is stock trading difficult?  Depends on who you ask.

A seasoned trader with the discipline to follow well honed principles will say “trading is not difficult.  See how I take losses and let my winners run?”  A battered and bruised, emotionally unstable trader will say “the market is difficult.  I am getting my @ss handed to me on a platter and it hurts!”  A breakeven trader will say, “compared to my broker I am not doing so bad.”

Our perspective makes all the difference in our success of failure.  If we can have the proper perspective then the market cannot hurt us.

The proper perspective includes, but is not limited to, the following:

The market will do what it wants to do when it wants to do it regardless of the technical games we play.

We win some lose some, in no particular order, on any given strategy.

The only trading mistake that matters is when future uncertainty is not properly considered an essential element of risk.

The long-term process, not short term outcomes, builds the consistency necessary to tackle market uncertainty.

Responsibility accepted before the trade becomes the disciple that carries us through the trade.

The best money is oftentimes made by being a non-participating, impartial observer.


 

So the next time someone asks if stock trading is difficult.  What will be our answer?  Will it be based on the proper perspective or on the last trade we made?  On emotions? On our reaction to price action? News? Compared to what?  A successful bust or a skinned knee?  The answer can make a difference.

10 Foolish Things a Trader Can Do

  
  Education
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01. Try to predict the future movement of a stock, and stay in it no matter what.

02. Risk your entire account on one trade with no stop loss plan.

03. Have a winning trade but no exit strategy to get out, no trailing stop or exhaustion top signal.

04. Ask for and follow the advice of others instead of trading with your own trading plan, method, rules, and system.

05. Trade your emotions instead of signals: buy when you are greedy and sell when you are afraid.

06. Trade your opinions, not a quantified method. (more…)

5 Ways to Reduce Your Losses When Trading

  
  Education
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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.

Traders should stay calm during the trading, this helps to observe and analyze the situation on the market much better, see some small details and make a competent decision.

Panic, stress or fear, always lead to mistakes.

One of the serious problems in trading is rush and mania to be present on the market all the times, opening positions when there is no potential for a trade or where the market is either flat or going the other direction.

Tips to resolve the mistakes:

1. Always look at the market. If there is no clear picture of the market’s behavior, don’t risk your money.

2. Always look at a trade potential.

3. Always look either at the Open Book or Market Maker window and Tape.

4. Always know where you are going to place you stop-loss order.

5. If you’re just not sure, or if the situation is uncertain, don’t enter the trade.

Following these tips requires some work and changes to our habits. It is not easy at all! We always hear sayings that the trader should be disciplined. What it actually means is changing your old habits and training yourself to have new ones. It is not comfortable, but it brings positive results, which will be noticeable on your month-end P/L report.

Catalyst that could lead to a crash

  
Economy, Education
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“Chinese banks face state loans turmoil; about Rmb1,550B in questionable loans. “
This simple sentence reminds me of the Japanese Banks prior to the big Nikkei crash, that has not yet recovered (over 20 years).
What did we learn from the subprime mess ? The banks lied to us …..
What did we learn about the Nikkei crash ? The banks lied ….
1) Watch the Shanghai Index ! It has risen from its July’s low to almost 2600 ; a key resistance level.
2) Watch light crude oil prices (key indicator for the Chinese demand)
3) Did you just make some money on this rally ? SELL !!!!
I am bearish ? No, its just NOT the time to “buy and hold”

Mistake

  
  Education
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mistake-Everyone makes mistakes. Some repeat their mistakes and suffer continuously. The smart ones learn from their own mistakes and call it experience. But the geniuses are a special breed, they’re the ones that learn from the mistakes of others. Here’s what Bruce Kovner has to say about this subject: “You have to be willing to make mistakes regularly; there is nothing wrong with it. Michael [Marcus] taught me about making your best judgment, being wrong, making your next best judgment, being wrong, making your third best judgment, and then doubling your money. Whenever I enter a position, I have a predetermined stop. That is the only way I can sleep. I know where I’m getting out before I get in. The position size on a trade is determined by the stop, and the stop is determined on a technical basis. I never think about other people who may be using the same stop, because the market shouldn’t go there if I am right. Place your stops at a point that, if reached, will reasonably indicate that the trade is wrong, not at a point determined primarily by the maximum dollar amount you are willing to lose. If you personalize losses, you can’t trade.”

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