|
Archives of “money” tag
rss40 steps in the Traders Journey
They are as follows:
- We accumulate information, we learn- buying books, asking questions, maybe going to seminars and researching what really works in trading.
- We begin to trade with our ‘new’ found knowledge.
- We make profits only to give it back very quickly and then realize we may need more knowledge or information.
- We accumulate more information.
- We switch the stocks we are currently following and trading.
- We go back into the market and trade with our better system. this time it will work.
- We lose even more money and begin to lose of confidence that we can even be traders. The reality of losing money sets in.
- We start to listen to other traders and what works for them.
- We go back into the market and continue to lose more money.
- We completely switch our style and method.
- We search for more information.
- We go back into the market and start to see a little progress.
- We get ‘over-confident’ in a single trade and put on a big position believing it is a sure thing and the market quickly takes our money.
- We start to understand that trading successfully is going to take more time and more knowledge than we ever anticipated. MOST PEOPLE WILL GIVE UP AT THIS POINT, AS THEY REALIZE WORK IS INVOLVED.
- We get serious and start concentrating on learning a ‘real’ methodology.
- We trade our methodology with some success, but realize that something is missing.
- We begin to understand the need for having rules to apply our methodology.
- We take a sabbatical from trading to develop and research our trading rules.
- We start trading again, this time with rules and find some success, but over all we still hesitate when we execute.
- We add, subtract and modify rules as we see a need to be more proficient with our rules. (more…)
Trading Quotes
“Rich people don’t make big bets. Really rich-and smart-people don’t make big bets. First they are not out to “prove” anything, they are out to make more money, and second, they know that risk control is as important as the other two legs of speculation, selection and timing. That is all this business of … trading gets down to, selection, timing, and risk control.” “Trading well is not easy, but it is something you can learn if you have the perseverance combined with the humility to be realistic about your own strengths and weaknesses.” “Most often, traders have four fears. There’s the fear of being wrong, the fear of losing money, the fear of missing out and the fear of leaving money on the table. I found that basically, those four fears accounted for probably 90% to 95% of the trading errors that we make. Let’s put it this way: If you can recognize opportunity, what’s going to prevent you from executing your trades properly? Your fear. Your fears immobilize you. Your fears distort your perception of market information in ways that don’t allow you to utilize what you know.” |
Lessons for traders
- Price goes up or down, from point A to point B, due to fundamental conditions. Hence we must understand fundamentals. However, the path price takes is not direct; it is driven by the news and emotions of the day. That’s where technical analysis shines.
- Don’t bet big on any trade.
- Use money management, nothing is more important to survival.
- Fade the advisors and public; they are most often wrong while the commercials [the big guys] are most often correct.
- Don’t let emotions run your trading game.
- Trade what you see, not what someone tells you that you should be seeing. Forget the news; trade what you see.
15 Trading Rules
1. Don’t be a tradeaholic
- Someone who has to have a trade on at all times or they feel their missing out
2. You trade to make money – not for fun, games, or to escape boredom
3. Never add to a bad trade
- This may work occasionally, but will hurt you in the long run
4. Once you have a profit on a trade, never let it turn into a loss
5. No hoping, no wishing, no would’ve, no opinions, no should’ve
6. Don’t be a one way trader – be flexible, opportunities on both sides
7. Know your risk on each trade. Trade with stops to limit losses
- Sell down to the sleeping point (My favourite since 15 yrs )
8. Look for 3-1 profit objective trade
9. When initiating a trade, always get your price (use a limit order)
10. When liquidating a bad trade, always use a market order
11. Have a plan. Trade it. Monitor it.
12. Make 10 points on a million trades, not a million points on one trade
- Aim for consistency (it adds to your batting average)
- There are more opportunities to make many reasonable trades
13. Learn from your own mistakes
14. Pay attention to weekly lows and highs
15. Technicals and fundamentals are equally important.
Beating The Game
My satisfaction always came from beating the market, solving the puzzle. The money was the reward, but it was not the main reason I loved the market. The stock market is the greatest, most complex puzzle ever invented – and it pays the biggest jackpot….it was never the money that drove me. It was the game, solving the puzzle, beating the market that had confused and confounded the greatest minds in history. For me, that passion, the juice, the exhilaration was in beating the game, a game that was a living dynamic riddle, a conundrum to everyone who speculated on Wall Street. Jesse Livermore
11 Trading Thoughts
|
Stock Market Wisdom : The Tortoise And The Hare
Once upon a time, there was a young hare, a hotshot rabbit investor who would always brag to anyone that would listen and that he was the smartest, fastest, best performing investor in the world. He would constantly tease the old tortoise about his slow, solid investment style.Then, one day, the annoyed tortoise answered back: “There is no denying that you are very aggressive in your investment strategy. (more…)
Winners Trade to Win
As you already know, I am not a slave to conventional wisdom. It is my belief that most popular beliefs held by the masses are not wise at all. This applies to all walks of life, not just the stock market.
The latest bit of unwise conventional wisdom is the idea that one must “focus on not losing money in order to make money”. Play it safe and protect your capital has been a popular mantra over the past month. What a load of crap.
You know what happens when you focus on not losing money? You lose it. Either that or you make meager gains (all hail consistency, as in consistently average!). It’s akin to an athlete playing not to get injured. That is when you get hurt. The team that plays not to lose rarely wins.
In trading, playing not to lose will cause you to pass up on good trades and scare you out of trading volatile, yet lucrative markets. If you have put in the blood, sweat and tears that accompany hard work and dedication, know what you are doing, and have a sound methodology and edge, don’t ever play not to lose.
Note that this doesn’t mean you throw caution to the wind. On the contrary, a trader must be vigilant about managing risk, position size and ones emotions. These three factors, along with having an edge, allow one to play to win, rather than lose, and put on winning trades.
Solution focused approach
What did we do differently on those successful occasions?
* I have planned the trade well in advance with research; it is not a spontaneous trade, so I’ve had time to think clearly about what I want to do.
* I have a clear profit target in mind based on research and refuse to waver from that target unless the market takes me out with a predefined stop. I consider myself a person of integrity, so I tell myself that I have to show integrity and loyalty to my trade idea and target;
* I don’t follow the position tick for tick. Either the trade will hit my target or it will hit my stop. I make a conscious effort to let go and not micromanage the trade;
* I keep myself calm and clearly focused by purposely getting up from my chair, doing some stretches, breathing deeply, and getting away from the screen. I keep myself in a state that is incompatible with anxiety;
* I rehearse constructive self-talk during the trade. I tell myself that I’ve done my preparation and established my edge. Any individual trade can go against me, but if I take all the good trades I can, eventually I’ll benefit from good odds and a good risk-reward ratio. If I lose money on the trade, I’ll figure out why and what that might be telling me about the current market. (more…)