Archives of “moving in the right direction” tag

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Trading Game is Simple It’s Just not easy

  
  Education
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 I believe that good traders are able to trade the markets effortlessly – it’s simple to them. But getting to the point of doing anything effortlessly is not easy. In fact, it’s really hard. A good analogy would be describing an athletes ability to perform his or her skill. If we took two people – one being a person who runs two miles everyday versus a person who hasn’t ran for the past two months, who will have the easier time running one mile? The answer is simple of course. The person who runs everyday will be able to run one mile easily – it will be effortless to them. However, the person who hasn’t ran in two months will find it extremely hard to and likely have to take breaks in-between so that he or she can finish.

In order for trading to become simple, there are some crucial and necessary steps that need to be taken. There needs to be consistency in the traders approach to the markets. It’s unfortunate, but we are in a day and age where traders are obsessed with just “trading for the fun of it”, and they aren’t realizing that that’s what’s preventing them from being consistent and successful. Again, if we go back to our analogy, does a great athlete deter from their routine? No. In fact, they have routines that boil down to eating, and sleeping habits in order to keep themselves moving in the right direction. It’s really not a mystery, but for whatever reason most traders seem to fail that this approach is what’s needed if you want to be good.

There really is a direct correlation between traders who are good and traders who are not. There is a direct correlation between traders who are consistent and traders who ride the roller coaster. That difference is preparation. Preparation and repetition is what makes anyone great at what they do. But preparing is not easy. It takes focus, will, and a lot of discipline. In trading that translates to having a very specific trading plan, with specific rules and the discipline to do it every single day. And as you prepare yourself everyday in your approach to the markets, you’ll find that trading becomes simple. It becomes effortless.

So if you want to be a good trader, scratch that – if you want to become a great trader, step back and think about what it really takes, and prepare yourself. It won’t be easy, but sooner or later you’ll realize how simple it really is.

TRADING IS SIMPLE. IT’S JUST NOT EASY

  
  Education
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How could two phrases sound so similar, but yet be so different?

I think we need to look differences between the context of each phrase.

When I describe the idea of trading being simple, what I really mean is that itshould be effortless. The word effortless is defined by Merriam-Webster Dictionary as:

showing or requiring little or no effort <effortlesspower>

I believe that good traders are able to trade the markets effortlessly – it’s simple to them. But getting to the point of doing anything effortlessly is noteasy. In fact, it’s really hard. A good analogy would be describing an athletes ability to perform his or her skill. If we took two people – one being a person who runs two miles everyday versus a person who hasn’t ran for the past two months, who will have the easier time running one mile? The answer is simple of course. The person who runs everyday will be able to run one mile easily – it will be effortless to them. However, the person who hasn’t ran in two months will find it extremely hard to and likely have to take breaks in-between so that he or she can finish. (more…)

Word of Wisdom from :Technical Analysis of Stock Trends by Robert Edwards and John Magee.

  
  Education
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No stock trader should be without Technical Analysis of Stock Trends by Robert Edwards and John Magee.  Originally penned in 1948 and revised numerous times over the years, it is a classic.  What Edwards and Magee wrote 60+ years ago is today still the same as it ever was.

In a chapter entitled “Stick To Your Guns” we find the following words of wisdom for those traders who seek the oftentimes elusive peace of mind of the disciplined few.

It has often been pointed out that any of several different plans of operation, if followed consistently over a number of years, would have produced consistently a net gain on market operations.   The fact is, however, that many traders, having not set up a basic strategy and having no sound philosophy of what the market is doing and why, are at the mercy of every panic, boom, rumor, tip, in fact, of every wind that blows.  And since the market, by its very nature, is a meeting place of conflicting and competing forces, they are constantly torn by worry, uncertainty, and doubt.  As a result, they often drop their good holdings for a loss on a sudden dip or shakeout; they can be scared out of their short commitments by a wave of optimistic news; they spend their days picking up gossip, passing on rumors, trying to confirm their beliefs or alleviate their fears; and they spend their nights weighing and balancing, checking and questioning, in a welter of bright hopes and dark fears.

Furthermore, a trader of this type is in continual danger of getting caught in a situation that may be truly ruinous.  Since he has no fixed guides or danger points to tell him when a commitment has gone bad and it is time to get out with a small loss, he is prone to let stocks run entirely past the red light, hoping that the adverse move will soon be over, and there will be a ‘chance to get out even,’ a chance that often never comes.  And, even should stocks be moving in the right direction and showing him a profit, he is not in a much happier position, since he has no guide as to the point at which to take profits.  The result is he is likely to get out too soon and lose most of his possible gain, or overstay the market and lose part of the expected profits. (more…)

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