Archives of “open positions” tag

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SAVE YOURSELF!!

  
  Education
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Many of us will sit at our screens, cursing, praying, begging, but the best thing to do is to save yourself, by cutting bad trades quickly. DON’T DEPEND ON THE MERCY OF THE BANKS TO DO IT!!!!!! THEY ARE OUT TO EAT YOUR LUNCH ALWAYS ! THEY ARE YOUR ENEMY, AND THEY ARE RUTHLESS WITHOUT MERCY!!!!!

#1. DON’T LEAVE OPEN POSITIONS! Trade what You can see. When You are not in the market take your money out with You. That way You can save on all of those foul words to Your broker when he tries to explain the price slippage that caused price to go beyond Your stop loss.

#2. If You must leave trades opened, put in a physical stop losses..

#GRANDDADDY OF THEM ALL!!!!!!!!!

NEVER LET LOSSES RUN !!!!!!

NEVER LET LOSSES RUN !!!!!!

NEVER LET LOSSES RUN !!!!!!

CUT THE LEGS FROM UNDER THAT BEAST AS SOON AS POSSIBLE!!!!!!!!!!

Two things are essential if You are going to enjoy a very successful and lucrative trading career.

#1 Wait for a proper trade set-up

#2 Learn to save yourself. CUT BAD TRADES QUICKLY!!!!!! So what if it comes back in your favor, many times it will, but it only takes one good shakeout to leave your lifestyle in jeopardy.

Cut bad trades to leave the most capital possible for a more profitable trade set-up. THE MARKET IS VERY VERY GENEROUS, IT WILL ALWAYS GIVE YOU ANOTHER OPPORTUNITY TO MAKE SOME PAPER, BUT YOU HAVE TO CUT YOUR LOSSES QUICKLY SO THAT YOU HAVE THE MAXIMUM CAPITAL TO TAKE ADVANTAGE OF THE RIGHT OPPORTUNITY WHEN IT PRESENTS ITSELF!!!

The market is swim, float or sink. Don’t let them sink You. SAVE YOURSELF!

Mastering Reward/Risk

  
  Education
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riskrewardMost traders ignore reward/risk ratios, hoping that luck will save them when things start to go bad. 

 This is probably the main reason so many of them are destined to fail. It’s really dumb when you think about it, because reward/risk is the easiest way to  get a definable edge on the market house. 

 The reward/risk equation builds a safety net around your open positions. It’s designed to tell you how much can be won, or lost, on each trade you  take. The secondary purpose is to remove emotion so you can focus squarely on the cold, hard numbers. 

 Let’s look at 15 ways that reward/risk will improve your trading performance. 

 1. Every setup carries a directional probability that reflects a specific pattern. Always execute positions in the highest-odds direction. Exit your trades  when a price fails to respond according to your expectations. 

 2. Every setup has a price level that violates the pattern. Only take trades where price needs to move a short distance to hit this “risk target.” Look the  other way and find the “reward target” at the next support or resistance level. Trade positions with the highest reward target to risk target ratios.  (more…)

The Need To Be Right – Common Psychological Traps For Stock Traders

  
  Education
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Some thoughts on what characterizes great and successful traders:

  • Great traders graciously accept losses. They don’t need to be right all the time.
  • Great traders focus on proper execution not on the outcome of a single trade.
  • Great traders concentrate on good risk management. They constantly manage their open positions.
  • Great traders are emotionally detached. Single trades do not affect their mood.
  • Great traders don’t compare themselves to others. They isolate themselves from the opinions of others. 
  • Great traders are not afraid to buy high and sell low. 

As you probably know by now the single biggest mistake a trader can make is to hold on to a losing position. Failing to cut losses quickly and letting them develop into huge losses is mentally and financially devastating. The underlying psychology which is responsible for this behavior is the ‘need to be right’ and the fear to sell at a loss. What aggravates the situation is adding to a losing position.Dennis Gartman says: “Do more of the things that work and less of the things that don’t.“

Conclusion:
Isolate yourself from the opinions of other people. Make trading decisions your own. Focus on proper execution. Have the courage to do the right thing because it is right.

Power of Charts

  
  Education
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thumbs_upThe critical ingredient is a maverick mind. Focus on trading vehicles, strategies and time horizons that suit your personality. In a nutshell, it all comes down to: Do your own thing (independence); and do the right thing (discipline).

Just 6 Days back written to Buy :Nagarjuna Const ,Hind Construction.

-From 142-155 stock number one had spurted and our Darling stock spurted from 112-130.

Last week Boldly written :Worst is over for Shipping Stocks.

G.E Shipping ,Mercator Lines :Yes both stock were on Fire and still looking hot and fiery.

Always Remember :Repeatedly reevaluate your open positions. Keep asking yourself: would I put my money into this if it were presented to me for the first time today? Is this trade progressing toward the ending position I envisioned?

Updated at 9:38/22nd Sept/Baroda

MindTraps-Great Book

  
  Education
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I read a great book on trading psychology, called MindTraps by Roland Barach. MindTraps focuses on how the average person tends to think, compared to how we need to think to make money over time in the markets.

 Here’s a summary of points that can benefit you as a trader:

  1. 1.Before entering any trade, you should consider the other side of the trade and state the reasons you’d take the other side of the trade.  This helps you objectively enter a trade with a full understanding of the major risks that involved.
  2. Analyze your behavior from the beginning to the end of the trading process (from idea generation to entry and finally to exit) – what are the areas you can improve to help your trading profitability the most?
  3. Keep a trading journal of your thoughts on open positions and new ideas – writing things down helps you objectively look back and see where you went right and wrong.
  4. Fear blinds us to opportunity; greed blinds us to danger – emotions cause “perceptual distortion” where we only see the part of the picture that our beliefs allow us to see.
  5. We are likely to continue doing things for which we are rewarded -this can cause us to get too bullish after the bulk of the uptrend has occurred, or get too bearish near the lows.
  6. Fear of regret slants stock market behavior toward inaction and conventional thinking –  the person who is afraid of losing is usually defeated by the opponent who concentrates on winning (an analogy for sports fans is the Prevent defense in football – playing “not to lose” only prevents you from winning).
  7. Can’t have a personal agenda to prove your self-worth in the markets –  the focus must be on following your plan to maximize the ability to make money.
  8. Don’t get overly attached to any one view on a stock or market – don’t talk to others about open positions; it just makes it that much harder to exit when your plan says it should.
  9. Our predictions are only as good as the information available to us – objectively look at the indicators and data you use, to get the best quality of information and focus available
  10. People prefer for gains to be taken in several pieces to maximize their feeling good about their ability, while they prefer to take all their losses in one big lump to minimize the pain they feel.
  11. People prefer a sure gain compared to a high probability of a bigger gain, so they can say they made a profit; in contrast, people will speculate on a high probability of a bigger loss over a sure smaller loss, because they don’t want to feel like a loser.  In trading, we must flip around the conventional emotions to allow us to let profits run while cutting losses shorter.

Ed Seykota’s Magic Trading System

  
  Education
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1: Do not stress about whipsaws – one good trend pays for them all.

A whipsaw is when you enter a stock, but get stopped out quickly.  In a period of whipsaws, this may happen many times.  This can be frustrating to a trader or investor, and it may cause them to change their system.  But the fact is that one good trend will pay for all of these whipsaws, and if you change your system you lose the benefit of that!

2: When you Catch a Trend, ride it to the end.

Your system must be able to jump on a trending stock (for instance, up if you are going long), but then also be able to ride that trend to the end.  Many novice traders will jump out of stocks before they are finished trending because they are scared the market has gone too far.  Let your system tell you when the trend is ending, and only exit once it does.

3: When you show a loss, give the loss a toss.

Every single successful money manager ever interviewed has said something along the lines of: “Cut your losses short”.  Get rid of your losses.  Keep your winners.  And once you have your system don’t second guess it!  Being stopped out is part of the process.

4: We know if our risk is right when we make a lot of money, but can still sleep at night.

Risk is the amount of risk per trade (the price between your entry and your stop loss), and how much your total risk is (regarding how many positions you have open at one time). (more…)

Day Trading Terms

  
  Education
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Advisor – the one who charges money for a piece of stock advice to cover his/her losses on the market.

Advisory Service – an advisor who lost a considerable amount of money and started new business.

Afternoon – a daily chance to give back the money you made that morning (see Friday).

Apprentice – anyone who peers at your screen shortly after you closed a profitable deal.

Average Down – what you have to do if you opened a long position and had to go to the bathroom.

Average Up – what you have to do if you opened a short position and had to go to the bathroom.

Bad Trade/Stupid Trade – an unprofitable deal that someone else carries out which does not fit your trading strategy.

Bottom – (when you have an open long position) the spot where you give up averaging down and sell; (when you have an open short position) the spot where the book recommends you to open a short position.

Break – a pause you take when you have either 2 profitable or 5 unprofitable deals in a row. (more…)

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