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5 Trading Pitfalls And How To Solve Them

  
  Education
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pitfall-The following are 5 common pitfalls I have seen traders experience and I have listed 5 practical solutions you can quickly implement to overcome these assassins to your performance.
Pitfalls

  1. Focusing on the P & L
  2. Losing objectivity while in a trade
  3. Becoming emotional about a trade
  4. Lacking confidence: exiting early, failing to put a trade on, not sizing up
  5. Difficulty adapting to a changing market

Solutions

  1. 1.Quantify success base on the caliber of the trade (i.e. high quality entries/exits).
  2. Continuously ask yourself, “is my original reason WHY I entered this trade still there?” (more…)

Paul Tudor Jones: The Secret To Successful Trading

  
  Education
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“The secret to being successful from a trading perspective is to have an indefatigable and an undying and unquenchable thirst for information and knowledge. Because I think there are certain situations where you can absolutely understand what motivates every buyer and seller and have a pretty good picture of what’s going to happen. And it just requires an enormous amount of grunt work and dedication to finding all possible bits of information.

You pick an instrument and there’s whole variety of benchmarks, things that you look at when trading a particular instrument whether it’s a stock or a commodity or a bond. There’s a fundamental information set that you acquire with regard to each particular asset class and then you overlay a whole host of technical indicators and that’s how you make a decision. It doesn’t make any difference whether it’s pork bellies or Yahoo. At the end of the day, it’s all the same. You need to understand what factors you need to have at your disposal to develop a core competency to make a legitimate investment decision in that particular asset class. And then at the end of the day, the most important thing is how good are you at risk control. 90% of any great trader is going to be the risk control.”

Perspective

  
  Education
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When you trade, know why you are trading that position. You can listen to others, and remember that you are the ultimate decision maker.

I remember a client of mine who is very brilliant; he knew why he was getting into a trade. Then he would trust others much more than himself, and as a result, he would change his mind and would lose. Needless to say, he has learned to trust himself and develop his mental edge. I am very happy to say that these days he is doing very well.

What are the key points for keeping your own perspective?

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    • Believe in yourself.
    • Know your strategies.
    • Know your entry and exit points.
    • Be cognizant of who or what news sources you listen to.
    • Be aware of who you surround yourself with.

How to Stay Objective in your Trades

  
  Education
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1. Acknowledge that you have lost objectivity. Now that you are aware of the problem, you can begin to deal with it.

2. Remove yourself from the day-to-day noise and write down what your original thesis was. Clearing off your mirrors will tell you what direction you are moving.

3. Begin to Think Backwards by creating three columns with the following headings (Support, Do Not Support, Undecided). This will force you to Objectively lay out and evaluate the situation.

4. Talk to yourself: “Based on the data points I wrote down in each column, if I did not have a position on, what would I do?” Asking yourself this question forces you re-evaluate the trade from an unbiased perspective.

5. Compare your response with your original position/thesis to create a WIN-WIN (more…)

10 Thoughts from Mark Douglas

  
  Education
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1. The four trading fears

95% of the trading errors you are likely to make will stem from your attitudes about being wrong, losing money, missing out, and leaving money on the table – the four trading fears

2. The proverbial empathy gap

You may already have some awareness of much of what you need to know to be a consistently successful trader. But being aware of something doesn’t automatically make it a functional part of who you are. Awareness is not necessarily a belief. You can’t assume that learning about something new and agreeing with it is the same as believing it at a level where you can act on it.

3. The market doesn’t generate happy or painful information

From the markets perspective, it’s all simply information. It may seem as if the market is causing you to feel the way you do at any given moment, but that’s not the case. It’s your own mental framework that determines how you perceive the information, how you feel, and, as a result, whether or not you are in the most conducive state of mind to spontaneously enter the flow and take advantage of whatever the market is offering. (more…)

Three things to make trading less hard

  
  Education
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Trading is not easy but it also isn’t as hard as we make it.  Here are three things that will help it be less hard.

Trading Plan

Have a plan already.  You are just guessing and putting yourself through unnecessary stress if you don’t.  You are taking a test without studying.

Fall in love with the L’s

You have to live with the idea of loss and learning.  They are connected.  They are always fighting each other. Losses makes you want to ignore the learning and not losing makes you think you don’t need it.

Perspective

When you lose your optimism shrinks, when you win it expands.  Chances are you have only accepted winning. One trade does not make a trend, either direction.  But it is easy to connect the losses.  Step back and see it for what it really is.

Never Revenge On The Market

  
  Education
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revenge-oneThere is a direct correlation between your ability to let the market tell you what it is likely to do next and the degree to which you have released yourself from the negative effects of any beliefs about losing, being wrong, and revenge on the markets. Not being aware of this relationship, most traders will continue to observe the market from a contaminated perspective

The First Requirement for Success

  
  Education
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“Sun Tzu said if you sit by the river long enough, you’ll see the bodies of your enemies float by. The key is “long enough.” If you live long enough, you have to be the survivor. When I was a kid, we didn’t have the video games you have today, so we used to listen to comedy records. One of the greatest ones was Mel Brooks doing the 2000 year old man. Carl Reiner says to him, “how did you get to be the world’s oldest man?” And he says, “Simple. Don’t die.” How do you get to be the world’s oldest investor? The answer is don’t crap out.

“So if you look at distressed debt where we started in 1988, I could tell you who our number one competitor was in every year through 1995 and not one is a main competitor today. And it’s not because of what we did; all we did is perform consistently. They crapped out. It sounds simplistic to say, but the first requirement for success is survival…”

– Howard Marks

What steps do you take to ensure survival as a trader? (more…)

Paul Tudor Jones Quotes

  
  Education
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I believe the very best money is made at the market turns. Everyone says you get killed trying to pick tops and bottoms and you make all your money by playing the trend in the middle. Well for twelve years I have been missing the meat in the middle but I have made a lot of money at tops and bottoms.” …

“I’m always thinking about losing money as opposed to making money. Don’t focus on making money, focus on protecting what you have” ..

The secret to being successful from a trading perspective is to have an indefatigable and an undying and unquenchable thirst for information and knowledge.

Ninety-percent of any great trader is going to be the risk control.

When trading macro, you never have a complete information set or information edge the way analysts can have when trading individual securities. It’s a hell of a lot easier to get an information edge on one stock than it is on the S&P 500. When it comes to trading macro, you cannot rely solely on fundamentals; you have to be a tape reader, which is something of a lost art form.

These days, there are many more deep intellectuals in the business, and that, coupled with the explosion of information on the Internet, creates the illusion that there is an explanation for everything and that the primary task is simply to find that explanation. As a result, technical analysis is at the bottom of the study list for many of the younger generation, particularly since the skill often requires them to close their eyes and trust the price action. The pain of gain is just too overwhelming for all of us to bear

I Trade In The Zone.

  
  Education
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  1. I Trade In The Zone’. I Trade IN The Moment, IN The Present, With Total Disregard For What Others Think & Feel About Me.
  2. ‘I Trade In The Zone’. I Ignore ALLEmotions & Defensive Perspectives. I Trade; I Do, I Act From An Entirely Detached & Impartial Perspective.
  3. ‘I Trade In The Zone’. Only In The Zone Do I See The Market As It Truly Is.
  4. ‘I Trade In The Zone’. I Block Out ALL Bad Habits & Self-Limiting Beliefs Attained From My Past, My Environment & Their Surrounding Noise.
  5. ‘I Trade In The Zone’. My Mind Is Pure, Clear, Focused & Yet Empty. The product Of‘Choice’ Means I ALWAYS Can; At Will, ‘Trade In The Zone’.
  6. ‘I Trade In The Zone’. I Trade Without Ego, Never Reacting To Pain, Sorrow Or Fear. I Just Trade The Market As It Truly Is. I Am A Super Trader, I Am The Master Of My Emotions, & So I Can Trade In The Zone. ‘I TRADE IN THE ZONE’.
  7. ‘I Trade In The Zone’. Trading In MY Zone Means I Distinguish Actual Reality From My Interpretations & Projections Of Reality. I Control The Zone!
  8. ‘I Trade In The Zone’. Only In The Zone, My Centred State, Can I ‘Super Trade.’ I Flow With Trends, I Spot Reversals & Breakouts; I Cut Losses Without Hesitancy & Let My Profits Run Perpetually. ‘I Trade In The Zone’.
  9. The Zone Is Where I Live; It’s My Nirvana, My Sanctuary, My Paradise, My Heaven.
  10. I LIVE & TRADE In The Zone. The Zone Is In Me; & The Key To Enter Is Within Me Forever!
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