- Look at your trading as a series of probabilities, don’t focus on any single profit or loss.
- Want what the market wants.
- Do your homework. Come prepared to each day’s trading.
- Never take a trade on the open in the direction of a that day’s gap.
- Don’t risk too much of your trading capital on any single idea.
- Remain flexible.
- Believe what you see. If the market’s going up or down, it’s going up or down.
- Anything can happen. The wildness lies in wait.
- Verify your trading methods or systems.
- Caveat emptor (“Let the buyer beware.”) when buying a trading system or hiring a mentor.
- Your own personal psychology will express itself regardless of your chosen method.
- An opinion isn’t worth much, your own or someone else’s.
- Watch how the markets react to the news.
- Learn from your mistakes.
- Stay in the now. Don’t trade yesterday, today. Don’t trade tomorrow, today.
- Don’t worry about a missed opportunity. Another one is on the way. Besides there were several that just passed of which you were totally unaware.
- If you don’t risk, you can’t make money. If you lose all your trading capital, you can’t trade. Find balance.
- Markets don’t go in a single direction. The trend will wobble on it’s way to its destination.
- The trend is your friend. Unless you’re a counter trend trader, and then only it’s end is your friend.
- Tomorrow’s another day, a whole new trading opportunity. Be optimistic.
- Forgive yourself. Take the lesson, and move on.
Archives of “probabilities” tag
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Position Size Can Be More Important Than the Entry Price
Too many traders focus only on the entry price and pay insufficient attention to the size of the position. Trading too large can result in good trades being liquidated at a loss because of fear.
On the other hand, trading larger than normal when the profit potential appears to be much greater than the risk is one of the key ways in which many of the Market Wizards achieve superior returns. Trading smaller, or not at all, for lower probability trades and larger for higher probability trades can even transform a losing strategy into a winning one.
For example, Edward Thorp, who started out devising strategies to win at casino games before achieving an extraordinary return/risk record as a hedge fund manager, discovered that by varying the bet size based on perceived probabilities, he could transform the negative edge in Blackjack into a positive edge. An analogous principal would apply to a trading strategy in which it was possible to identify higher and lower probability trades.
Techniques of Tape Reading
This (Trading) is not a job where you get paid by the hour.
You get paid for doing the right thing.
Forget that your money is at stake. Money in trading account is just a tool for making money. Preserve your tool. You need it to make money.
Don’t let the outcome of one trade alter your trading discipline. One trade doesn’t make a system…
Trading is a game of probabilities. You don’t have to be right every time. You just have to follow your rules.
You decide your fate; the market doesn’t.
Pure followers of stock pickers will never be around… Learn or you are bankrupt.
Be aggressive in trending market and conservative in choppy market.
Take home runs when you can, but don’t beat yourself up about missing a few.
One trade should never make or break your account.
The Secret
What’s the secret of successful traders and how did they make the transition from clueless learner to consistent pro?When the same tools are available to anyone, why do some people out perform others?
The successful traders have discovered The Secret.
It is not the latest indicator, program or hot tipster. It is something that everyone has inside them already.
The Secret is believing in your method and trading it. Believing to the point of having it ingrained into your brain so that it becomes as automatic as breathing. If the charts do this, then I will do that. Trading your plan means cutting losers, riding winners, managing money and risk well. When you arrive at the point of realizing that your self-discipline can only get you so far and that the next step should be reflex trading then you will have found The Secret.
Having to exercise self- discipline to me means that there is still something inside you that you must fight to control. If emotions are still in control of your trading then you must find a way to turn that fear and greed into a move productive energy. Trading your method as a reflex means that there is no struggle to control wayward thoughts. (more…)
Better to be Profitable Than Right
The ultimate goal of a futures trader should be to have overall trading success by being profitable. There is no single-best path one can take on the destination to trading success and profitability. However, there are a few general trading tenets to which all successful traders have subscribed. One such trading tenet is “losing your ego” when trading futures.
Mark Cook, a well-respected trader and trading educator from rural Ohio, for many years has stressed that traders need to lose their egos before getting into trading futures markets. He is also an advocate of survival in futures trading. One must survive in this challenging arena before one can succeed. I enjoyed listening to Mark at a trading seminar a few years ago. He even used to wear bib-overalls (with no shirt) at some of his trading seminars – just to drive home the point that trading futures is not easy and that ultimate success takes a lot of hard work.
My good friend and respected trader and educator Glen Ring also espouses the notion, and may have even coined the phrase, “it’s better to be profitable than right in futures trading.” Those who know or have talked to Glen know he, too, is a no-nonsense, no-hype trader who takes a yeoman’s approach to the business. When asked what direction a specific market “will” go in the future, Glen is never afraid to say, “I don’t know,” before he adds that, “successful trading is not a business of predictions but one of probabilities based on past price history.” (more…)
Trading Recipe!
*The recipe for success in trading are as follows:
- *Identify a signal
- *Take immediate action
- Feel good no matter what the result, as long as the trade is consistent with your technical bias based on sound probabilities
On the other hand, experiencing hesitation or self-doubt, just at the moment of action, is the recipe for failure!
The Pain is Unjustified
I’ve always said, you don’t have to blow out an entire account before we figure out the significance of being disciplined. You don’t need to feel pain to learn that lesson. You just have to commit to the process of becoming disciplined. It poses a more fundamental question, are you willing to do what it takes to become consistently profitable?
How do we overcome this pain and impulsiveness? Through belief in a system, and a full understanding of the probabilities. You MUST embrace loss as a part of this profession, if you don’t you are in the wrong industry. Do not place another trade. This belief comes with repetitions. The belief has to be earned through proof and practice.
Before you proceed with your next trade, I want you to think about the power of your MIND. (more…)
6 Trading Sins
1. Thinking that trading is a get-rich-quick scheme.
2. Reacting emotionally to market movement instead of assessing the market rationally using proven methods for high probability trades.
3. Chasing the Market.
4. Lack of preparation – entering the market with little or no understanding of what the probabilities are and how to handle them. Being unaware of special events or announcements that may be big marketmovers.
5. Butterfly Trading. Trying one method after another without mastering any.
6. “Go-it-alone” Syndrome, hoping to discover the ‘secret code’ for trading. Most successful traders have learned from other successful traders. This can eliminate years of trial and error, and some very painful trading losses.
Think Like Las Vegas
Do you think of each trade as an island, as the great hope, or do you think in terms of probabilities over a series of trades? Casinos make their money by keeping the odds in their favor over a large number of bets. And that’s how successful traders think too. They don’t get attached to the success or failure of any given trade. Their primary goal is to stay calm, relaxed and open to the market’s opportunities so that they can execute their edge precisely and keep the odds in their favor. Thats why I make such a big deal about emotional clearing and staying calm. The emotional clearing technique I use is literally worth tens of thousands of dollars to me in bottom line results.
Ten Powerful Psychological Traits of the Rich Trader
Ten Powerful Psychological Traits of the Rich Trader
When you are trading like that, it is hard to be beaten. Time is your friend. |