If you have been reading this blog for a while you know that ANIRUDH SETHI REPORT promotes simplicity. Am I alone in thinking this way? I do not believe so! I would hazard to guess that most all, if not all, professional traders believe that successful trading boils down to having and following a very simple set of rules.
Here is a very short list of comments from very reliable sources—successful professional traders.
John F. Carter: “It is important to remember that there is no need to spend wasted years looking for complicated setups or the next Holy Grail. There are very simple setups out there to use. Some of the best traders I know have been trading the same setup, on the same time frame, on the same market for 20 years. They don’t care about anything else, and they don’t want to learn about anything else. This works for them, and they are the masters of this setup. They have nothing else coming in to interfere with their focus” (p. 31, Mastering the Trade: Proven Techniques for Profiting from Intraday and Swing Trading Setups).
Clifford Bennett: “While there have been some spectacular front-cover traders, the ones who amass fortunes year after year tend to stay in the background. At the very least, they display a simple and down-to-earth approach to markets if they are ever interviewed” (p. 117, Warrior Trading: Inside the Mind of an Elite Currency Trader). (more…)
Archives of “professional traders” tag
rss51 Professional Trading Tips
1. Trading is simple, but it is not easy.
2. When you get into a trade watch for the signs that you might be wrong.
3. Trading should be boring.
4. Amateur traders turn into professional traders once they stop looking for the “next great indicator.”
5. You are trading other traders, not stocks or futures contracts.
6. Be very aware of your own emotions.
7. Watch yourself for too much excitement.
8. Don’t overtrade.
9. If you come into trading with the idea of making big money you are doomed.
10. Don’t focus on the money.
11. Do not impose your will on the market.
12. The best way to minimize risk is to not trade when it is not time to trade.
13. There is no need to trade five days a week.
14. Refuse to damage your capital.
15. Stay relaxed.
16. Never let a day trade turn into an overnight trade.
17. Keep winners as long as they are moving your way.
18. Don’t overweight your trades.
19. There is no logical reason to hesitate in taking a stop.
20. Professional traders take losses because they trust themselves to do what is right.
21. Once you take a loss, forget about it and move on.
22. Find out what loss parameters work best for your setup and adjust them accordingly.
23. Get a feel for market direction by “drilling down” (looking at multiple time frames).
24. Develop confidence by knowing and executing your trade setups the same way every time.
25. Don’t be ridiculous and stupid by adding to losers.
26. Try to enter a full size position right away.
27. Ring the register and scale out of your position.
28. Adrenaline is a sign that your ego and your emotions have reached a point where they are clouding your judgment.
29. You want to own the stock before it breaks out and sell when amateurs are getting in after the move.
30. Embracing your opinion leads to financial ruin.
31. Discipline is not learned until you wipe out a trading account.
32. Siphon off your trading profits each month and stick them in a money market account.
33. Professional traders risk a small amount of money on their equity on one trade.
34. Professional traders focus on limiting risk and protecting capital.
35. In the financial markets heroes get crushed.
36. Stick to your trading rules and you will never blow up your trading account.
37. The market can reinforce bad habits.
38. Take personal responsibility for each trade.
39. Amateur traders think about how much money they can make on each trade. Professional traders think about how much money they can lose.
40. At some point all traders realize that no one can tell them exactly what is going to happen next in the market.
41.Losing trades don’t diminish you as a person. You’re also not your winning trades. They are just by-products of the business you’re in.
42.Act in your best interest – placing a trade because you’re afraid of missing out on a big move is NOT acting in your best interest.
43.Flawless execution comes from forming a habit. A habit is formed when it is repeated over and over again. Start practicing.
44.Don’t let personal/external factors affect the trading for thou judgment is clouded. Let the market show you what to do. Always.
45.Make sure your trading goals are 1) realistic, 2) attainable, 3) measurable. If they don’t meet these criteria, then the goal is nothing.
46.You want to own the stock before it breaks out, then sell it to the momentum players after it breaks out. If you buy breakouts, realize that professional traders are handing off their positions to you in order to test the strength of the trend. They will typically buy it back below the breakout point—which is typically where you will set your stop when you buy a breakout. (In case you ever wondered why you get stopped out on a lot of “failed” breakouts).
47.Amateur traders always think, “How much money can I make on this trade!” Professional traders always think, “How much money can I lose on this trade?” The trader who controls his or her risk takes money from the trader whose head is in the clouds.
48.. Siphoning out your trading profits each month and sticking them in a money market account is a good practice. This action helps to focus your attitude that this is a business and not a place to seek thrills. If you want an adventure, go live in Minnesota for a winter. If you want excitement, deliberately forget your anniversary. Just don’t trade.Adrenaline is a sign that your ego and your emotions have reached a point where they are clouding your judgment. Realize this and immediately tighten your stop considerably to preserve profits or exit your position.
49.
50.Averaging down on a position is like a sinking ship deliberately taking on more water.
51.You Need MONEY -MIND-METHOD & Target to get success in Trading.If u miss any one of them…its my challenge to anybody in World …U will never ever be succesful !!
Updated at 22:45/07th Sept/Baroda
40 Rules for Traders
| 1. Trading is simple, but it is not easy. 2. When you get into a trade watch for the signs that you might be wrong. 3. Trading should be boring. 4. Amateur traders turn into professional traders once they stop looking for the “next great indicator.” 5. You are trading other traders, not stocks or futures contracts. 6. Be very aware of your own emotions. 7. Watch yourself for too much excitement. 8. Don’t overtrade. 9. If you come into trading with the idea of making big money you are doomed. 10. Don’t focus on the money. 11. Do not impose your will on the market. 12. The best way to minimize risk is to not trade when it is not time to trade. 13. There is no need to trade five days a week. 14. Refuse to damage your capital. 15. Stay relaxed. 16. Never let a day trade turn into an overnight trade.17. Keep winners as long as they are moving your way. 18. Don’t overweight your trades. 19. There is no logical reason to hesitate in taking a stop. 20. Professional traders take losses because they trust themselves to do what is right. 21. Once you take a loss, forget about it and move on. 22. Find out what loss parameters work best for your setup and adjust them accordingly. 23. Get a feel for market direction by “drilling down” (looking at multiple time frames). 24. Develop confidence by knowing and executing your trade setups the same way every time. 25. Don’t be ridiculous and stupid by adding to losers. 26. Try to enter a full size position right away. 27. Ring the register and scale out of your position. 28. Adrenaline is a sign that your ego and your emotions have reached a point where they are clouding your judgment. 29. You want to own the stock before it breaks out and sell when amateurs are getting in after the move. 30. Embracing your opinion leads to financial ruin. 31. Discipline is not learned until you wipe out a trading account. 32. Siphon off your trading profits each month and stick them in a money market account. 33. Professional traders risk a small amount of money on their equity on one trade. 34. Professional traders focus on limiting risk and protecting capital. 35. In the financial markets heroes get crushed. 36. Stick to your trading rules and you will never blow up your trading account. 37. The market can reinforce bad habits. 38. Take personal responsibility for each trade. 39. Amateur traders think about how much money they can make on each trade. Professional traders think about how much money they can lose. 40. At some point all traders realize that no one can tell them exactly what is going to happen next in the market. |
Courage
Not all traders have the courage to stand up to their actions. It takes a lot of courage to deal with the fears a trader must overcome in his career. The first is the fear of success that is so common and is the most prevalent. We want success and are afraid of it at the same time too. As our account grows so does the fear of handling those amounts of money. Could you trade risking a bigger amount as the account grows? Sometimes we sabotage our own success as it puts us out of our comfort zone. Another aspect of the fear of success is the subconscious fear of not being able to sustain that success. Our ego is questioning our ability to avoid messing up and losing that prized status of a hero. Same holds true for a windfall success. We know we might be able to do it again but our ego says we will look bad if we cannot do it again. Professional Traders have developed the ability to methodically achieve success and the confidence to repeat it while reducing the odds of sabotaging themselves via their egos. Professional Traders know that trading is boring and is not full of fun and excitement. That is why they have the courage to give up the fun and excitement in exchange for trading capital preservation. They also have the courage to not become addicted to winning big all the time. They know there will be singles, doubles and losers along the way too. They have the courage to stay on the sidelines at times and miss trading opportunities. They also know when to get out of a trade bravely and have the courage to ask for help when needed. They have the courage to stick to their strategy, ask dumb questions, admit it when they are wrong and finally have the courage to trade for profit and not for pure excitement.
"6 Skills For Traders"
Whether it is day trading, scalping, or investing,there are fundamental skills that each trader should master. Skill-building activities will help you sharpen your ability to make money and cash in on critical market movements.
1. Don’t Be a Perfectionist
Consistent profits are achieved from winning more than you lose – not winning every single trade.There are plenty of professional traders who generate profits by winning just 10% of their trades by maximizing gains and minimizing their losses.
2. Stick to a Trading Plan
Developing a trading plan is extremely important.Day trading around your own set plan for each position will produce consistent profits. A trading plan planner should be your best friend when developing your own trading
style. The key is sticking to what you’ve written down on paper.
3. Know the Odds
You should know the payoff odds for each trade that you take.Scalping produces large gains from small movements with higher risk than swing trading. Your trading plan should include a way to regulate how much capital you’re willing to risk on each position – but you should never risk more than 2% of your total account value. (more…)
9 Lessons from Jesse Livermore
There are those who would convince you that it is somehow smart or in your best interest to be manically switching your investments around, back and forth, long and short, on a daily basis. To pay attention to this kind of overstimulation is the height of madness, even for professional traders.
The most storied and important trader who ever lived, Jesse Livermore, would be tuning these daily buy and sell calls out were he alive and operating today. Because while he was a trader, he was not of the mindset that there was always some kind of action to be taking.
Jesse Livermore’s legacy is a bit of a double-edged sword…
On the one hand, he was the first to codify the ancient language of supply and demand that is every bit as relevant 100 years later as it was when he first relayed it to biographer Edwin Lefèvre. Livermore himself sums it up thusly: “I learned early that there is nothing new in Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again. I’ve never forgotten that.”
On the other hand, Livermore’s undoing came at precisely the moments in which he ignored his own advice. After repeated admonitions about tipsters, for example, Jesse allowed a tip on cotton to lead to a massive loss which grew even larger as he sat on it – violating yet another of his own cardinal rules.
And of course, other than for a few moments of temporary triumph in the trading pits and bucket shops of the era, Jesse Livermore was not a happy man. “Things haven’t gone well with me,” he informed one of his many wives by handwritten note, before putting a bullet through his own head in the cloakroom of the Sherry-Netherland Hotel.
But he did leave behind a wealth of knowledge about the art of speculation. His exploits (and cautionary tales of woe) have educated, influenced and inspired every generation of trader since Reminiscences was first published in 1923. (more…)
40 Trading Lessons
1. Trading is simple, but it is not easy.
2. When you get into a trade watch for the signs that you might be wrong.
3. Trading should be boring.
4. Amateur traders turn into professional traders once they stop looking for the “next great indicator.”
5. You are trading other traders, not stocks or futures contracts.
6. Be very aware of your own emotions.
7. Watch yourself for too much excitement.
8. Don’t overtrade.
9. If you come into trading with the idea of making big money you are doomed.
10. Don’t focus on the money.
11. Do not impose your will on the market.
12. The best way to minimize risk is to not trade when it is not time to trade.
13. There is no need to trade five days a week.
14. Refuse to damage your capital.
15. Stay relaxed.
16. Never let a day trade turn into an overnight trade.
17. Keep winners as long as they are moving your way.
18. Don’t overweight your trades.
19. There is no logical reason to hesitate in taking a stop.
20. Professional traders take losses because they trust themselves to do what is right. (more…)
Over Trading
Overtrading is a major obstacle for profitability. People tend to overtrade when they don’t have a plan for the trading day/week.
If overtrading is a major issue for professional traders, lack of discipline is a major issue for developing traders. (more…)
Five Stages of Trader Evolution
Gambler. This is the oldest trader’s ancestor. He was fairly naive, highly emotional and addicted gambler. The gambler perceived the market as his casino-like entertaining arena. He bet large and he bet often. His goal was to get rich quick. Most, if not all, of his capital was quickly distributed to more evolved traders.
Which stage are you at?
5 bits of trading wisdom
- Most of the time, you want to own the stock before it breaks out, then sell it to the momentum players after it breaks out. If you buy breakouts, realize that professional traders are handing off their positions to you in order to test the strength of the trend. They will typically buy it back below the breakout point—which is typically where you will set your stop when you buy a breakout. Greed comes into play when the stock breaks out again, and the momentum players are forced to chase it and “pay up” for the stock. Be aware of how trends are established and use that to your advantage to enter and exit positions.
- Embracing your opinion leads to financial ruin. When you find yourself rationalizing or justifying a decline by saying things like, “They are just shaking out weak hands here,” or “The market makers are just dropping the bid here,” then you are embracing your opinion. Don’t hang onto a loser. Cut your losses. You can always get back in.
- Unfortunately, discipline is typically not learned until you have wiped out a trading account. Until you have wiped out an account, you typically think it cannot happen to you. It is precisely that attitude that makes you hold onto losers and rationalize them all the way into the ground.
- Siphoning out your trading profits each month and sticking them in a money market account is a good practice. This action helps to focus your attitude that this is a business, and your business should generate profits on a monthly basis.
- “Professional traders only place a small portion of their assets into 1 position. Or if they take on a large position, then they strictly limit their risk to 1-2% of their current equity. Amateurs typically place a large portion of their assets into 1 position, and they give it “room to move” in case they are actually right. This type of situation creates emotions that ruin accounts, while professionals are able to make decisions and cut losses because they strictly define their risk.”