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TRADER’S TWO MOST POWERFUL WORDS

  
  Education
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Let’s face it, no matter the outcome of a trade-lose, win, draw, and even the miss-traders are rarely satisfied with the result.  This is exactly why it is so important that we utilize the two most powerful words in a stock trader’s vocabulary..and no… it does not involve four letters!  The following is a list that you can use these two words with.  You will get my point.  Of course you can add to it if you like.

I missed the trade…SO WHAT!

This trade did not work…SO WHAT!

I excited a profitable trade too early…SO WHAT!

I excited with a loss too quickly…SO WHAT!

My stock gapped against me…SO WHAT!

The stock recovered without me…SO WHAT!

A stock I was bullish on was downgraded by an ANALyst…SO WHAT!

A stock I was bearish on was upgraded by an ANALyst…SO WHAT!

The market is not trending…SO WHAT!

The market is consolidating…SO WHAT!

The market is breaking support…SO WHAT!

The market is busting out of resistance…SO WHAT!

The economy stinks but the market is going higher…SO WHAT!

James P. Arthur Huprich's Market Trusms And Axioms

  
  Education
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1. Commandment #1: “Thou Shall Not Trade Against the Trend.”

2. Portfolios heavy with underperforming stocks rarely outperform the stock market!

3. There is nothing new on 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, mostly due to human nature.

4. Sell when you can, not when you have to.

5. Bulls make money, bears make money, and “pigs” get slaughtered.

6. We can’t control the stock market. The very best we can do is to try to understand what the stock market is trying to tell us.

7. Understanding mass psychology is just as important as understanding fundamentals and economics.

8. Learn to take losses quickly, don’t expect to be right all the time, and learn from your mistakes.

9. Don’t think you can consistently buy at the bottom or sell at the top. This can rarely be consistently done.

10. When trading, remain objective. Don’t have a preconceived idea or prejudice. Said another way, “the great names in Trading all have the same trait: An ability to shift on a dime when the shifting time comes.”

11. Any dead fish can go with the flow. Yet, it takes a strong fish to swim against the flow. In other words, what seems “hard” at the time is usually, over time, right.

12. Even the best looking chart can fall apart for no apparent reason. Thus, never fall in love with a position but instead remain vigilant in managing risk and expectations. Use volume as a confirming guidepost.

13. When trading, if a stock doesn’t perform as expected within a short time period, either close it out or tighten your stop-loss point.

14. As long as a stock is acting right and the market is “in-gear,” don’t be in a hurry to take a profit on the whole positions. Scale out instead.

15. Never let a profitable trade turn into a loss, and never let an initial trading position turn into a long-term one because it is at a loss. (more…)

Trading Psychology

  
  Education
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Your biggest enemy, when trading, is within yourself. Success will only  come when you learn to control your emotions. Edwin Lefevre’s

 Reminiscences of a Stock Operator (1923) offers advice that still applies  today.

 Caution
 Excitement (and fear of missing an opportunity) often persuade us to enter the market  before it is safe to do so. After a down-trend a number of rallies may fail before one  eventually carries through. Likewise, the emotional high of a profitable trade may blind  us to signs that the trend is reversing.

 Patience
 Wait for the right market conditions before trading. There are times when it is wise to  stay out of the market and observe from the sidelines.

 Conviction
 Have the courage of your convictions: Take steps to protect your profits when you see  that a trend is weakening, but sit tight and don’t let fear of losing part of your profit  cloud your judgment. There is a good chance that the trend will resume its upward  climb.

 Detachment
 Concentrate on the technical aspects rather than on the money. If your trades are  technically correct, the profits will follow.

 Stay emotionally detached from the market. Avoid getting caught up in the short-term  excitement. Screen-watching is a tell-tale sign: if you continually check prices or stare at  charts for hours it is a sign that you are unsure of your strategy and are likely to suffer  losses.

 Focus
 Focus on the longer time frames and do not try to catch every short-term fluctuation.  The most profitable trades are in catching the large trends.

 Expect the unexpected
 Investing involves dealing with probabilities ? not certainties. No one can predict the  market correctly every time. Avoid gamblers? logic.

 Average up – not down
 If you increase your position when price goes against you, you are liable to compound  your losses. When price starts to move it is likely to continue in that direction. Rather  increase your exposure when the market proves you right and moves in your favor.

 Limit your losses
 Use stop-losses to protect your funds. When the stop loss is triggered, act immediately  – don’t hesitate.

 The biggest mistake you can make is to hold on to falling stocks, hoping for a recovery.  Falling stocks have a habit of declining way below what you expected them to.  Eventually you are forced to sell, decimating your capital.

 Human nature being what it is, most traders and investors ignore these  rules when they first start out. It can be an expensive lesson.

 Control your emotions and avoid being swept along with the crowd. Make consistent  decisions based on sound technical analysis.

Market Truisms and Axioms

  
  Education
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Commandment #1: “Thou Shall Not Trade Against the Trend.”

• Portfolios heavy with underperforming stocks rarely outperform the stock market!

• There is nothing new on 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, mostly due to human nature.

• Sell when you can, not when you have to.

• Bulls make money, bears make money, and “pigs” get slaughtered.

• We can’t control the stock market. The very best we can do is to try to understand what the stock market is trying to tell us.

• Understanding mass psychology is just as important as understanding fundamentals and economics.

• Learn to take losses quickly, don’t expect to be right all the time, and learn from your mistakes.

• Don’t think you can consistently buy at the bottom or sell at the top. This can rarely be consistently done.

• When trading, remain objective. Don’t have a preconceived idea or prejudice. Said another way, “the great names in Trading all have the same trait: An ability to shift on a dime when the shifting time comes.”

• Any dead fish can go with the flow. Yet, it takes a strong fish to swim against the flow. In other words, what seems “hard” at the time is usually, over time, right.

• Even the best looking chart can fall apart for no apparent reason. Thus, never fall in love with a position but instead remain vigilant in managing risk and expectations. Use volume as a confirming guidepost.

• When trading, if a stock doesn’t perform as expected within a short time period, either close it out or tighten your stop-loss point.

• As long as a stock is acting right and the market is “in-gear,” don’t be in a hurry to take a profit on the whole positions. Scale out instead.

• Never let a profitable trade turn into a loss, and never let an initial trading position turn into a long-term one because it is at a loss.

• Don’t buy a stock simply because it has had a big decline from its high and is now a “better value;” wait for the market to recognize “value” first. (more…)

Small Things Matter

  
  Education
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Ask many experienced traders to describe their most profitable trade, and you’ll hear a fantastic story. It’s usually purely chance. I know it was that way for me on a number of occasions. For example, the trader may have been going long on a large position when suddenly a report came out that shocked the market. Prices shot up as the public heard the news, and the trader made a killing. These stories are thrilling. They inspire you to sharpen your trading skills and master the markets. Who doesn’t want to be at the right place at the right time? But if you want to be a profitable, consistent trader, you can’t sit around waiting for a fantastic trading opportunity to present itself. Most of the time, trading is about making trade after trade to the point that it seems boringly routine. Rather than seek out big, exciting trades, it’s important to remember that small trades matter a lot.

As thrilling as big trades seem to be, it’s the smaller trades that keep you in business. It’s not unusual for traders to feel they have reached a plateau when trading. They make trade after trade and little seems to happen. They don’t suddenly find the Holy Grail of trading and achieve the great wealth and status they’ve dreamed about. Whether they realize it or not, however, they are still making progress. Each new observation of the market, each trade they execute, no matter how small, adds to their wealth of knowledge. They intuitively learn what to do and what not to do. They may see a slight variation in chart pattern that creates an inefficiency in price and learn just how far the pattern can deviate from the norm and still forecast the most likely movement of prices. On another day, they may learn a new way to place a protective stop so that they protect their risk, yet don’t get stopped out prematurely. These small everyday, seemingly insignificant experiences matter a lot.

Trading is challenging. Few survive trading over many years. The traders who do survive, however, know how to stay focused and patient. They don’t go for quick thrills, and unrealistically huge profit objectives. They know that losing is easy and can happen in the blink of an eye, but rebuilding capital usually takes a lot of work over a long period of time.

Instead of going for risky, exciting trades, you must seek out high probability setups, take steps to protect your capital, and execute your trades decisively, according to your trading plan. You may not have an exciting tale to brag about, but you take home steady profits–you get paid to trade. And when you make trade after trade, the small profits add up, and you end up with big profits in the end.

So when you feel that your earnings have reached a plateau, don’t get discouraged. As long as you are making profits, and staying in business, you’re continuing to develop your trading skills. You’re adding to your knowledge base. You’re developing a more intuitive feel for how the markets operate. It may not seem like you’re making the profits of a trading wizard, but if you keep at it, you’ll be one of the rare few that join the ranks of winning traders.
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Trade what you see, not what you think!

5 Axioms to Follow, Memorize and Practice

  
  Education
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  1. THE MARKET ITSELF IS THE ULTIMATE WEILDER OF JUSTICE. JUDGE, JURY AND PROSECUTOR.
  2. RECIPE TO LOSE FOR SURE: OVER-ANALYZE, PROCRASTINATE, HESITATE.
  3. LEARN TO SWEAT OUT, HANG ON TO AND SCALE OUT OF YOUR WINNERS.
  4. HIT SINGLES AND DOUBLES, NOT HOMERUNS. THE HOMERUNS ARE USUALLY THE RESULT OF GOOD TRADING AFTER A PROFITABLE TRADE HAS STARTED TO MAKE ITS MOVE
  5. A BIG LOSS CAN DESTROY YOU. IS RISK WORTH TOTAL DESTRUCTION?

TRADER’S TWO MOST POWERFUL WORDS

  
  Education
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Let’s face it, no matter the outcome of a trade-lose, win, draw, and even the miss-traders are rarely satisfied with the result.  This is exactly why it is so important that we utilize the two most powerful words in a stock trader’s vocabulary..and no… it does not involve four letters!  The following is a list that you can use these two words with.  You will get my point.  Of course you can add to it if you like.

I missed the trade…SO WHAT!

This trade did not work…SO WHAT!

I excited a profitable trade too early…SO WHAT!

I excited with a loss too quickly…SO WHAT!

My stock gapped against me…SO WHAT!

The stock recovered without me…SO WHAT!

A stock I was bullish on was downgraded by an ANALyst…SO WHAT! (more…)

Deadly Emotions

  
  Education
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REVENGE, we all know it and have done it. It happens when you are tricked by the market and decide to take another trade before looking at the big picture, then BAM you are on the wrong side of the trade again. Pissed off and refusing to move while your money is going further down the drain. Scared to let go for fear that you are going to get tricked again.

PANIC, that is when you lack the confidence to enter or ride a profitable trade. This happens when you have taken some hits and now you lack the confidence to trade profitably.

IMPATIENCE, this happens when you can’t wait for a proper trade set-up and jump on a price hiccup/retracement, often finding yourself on the wrong side of the trade.

ANGER, you know that feeling that comes over you when you have taken a hit or two and you want to kill your computer.

SELF PITY, when you come to the market hoping for crumbs and get none, and can’t see why THEY won’t let you have just a little bit.

DEPRESSION, something perhaps outside of the market has you at an extreme low point.

INDIFFERENCE, it happens when you have gotten hit so many times that you just don’t care any more because no matter what you can win any way.

All of these emotions work hard against you clouding your clarity and give other traders the advantage over you.

If you are experiencing any of these emotions when you enter your platform; abandon your trading until you have yourself under control and have the clarity of mind to trade. Not doing so greatly increases your chances of handing your money over to a trader who is more emotionally fit and controlled than you are.

We are all human and it happens to us all, but what weighs heavy in your mind will often weigh heavily in your pocket.

Come to your trading platform, well rested, focused and ready to trade. You may take an occasional hit so what it is a LESSON. We all get them and if we learn the lesson that the loss has taught us; it will make us much better traders.

DO NOT TRADE YOUR EMOTIONS!!!!!—-

TRADING MANTRA'S

  
  Education
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trading-mantrasEven the best traders in the market have trading sessions that are less than optimal.  Human nature dictates that we make mistakes, and trading the stock market is no exception.  Subsequently, there is always room for improvement, whether you are a novice trader or a seasoned veteran. 

  1. Stick to Your Guns – Don’t try to run from the market.  The only way to boost trading profits is to stay in the game and keep trading.  Running from the trades and the action will keep you out of the market, whether it is hot or cold.  Sticking to your trading plan and enacting trading discipline are the keys to producing profits.

 

  1. Set Stop Losses and Take Profits – “Set and forget” trading is generally profitable.  When you place each trade, remember to place your exit and stop loss, and then let the market be your guide.  Have a preset limit of how much you’re willing to win and how much you can lose.  Technical analysis will tell you the best price for selling (near resistance) and the best place for buying (near support).  Support and resistance points are the best places to put limit orders. (more…)

ABC’s of Stock Trading

  
  Education
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abc
This is not like any other ABC list you might have come across about trading stocks. There are no real terms here. The following is the ABC’s of successful stock trading.
A – Action, nothing happens until you DO SOMETHING.
B – Bear trap, don’t get sucked into it.
C – Cash, not making too much when you are holding cash.
D – Due diligence, don’t jump into a position blindly.
 
E – Early, the best traders make a move before its popular.
F – Fear to lose money, the hardest thing to overcome in trading.
G – Greed, try to make a quick buck, and lose a quick thousand.
H – Humbled, no trader is immune from bad trades.
I – Ignorance, following recommendations blindly puts all the blame on you.
J – Justification, the more you have to convince yourself, the less likely the trade will probably work.
K – Keep discipline, stick to your strategy and have faith it will work.
L – Losses, accept them and move on. Don’t dwindle on the past.
M – Money, what makes the world turn.
N – Never is impossible, in the stock market ANYTHING can happen.
O – Only if I had…, the worst statement a trader can make.
P – Perception, moves the market more than the actual facts.
Q – Quality vs. Quantity, which one works best for your system?
R – Realized Profit, you haven’t made or lost any money until you sell.
S – Strategy, never enter a position until you know the exit plan.
T – Trade Triangle Technology… need I say more?
U – Understatement, everybody succeeds in the stock market.
V – Value, reason traders buy and sell because they think the stock price should be higher or lower.
W – Write downs, something you don’t want to see a company do too often.
X – Xcited (I know, I know), nothing feels better than executing a profitable trade.
Y – Your alone, at the end of the day the only person who cares about your account is you.
Z – Zenith, where we would like to exit your stock position.

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