Archives of “profits” tag

rss

Lessons from Martin Schwartz

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

To succeed in trading one must learn from the best, so it is wise to consider the advice of Martin Schwartz.
I highly recommend you read his book Pit Bull – Lessons from Wall Street’s Champion Trader.
“I took $40,000 and ran it up to about $20 million with never more than a 3 percent drawdown.” (Month-end data)

“By living the philosophy that my winners are always in front of me, it is not so painful to take a loss. If I make a mistake, so what!”
“My trading style was to take a lot of small profits rather than go for one big one.“
“After a devastating loss, I always play very small and try to get black ink, black ink. It’s not how much money I make, but just getting my rhythm and confidence back.”
“The market does not know if you are long or short and could not care less. You are the only one emotionally involved with your position. The market is just reacting to supply and demand and if you are cheering it one way, there is always somebody else cheering it just as hard that it will go the other way.” (more…)

Traits of A SUCCESSFUL TRADER

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

Courage…courage-1

“The credit belongs to the man who is actually in the arena, who strives valiantly; who knows the great enthusiasms, the great devotions, and spends himself in a worthy cause; who at best, knows the triumph of high achievement; and who, at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who know neither victory nor defeat.”
Theodore Roosevelt

Persistence…persistence1

“Nothing in the world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent.”
Calvin Coolidge

The above quotes strike me as being appropriate for all of us engaged in the endless quest of trading profits. I make it a point to review these statements on a regular basis as I am well aware of the fact that I am only as good or bad as my last trade.

I accept the fact that I will never have it “made” as a trader. Each and every day is a new trading situation and I must be prepared with my trading plan. I must PLAN MY TRADE AND TRADE MY PLAN.

Over Trader Anonymous : Here's A Great Tip

  
  Education
#  #  #  #  #  #  #  #  #

overeating

Over trading is the single most damaging thing to an account. the commissions alone will eventually slowly eat away at capital and that’s not even taking into consideration the mental and emotional drain you will go thru. Your soul goes into a dark place when you over trade and get poor results. Sometimes it made me even angry and i used to lash out at others.It took me years to figure out that trading more ironically meant more losses, (more…)

Understanding Yourself

  
  Education
#  #


  • Understanding yourself is as important as understanding the markets.

  • Stick with what you know and are good at and leave the rest.

  • There are many ways to trade, find what works for you.

  • I am not smarter than the market.

  • To succeed, you must be mentally strong.

  • Learning to letting profits run is has proven far more difficult than I realize.

  • The emotional part of trading can be a deal breaker.

  • To be honest, I am a terrible trader. But that’s is because I don’t work hard enough.

  • Patience is a virtue in lazy portfolio investing.

Ego and Fear

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #

But of course “ego” in trading reveals itself in subtler ways. I came to realize that after watching any chart for a while I would form an confident opinion about where the price was headed. “Okay, that’s a bottom there.” “Now the price is going to reverse and test that last support level.” Thinking I could predict the market was clearly egotistical.

 

So one big change has been to no longer guess where the price is going. I wait for trends where ANYBODY can see the price is going somewhere, and trade that trend. Makes for a lot more quiet periods of no trades but more successful trades when they do occur.

 

“Fear” is another big issue for traders and for me the issue is “not having enough of it”. I’ve been willing to bet the bank on a hunch and have been working to change that. Now when I enter a trade I use mental imagery to escalate my fears so that I trade more responsibly. Have you seen the iMax films “Everest” or “The Alps”. Currently I imagine I am high up the sheer face of a rock cliff and the only thing keeping me alive is my attention to the security of the pitons and the condition of the ropes. This helps me be more selective in my entries and in placing my stops.

How do fear and ego enter into your trading? Are you still trying to guess where price is going? Are you imagining yourself on the edge of a cliff, or are you already spending the profits you haven’t yet banked? 

Desire and Fear in Trading

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

Desire and fear alternate in the minds of traders as they go through the day.  But let me ask you whether desire or fear dominates your thoughts and feelings as you trade? 

For many traders the primary emotion is fear.  They fear loss: losing profits, losing money, losing equity and even their margin.  Some fear losing their touch, their feel for the market, their focus, their luck, the respect of their boss, colleagues, or mate, or worse, their own self esteem.

Other traders are flooded with the emotion of desire.  They look forward to what the day will produce.  They like the thrill of the chase.  They have a sense of unlimited potential and abundant opportunities for profit.  They anticipate improving their skills, intuition, and understanding as they go through the trading day and week.

Keep in mind that desire is not greed.  Greed is an inordinate wanting.  It is excessive desire and comes from a sense of scarcity, a feeling that there is not and will not be enough.  Desire is healthy: greed is unhealthy.

What you feel depends upon your mental focus.  Do you place your conscious and unconscious attention on the possibility of loss or the probability (hopefully) of gain?

What you hold in your conscious attention colors your reality and becomes the quality and fabric of your life and trading. In your life, do you look for what’s missing, or do you pay attention to what you have and can create?  Do you think about terrible things that have happened and could happen again, or do you think about wonderful experiences you’ve had and expect even better things ahead?  Trading is a microcosm of life.  What you do in life, you’ll do in trading. (more…)

10 Ways to Move From Peril to Profits

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #
  1. The first question to ask in any option trade is how much of my capital could I lose in the worst case scenario not how much can I make.
  2. Long options are tools that can be used to create asymmetric trades with a built in downside and unlimited upside.
  3. Short options should only be sold when the probabilities are deeply in your favor that they will expire worthless, also a small hedge can pay for itself in the long run.
  4. Understand that in long options you have to overcome the time priced into the premium to be profitable even if you are right on the direction of the move.
  5. Long  weekly deep-in-the-money options can be used like stock with much less out lay of capital.
  6. The reason that deeper in the money options have so little time and volatility priced in is becasue you are ensuring someones profits in that stock. That is where the risk is:intrinsic value, and that risk is on the buyer.
  7. When you buy out-of-the-money options understand that you must be right about direction, time period of move, and amount of move to make money. Also understand this is already priced in.
  8. When trading a high volatility event that price move will be priced into the option, after the event the option price will remove that volatility value and the option value will collapse. You can only make money through those events with options if the increase in intrinsic value increases enough to replace the vega value that comes out.
  9. Only trade in options with high volume so you do not lose a large amount of money on the bid/ask spread when entering and exiting trades.
  10. When used correctly options can be tools for managing risk, used incorrectly they can blow up your account. I suggest never risking more than 1% of your trading capital on any one option trade.

Negative Trading Behaviors

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

*Over Trading in Size *Jumping the Gun *Hesitating *Skipping Trades *Being in A Hurry * Trading without Proper Preparation *Getting Stuck in A Losing Trade *Whipsawing *Breaking Your Trading Rules *Shooting From the Hip * Over Interpreting *Discounting *Trading A  Scenario without Reference to Price *Trading Heedlessly *Trading Wildly *Abandoning Your Trading Plan *Not having A Trading Plan *Switching Strategies Frequently *Not having  A Proven Strategy *Not Pulling the Trigger *Not Believing the Evidence the Market Provides *Blindly Believing   A story you tell yourself *Blindly Believing A story somebody else tells you *Becoming Impulsive.*Not Verifying A System Or Method Before you trade it.*Over Researching *Using Trading as a Spectator Sport *Jumping in before you think *Trading too Big *Grabbing Profits too soon.*Getting Careless *Being too Careful *Not adding to A Winning Trade.*Trading Heavier when losing *Forcing  trades *Getting Trigger Happy *Gulping Profits too soon *Adding to A losing Trade.*Overtrading  in terms of Frequency *Sticking with A Losing system *Sticking with A Broker that gives you bad Fills.*Not Making Trading A Priority*Worrying what others will think.*Trading with borrowed Money.*Trading with Money you need to live on*Holding Unrealistic Expectations.*Engaging in Negative and Destructive Self talk*Becoming Despondent about your trading results.*Wanting certainty before you trade.*Disregarding Probabilities*Fooling Yourself about your Trading.*Not keeping Proper Records*Not Acknowledging Mistakes.*Not Learning from Mistakes.*Repeating Mistakes*Engaging in Self Pity* Blaming Others *Getting Envious of other traders *Giving Up periodically *Resisting loss* Feeling shame for loss *Lying and Covering up results *Becoming pessimistic about the future of your trading * Being Unrealistic about your present trading &Tying self worth to trading * Bragging about Trading * Being Unduly Secretive  about trading * Using  trading to inflate your ego *Letting trading interfere with A full and Balanced life *Letting life interfere with A Full  and Balanced trading *Using trading to avoid living *Doing anything Unethical regarding your trading *Doing what Doesn’t work *Not continuing to do what does work *Getting Reckless & Getting Overcautious * Letting others put your down Re your trading * Waiting to Respect yourself untill you succeed with trading*Being Unorganized in your efforts * Trading for the sake of trading *Letting Distractions take your attention away from trading * Not Specializing *Not executing with precision *Forgetting to cancel stops after a trade is off*Fighting Yourself *Fighting the Market *Fighting Your Methods *Making careless errors & Personifying the Market *Projecting your own feelings on the market.

-Other

Go over each of the Behaviors you have checked and scale them from 1 to 10 as to severity.Let 10 represent the most harmful to your trading.

Master Talk Presents…William Eckhardt!

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

“One adage that is completely wrongheaded is that you can’t go broke taking profits. That’s precisely how many traders do go broke. While amateurs go broke taking large losses, professionals go broke by taking small profits. What feels good is often the wrong thing to do. Human nature does not operate to maximize gain but rather to maximize the chance of a gain. The desire to maximize the number of winning trades (or minimize the number of losing trades) works against the trader. The success rate of trades is the least important performance statistic and may even be inversely related to performance. Two of the cardinal sins of trading – giving losses too much rope and taking profits prematurely – are both attempts to make current positions more likely to succeed, to the severe detriment of long-term performance. Don’t think about what the market’s going to do; you have absolutely no control over that.
Think about what you’re going to do if it gets there. It is a common notion that after you have profits from your original equity, you can start taking even greater risks because now you are playing with “their money”. We are sure you have heard this.
Once you have profit, you’re playing with “their money”. It’s a comforting thought. It certainly can’t be as bad to lose “their money” as “yours”? Right? Wrong. Why should it matter whom the money used to belong to? What matters is who it belongs to now and what to do about it. And in this case it all belongs to you.”

5 Major Trading Pitfalls you must avoid at all costs!

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

5pitfallsPitfall #1. Betting the farm. Let’s be realistic. Not every trade is going to be a winner. Here is a simple rule for you to remember. Never commit more than 10% to any one position. When I was trading in the pits in Chicago I heard for the first time about the “RIOTRADE”. Simply put, you take a huge position in the market. If it works out, you are a hero. If you lose, you leave home and head for Brazil. Again, NEVER BET THE FARM ON ANY POSITION.

Pitfall #2. Planting too few seeds. This one goes hand in hand with the first pitfall. The key here is diversification and following several markets. Ken watches 30 markets and looks for profit opportunities in each one as they occur. PLANT MORE SEEDS AND YOU CAN ENJOY MORE WINNERS.

Pitfall #3. Jumping the gun. Patience, patience, patience. This is perhaps one of the toughest things for traders to remember, particularly after they have taken some good money out of the market. JUMPING INTO A MARKET BEFORE ALL INDICATORS ARE POSITIVE CAN CAUSE UNNECESSARY LOSSES. (more…)

Go to top