What did we do differently on those successful occasions?
* I have planned the trade well in advance with research; it is not a spontaneous trade, so I’ve had time to think clearly about what I want to do.
* I have a clear profit target in mind based on research and refuse to waver from that target unless the market takes me out with a predefined stop. I consider myself a person of integrity, so I tell myself that I have to show integrity and loyalty to my trade idea and target;
* I don’t follow the position tick for tick. Either the trade will hit my target or it will hit my stop. I make a conscious effort to let go and not micromanage the trade;
* I keep myself calm and clearly focused by purposely getting up from my chair, doing some stretches, breathing deeply, and getting away from the screen. I keep myself in a state that is incompatible with anxiety;
* I rehearse constructive self-talk during the trade. I tell myself that I’ve done my preparation and established my edge. Any individual trade can go against me, but if I take all the good trades I can, eventually I’ll benefit from good odds and a good risk-reward ratio. If I lose money on the trade, I’ll figure out why and what that might be telling me about the current market. (more…)
Archives of “profits” tag
rssNicolas Darvas Quotes
Discipline:
“I knew now that I had to keep rigidly to the system I had carved out for myself.”
Risk/Reward:
“I was successful in taking larger profits than losses in proportion to the amounts invested.”
Exiting profitable trades:
“I decided to let my stop-loss decide.”(Speaking on when to exit an up trending stock)
Bear Markets
“I also learned to stay out of bear markets unless my individual stocks remain in their boxes or advance.” (more…)
Trade Your Plan
Trading is a journey and a competitive activity. Why would you not plan your trades? Are you relying on someone else to plan them for you? Are you thinking there is something magical about the markets and all you have to do is click the mouse or call your broker and money flows into your account? If any of these are true, you are setting yourself up for failure.
Make a plan. This plan is what resonates with your brain structure, trading personality and money attitudes. Make it as simple as possible and then trade it consistently, day after day. If the plan is not working, change it until you get one that works for you. If it is working and generating profits for you, keep it. Don’t try to fatten it up, give it more bells and whistles or get greedy with it. If it’s broken, fix it and if it isn’t then leave it alone. Keep it simple and keep going with it.
Look at your plan every night after the market close. Write down how it worked for you that day and then contemplate and write down how you will use it the next day. In your nightly preparations and your preparations before the market opens, review your plan, Ensure that you are ready to execute, that you know what you are going to do, when you are going to do it, and then just do it—then execute ruthlessly. This is one way to empower yourself and grow in confidence as a trader. Winning in the markets, sports, business and life is about superior positioning, planning, reviewing, reworking, and executing over and over again until you get it right in a way that is seamlessly competent.
TRADING DISCOMFORT
Causes of Trading Discomfort
Discomfort in trading usually comes in two forms and both have micro and macro causes.
Monetary Discomfort – Just like it sounds, this is where you are uncomfortable because you are losing money.
This can happen simply because you have a position with an open loss that is beyond your comfort level, or it can have more a more complex genesis.
Are you down big for the year in your trading account? Are you in financial trouble in your regular life? Is the mortgage payment coming due and your trading profits are the funds you have to use to pay it?
Control Discomfort – This where you feel discomfort not because of the monetary loss, but because the trade is “not doing what it is supposed to.”
This could be the result of a choppy day where every trade you attempt, no matter long or short, reverses against you.
Or once again it could be a related to larger issue. Are you the type of person that always needs to be in control in your life? Do you have an obsession with always being “right?” Is the world a place that would be better off if it listened to your opinions DAMMIT? (more…)
What is important in trading
Trade with your personality
Regardless of what has been working for other people, you have to trade a system that suits your personality. It either has to compliment your strengths, overcome your weaknesses or both. That is not to say that a system that someone else creates cannot work for you, but you have to figure our your own unique way of trading it.
You have to have an edge
You have to have a specific, definable edge over the market. Like with any other endeavor, if you are not skilled, you will not do well. The best traders understand the edge that they have over the markets and constantly exploit it for profit.
Work hard, work smart
All of the top traders worked hard to refine their technique and constantly improve themselves in order to become better traders. It is not only about putting in a lot of hours, it is also about being open to ways of improving that may seem foreign or strange at the beginning.
No loyalty to a position
Top traders know how to cut losses short and take profits when the target is hit. They don’t get too excited about a position and make a business decision to take the profit or take the loss, based on the parameters of their system.
49 Trading Rules for Traders
- Usually they liquidate the good trades and keep the bad ones. Many traders don’t realize the news they hear and read has, in many cases, already been discounted by the market.
- After several profitable trades, many speculators become wild and unconservative. They base their trades on hunches and long shots, rather than sound fundamental and technical reasoning, or put their money into one deal that “can’t fail.”
- Traders often try to carry too big a position with too little capital, and trade too frequently for the size of the account.
- Some traders try to “beat the market” by day-trading, nervous scalping, and getting greedy.
- They fail to pre-define risk, add to a losing position, and fail to use stops.
- They frequently have a directional bias; for example, always wanting to be long.
- Lack of experience in the market causes many traders to become emotionally and/or financially committed to one trade, and unwilling or unable to take a loss. They may be unable to admit they have made a mistake, or they look at the market in too short a timeframe.
- They overtrade.
- Many traders can’t (or don’t) take the small losses. They often stick with a loser until it really hurts, then take the loss. This is an undisciplined approach…a trader needs to develop and stick with a system.
- Many traders get a fundamental case and hang onto it, even after the market technically turns. Only believe fundamentals as long as the technical signals follow. Both must agree.
- Many traders break a cardinal rule: “Cut losses short. Let profits run.”
- Many people trade with their hearts instead of their heads. For some traders, adversity (or success) distorts judgment. That’s why they should have a plan first, and stick to it.
- Often traders have bad timing, and not enough capital to survive the shake out.
- Too many traders perceive futures markets as an intuitive arena. The inability to distinguish between price fluctuations which reflect a fundamental change and those which represent an interim change often causes losses.
- Not following a disciplined trading program leads to accepting large losses and small profits. Many traders do not define offensive and defensive plans when an initial position is taken.
- Emotion makes many traders hold a loser too long. Many traders don’t discipline themselves to take small losses and big gains.
- Too many traders are underfinanced, and get washed out at the extremes.
- Greed causes some traders to allow profits to dwindle into losses while hoping for larger profits. This is really lack of discipline. Also, having too many trades on at one time and overtrading for the amount of capital involved can stem from greed.
- Trying to trade inactive markets is dangerous.
- Taking too big a risk with too little profit potential is a sure way to losses. (more…)
The Right frame of Mind
The psychology of the trader plays a very important role in his trading decisions and style. The best traders keep their sentiments (greed and fear) out of their analysis and decide to trade with clear mind. Follow the advices below and you will notice a great deal of improvement in your trading style.
Never trade when your mind is occupied with other things. Try to be concentrated on the market. Try to feel the market, that is the Market Sentiment. When you feel overwhelmed of the information in your head, take a break. Then come back with clearer mind. Do not be trigger happy with your trades and always have a trading plan. Follow your Forex system with discipline. Apply the rules of Money Management with care. Always mind your loses! Then let the profits come. Stop loss orders are there to save you by yourself. Always use them and never stay on a false trade just to feed your ego. Ego never makes money! Even the best traders are often wrong. But market is always right!
The best traders have the vigilance to realize the market sentiment quickly and ride the market in the right position. Even when they are wrong at first, they quickly change their posiotions when they realize it!
d your ego. Ego never makes money! Even the best traders are often wrong. But market is always right!
The best traders have the vigilance to realize the market sentiment quickly and ride the market in the right position. Even when they are wrong at first, they quickly change their posiotions when they realize it!
31 Trading Rules
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Self Improvement
If you are having trouble achieving your trading goals, take time out to examine the real causes of your problems. Working towards improvement will take a dedicated approach on your part. Identification of the problems are the first step. Attacking the problems one at a time is the first part of the solution. Doing the right thing at the right time based on the information you have should be your goal. Sit down and have an in depth talk with yourself and ask yourself some hard questions. For example: – do I have the emotional makeup necessary for this business? – do I have the financial reserves so that I am not relying on trading to pay the bills while I learn? – do I really enjoy doing this? Coming up with honest answers will be the only way to ultimately overcome issues that keep getting in your way. If you keep doing the same things, you will keep getting the same results, so you’ll need to change. Plain and simple. Best not to delay in sorting things out.
Waiting for the right moment to enter and exit definitely comes with experience. Correct order execution, taking profits when they are offered and cutting losers are also vital to your success.
My mind is not bogged down by indicators, rumours, conjecture or analyst’ reports. It is much easier for me then to concentrate on what really matters – recognizing what the charts are telling me and acting on this information.
Concentrate on the problems you might have. Hesitation, taking big losers, selling winners to soon, screwing up order entry, racing heart and sweaty palms. (more…)
Trading Rules: Strategies For Success
1. Divide your trading capital into ten equal risk segments
2. Use a two-step order process
3. Don’t overtrade
4. Never let a profit turn into a loss
5. Trade with the trend
6. If you don’t know what’s going on, don’t do anything
7. Tips don’t make you any money
8. Use the right order to get into the markets
9. Don’t be whimsical about closing out your trades
10. Withdraw a portion of your profits
11. Don’t buy a stock only to obtain a dividend
12. Don’t average your losses
13. Take big profits and small losses
14. Go for the long pull as an outside speculator
15. Sell shorts as often as you go long
16. Don’t buy something because it is low priced
17. Pyramid correctly, if at all
18. Decrease your trading after a series of successes
19. Don’t formulate new opinions during market hours
20. Don’t follow the crowd – they are usually wrong
21. Don’t watch or trade too many markets at once
22. Buy the rumor, sell the fact
23. Take windfall profits when you get them
24. Keep charts current
25. Preserve your capital
26. Nothing new ever occurs in the markets
27. Money cannot be made every day from the markets
28. Back your opinions with cash when they are confirmed by market action
29. Markets are never wrong, opinions often are
30. A good trade is profitable right from the start
31. As long as a market is acting right, don’t rush to take profits
32. Never permit speculative ventures to turn into investments
33. Don’t try to predetermine your profits
34. Never buy a stock because it has a big decline from its previous high, nor sell a stock because it is high priced
35. Become a buyer as soon as a stock makes new highs after a normal reaction
36. The human side of every person is the greatest enemy to successful trading
37. Ban wishful thinking in the markets
38. Big movements take time to develop
39. Don’t be too curious about the reasons behind the moves
40. Look for reasonable profits
41. If you can’t make money trading the leading issues, you aren’t going to make it trading the overall markets
42. Leaders of today may not be the leaders of tomorrow
43. Trade the active stocks and futures
44. Avoid discretionary accounts and partnership trading accounts
45. Bear markets have no supports and bull markets have no resistance
46. The smarter you are, the longer it takes
47. It is harder to get out of a trade than to get into one
48. Don’t talk about what you’re doing in the markets
49. When time is up, markets must reverse
50. Control what you can, manage what you cannot