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Trading Rules – For A Survival Of The Trader

  
  Education
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1. Plan your trade. Trade under the plan.

2. Write down your results.

3. Keep positive mood irrespective of your losses.

4. Do not bring the market from work to home.

5. Constantly raise level of your purposes.

6. Buy during bad news and sell during good.

7. Do not be afraid to buy at high position and to sell at low.

8. Always have well planned time for market studying.

9. Isolate yourself from opinions of others.

10. Always be quiet, persevering and consecutive; operate rationally.

11. Never enter into the market because you are bored to be out of the market. To be out of a position is also a position.

12. It is not necessary to enter and leave from the market too frequent.

13. Traders usually study not at profits, but at losses. Study every loss for improvement of the knowledge about the market.

14. Successful trading is combined and often accompanied by negative emotions. The most important element of successful trade is you are.

15. Always discipline yourself to follow certain rules in advance.

16. Do not allow big profits to turn in big losses

17. You should have the plan, you should know the plan – and you should follow it.

18. Perceive losses with advantage.

19. Halve your profit and never risk more than 50 % of profit operating against the market.

20. A key to successful trade – self-studying.

21. There is no so much distinction between getting in the market and losing there in natural abilities, that in ability to study the errors correctly. (more…)

Traders’ Discipline

  
  Education
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disciplinetraderTop daytraders have the discipline to follow their daytrading system rigorously, because they know that only the trades that are signaled by their system have a greater rate of success. Matching a method of trading with your personality is the only way you will ever feel comfortable in the markets. Some websites have sought to profit from day traders by offering them hot tips and stock picks for a fee.

Day trading is an investment tactic with a relatively short investment. You need to position yourself so that you can endure long strings of losses, and maintain your day trading system. (more…)

Bill Lipschutz :Trading Quotes

  
  Education
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Missing an opportunity is as bad as being on the wrong side of a trade. Some people say (after they have the opportunity to realize a profit) “I was only playing with the market’s money.” That’s the most ridiculous thing I ever heard.

When you’re in a losing streak, your ability to properly assimilate and analyze information starts to become distorted because of the impairment of the confidence factor, which is a by-product of a losing streak. You have to work very hard to restore that confidence, and cutting back trading size helps achieve that goal.

I don’t have a problem letting my profits run, which many traders do. You have to be able to let your profits run. I don’t think you can consistently be a winner trading if you’re banking on being right more than 50 percent of the time. You have to figure out how to make money by being right only 20 to 30 percent of the time.

Successful traders constantly ask themselves: What am I doing right? What am I doing wrong? How can I do what I am doing better? How can I get more information? Courage is a quality important to excel as a trader. It’s not enough to simply have the insight to see something apart from the rest of the crowd, you also need to have the courage to act on it and stay with it.

It’s very difficult to be different from the rest of the crowd the majority of the time, which by definition is what you’re doing if you’re a successful trader.

So many people want the positive rewards of being a successful trader without being willing to go through the commitment and pain. And there’s a lot of pain.

Avoid the temptation of wanting to be completely right.


Traders' Resolutions for the New Year-2013

  
  Education
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What are our top trading resolutions for 2013?

D  iscipline
R  esults
I  ntegrity
V  ictory (Over Emotions)
E  ducation

Discipline

Most traders could benefit from being more disciplined with their trading. Discipline in trading takes many forms. But it can be summarized as just doing what we know needs to be done.
For example, a common New Year’s resolution is to lose weight. Losing weight is simple in theory—we just need to eat healthy foods and exercise more. Just say no to the doughnut and yes to the salad—simple! Of course, sticking to your plan is anything but easy, which is where discipline comes into play. Just do what we know needs to be done.
If I could target only two things to be more disciplined in next year’s trading they would be:

  1. Cut losing trades: Do everything to keep losses small.
  2. Let profits run: Don’t fall prey to the fear of a small profit slipping away. (more…)

Evaluating Yourself as a Trader

  
  Education
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FAILSIGN1) What is the quality of your self-talk while trading?

2) What work do you do on yourself and your trading while the market is closed?

3) How would your trading profit/loss profile change if you eliminated a few days where you lacked proper risk control?

4) Does the size of your positions reflect the opportunity you see in the market?

5) Are trading losses often followed by further trading losses due to frustration?

6) Do you cut winning trades short because, deep inside, you don’t think you’ll be able to achieve large profits?

7) Is trading making you happy, proud, fulfilled, and content, or does it more often leave you feeling unhappy, guilty, frustrated, and dissatisfied?

8) Are you making trades because the market is giving you opportunity, or are you placing trades to fulfill needs–for excitement, self-esteem, recognition–that aren’t being met in the rest of your life? (more…)

A Thought Experiment

  
  Education
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Assume that only daytraders are left trading. Assume they all enter in direction of recent moves sometime after open. One would believe that they try to maximize profits by trailing or waiting til near close to close position, then on close close position and pull orders. What would market result be? I am guessing something like today’s price action might result. It is difficult to verify this, but perhaps the assumption is not too far off or just a case of fitting the theory to the facts after the fact?

Greed

  
  Education
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There was a scorpion, who wanted to cross a river, but cannot as he could not swim.
He asked a frog to carry him across a river. 
The frog was afraid of being stung, but the scorpion reassures him that if it stung, the frog would sink and the scorpion would drown as well. 
The logic appeals to the Frog, So he then agrees; nevertheless, in mid-river, the scorpion stings him, dooming them both.
When asked why, the scorpion explains, “I’m a scorpion; it’s my nature.”

To let profits run, need to keep Greed at bay, else it will Sting in each and every trade.

Hallmark of a Position Day Trader

  
  Education
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  • Routine and Predictable daily methodology
  • Psychological Control: Discipline, Focus, Patience
  • Macro vs Micro Market Analysis … seeing the Big Picture
  • Comprehensive intraday Hit List analysis
  • Multiple intraday Set-up opportunities
  • Various chart pattern recognition … low risk opportunities
  • Capital preservation = risking less than 50% maximum stop loss.
  • Expectation & Time Exits: Scalp, Breakeven, Profit Target, Let Profits Run
  • Trading Execution Commitment: honoring Set-up signals, not P&L

    • 4 Trading Mistakes

      
      Education
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    1.  Do the Math
     

    Sit down and go over your expected Risk to Reward Ratio for each trade.  If you have already been trading for a period of time sit down and analyse how much you are making each trade and your winning %.  These two numbers will help you formulate a solid profit goal.  No trading strategy works 100% of the time so you need to work out how much you lose per losing trade vs. how much you make per winning trade and then figure in your percentages.  From there you should have a realistic idea of how much you can expect to make in through your trading. 

    2.  Don’t Expect Instant Returns
     

    Trading is a business and like any other business it requires not only capital investment but time investment as well.  It takes time to find your rhythm and develop your trading skills.  Try not to be to hard on yourself during the learning phase and remember to focus on the positive aspects of your trading.  The vast majority of traders lose money and this number is even higher with traders who are just starting out.  Factor this in when you are setting your goals.

    3.  Skill vs. Profits
     

    Try to come up with goals that are not directly tied to your P&L statements.  For example, set a goal of following your rules for every trade for an entire trading day.  Once that is completed shoot for an entire week, then a month, and pretty soon you will be doing following your rules without even realising it.   Train yourself to develop your trading skills and reward yourself when you reach those goals. 

    4.  It Takes Money
     

    It takes money to make money.  Small accounts are fantastic for testing out whether or not trading is for you but when you get serious and want to go full time make sure you have enough capital to support your business.  Solid traders should expect to make 8% in the market over the course of a month.  That equates to 96% over a given trading year.  Make sure this figure allows you to have the lifestyle that you are expecting. 

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