Archives of “reflection” tag

rss

Six Insights for Disciplined Trading

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

1) Trading is a probability game.  You can’t be a perfectionist and expect to be a great trader. Your losses (that you hope will return to breakeven) will kill you.

2) Jumping in too soon or getting in too late.  These mistakes come from traders not having a well-defined plan of how they will enter the market.  This positions the trader as a reactive trader instead of a proactive trader, which increase the level of emotion the trader will feel in reacting to market movements.  A written plan helps make a trader more systematic and objective, and reduces the risk that emotions will cause the trader to deviate from his plan.

3) Not taking profits on winners and letting winners turn to losers.  Again this is a function of not having a properly thought-out plan.  Entries are easy but exits are hard.  You must have a plan for how you will exit the market, both on your winners and your losers.  Then your job as a trader becomes to execute your plan precisely.

4) Great traders don’t place their own expectations on to the market’s behavior.  Poor traders expect the market to give them something.  When conditions change, a smart trader will recognize that, and take what the market gives. 

5) Emotional pain comes from expectations not being realized.  When you expect something, and it doesn’t deliver as expected, what occurs? Disappointment.  By not having expectations of the market, you are not setting yourself up for this inner turmoil.  Douglas states that the market doesn’t generate pain or pleasure inherently; the market only generates upticks and downticks.  It is how we perceive and respond to these upticks and downticks that determine how we feel.  This perception and feeling is a function of our beliefs.  If you’re still feeling pain when taking a loss according to your plan, you are still experiencing a belief that your loss is somehow a negative reflection on you personally. 

6) The Four Major Fears – fear of losing money, being wrong, missing out, leaving money on the table.  All of these fears result from thinking you know what will happen next. Your trading plan must approach trading as a probabilities game, where you know in advance you will win some and lose some, but that the odds will be in your favor over time.  If you approach trading thinking that you can’t take a loss, then take three losses in a row (which is to be expected in most trading methods), you will be emotionally devastated and will give up on your plan.

It's not the trade, it's the battle

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

Too many traders believe that their last trade is a reflection of just how good of a trader they are (but they are the only ones who feel that way about themselves). This boils down to one word – expectation. If you expect to win all the time, or even the vast majority of the time, you’re setting yourself up for a lot of heartache. That frustration, though, is the very same force that will truly make your negative perception of yourself a reality. And even a good trade can be damaging if you let it warp your disciplined approach. The fact of the matter is that this is a game of odds, and should be played over a long period of time. Focus on the war – not the battle.

What Kind of Person is Best Suited to Trading?

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

Great traders have a few personality traits that do give them a natural advantage.  That’s not to say you can’t succeed without them, just that it’ll be an uphill battle and a greater degree of reflection and self-correction will be required.  The trader with the best chance of success will be –

Independent.  Being happy with a good deal of autonomy will allow you to confidently execute your plan without needing 25 people to concur with your analysis.  Trading is a solitary game, and you need to be able to thrive on your own, to a large extent.  Support is great but when it comes down to it, it’s all up to you.

Decisive.  If you take hours to do something simple like choose a burger off a menu, the odds of you being able to see a trade set-up and coolly pull the trigger are greatly diminished.  Especially if you trade short time-frames that can be the difference between success and failure.

Insightful.  If a trader can honestly look at their skills, motivations and short-comings and actively work to rectify them, they have the tools to over-come nearly anything the market throws their way. (more…)

12 Quotes From ‘Trading In The Zone

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


I spent hours reading and re-reading this book, and eventually made a summary of all the key quotes.  In a series of posts I’ll be sharing these quotes with you, and hopefully they will inspire you to take your trading to the next level.  I hope you enjoy my first selections:    
1.  You will need to learn how to adjust your attitudes and beliefs about trading in such a way that you can trade without the slightest bit of fear, but at the same time keep a framework in place that does not allow you to become reckless.
2. Trading is an activity that offers the individual unlimited freedom of creative expression.
3. The unlimited characteristics of the trading environment require that we act with some degree of restraint and self-control, at least if we want to create some measure of consistent success.
4. The hard reality of trading is that, if you want to create consistency, you have to start from the premise that no matter what the outcome, you are completely responsible.
5. One of the principal reasons so many successful people have failed miserably at trading is that their success is partly attributable to their superior ability to manipulate and control the social environment, to respond to what they want.  (Unfortunately) the market doesn’t respond to control and manipulation (unless you’re a very large trader).
6. The tools you will use to create this new version of yourself are your willingness and desire to learn, fuelled by your passion to be successful.  Successful traders have virtually eliminated the effects of fear and recklessness from their trading.
7. Attitude produces better overall results than analysis or technique. (more…)

Aim Small, Miss Small

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

As many of you already know, one of the biggest factors in successful trading is how well you manage the trade – that is the stop-losses you place, the amount of capital that you put to work, where you take profits, and how you protect the profits that you already have. You could, no doubt, write many books on each of these subjects, but for now, I’m going to focus on a small, but critical aspect of risk-management and my inspiration comes from the movie “The Patriot”, which happens to be one of my favorite movies of all time.

In the clip below, Benjamin Martin (the father) asks his two young boys, “What Did I tell ya ‘fellas about shooting?” and they replied, “Aim Small, Miss Small”. Every time I hear those words I tell myself how true they ring across so many spectrums of life. As an avid hunter, if you just aim the gun at the direction of the game you are targeting, you are bound to miss. However, if you pick out a tiny, specific area of the animal, whether its the upper-right side of the chest, or some other smaller area, you have a much better chance of hitting your target. In fact, the smaller the target area, the lesser amount of margin for error you have in missing.

So how does this apply to trading, you must be asking? The stop-loss that we set in relation to our entry price is a reflection of our “Trading-Aim”

When I trade, I look for setups that are as close as possible to a desirable stop-loss. By desirable, that means I’m not just picking a spot that is 1 or 2% from my entry price for the sake of it being so, instead, if I am long, I am going to look to place a stop-loss somewhere underneath a critical support level, and if I am short, then I am going to place a stop just above an area of resistance. So the place that I choose for my stop-loss is that of a strategic area and a point to where I know, that if it hits the stop, I know that my thesis is no longer valid and therefore, I must exit the trade. (more…)

Lifestyle & Improvement

  
Education, Life
#  #  #  #  #  #  #  #  #  #  #  #  #  #

  • 63 ways to build more confidence (LifeHack)

  • Ways to live forever (James Altucher)

  • What not to say when pulled over by a cop (Chris Rock)

  • How to simplify your life (Frugal Zeitgeist)

  • The minimalist’s guide to cultivating passion (Zen Habits)

  • How great leaders inspire action (Ted)

  • Success in most arenas of life is thus not a reflection of innate skill but rather devoted effort (Peter Orszag)

Confidence: How to Apply the Goldilocks Principle as a Trader Read more

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

An absolutely crucial characteristic all successful traders share is confidence. Success is only achieved when a trader has the confidence to execute his ideas without being overcome by emotional fears. I believe that creating a game plan and sticking to it will foster confidence in the long run because the trader defines all aspects of his trade that he can control; the rest is left to the market. Confidence based on winning trades is fleeting, but confidence based on the ability to objectively execute ideas leads to long-term, unbreakable confidence.
Yet I often see two primary psychological problems that traders experience with regard to confidence. There is overconfidence and underconfidence, both of which lead to very serious complications in one’s trading. Overconfidence occurs when the trader has had a string of winners and feels indestructible. A common statement of reflection once destruction occurs is usually something like: “I thought I knew more than the markets” or “I thought I had trading all figured out.” The trader usually begins to get sloppy in their trading and takes poor risk/reward trades, believing it will just work out for them. Hard-earned profits can disappear in a very short time if overconfidence is present — unless the trader has learned the techniques to recognize this and nip it in the bud quickly. (more…)

It's not the trade, it's the battle.

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

Too many traders believe that their last trade is a reflection of just how good of a trader they are (but they are the only ones who feel that way about themselves). This boils down to one word – expectation. If you expect to win all the time, or even the vast majority of the time, you’re setting yourself up for a lot of heartache. That frustration, though, is the very same force that will truly make your negative perception of yourself a reality. And even a good trade can be damaging if you let it warp your disciplined approach. The fact of the matter is that this is a game of odds, and should be played over a long period of time. Focus on the war – not the battle.

12 Quotes From ‘Trading In The Zone'

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

1. Attitude produces better overall results than analysis or technique.

2. Positive winning attitude = expecting a positive result from your efforts, with an acceptance that whatever results you get are a perfect reflection of your level of development and what you need to learn to get better.

3. Winning in any endeavour is mostly a function of attitude.

4. Losing and being wrong are inevitable realities of trading.

5. The market has no responsibility towards the individual trader. Taking responsibility means acknowledging and accepting, at the deepest part of your identity, that you – not the market – are completely responsible for your success or failure as a trader.

6. If you perceive the endless stream of opportunities to enter and exit trades without self-criticism and regret, then you will be in the best frame of mind to act in your own best interest and learn from your experiences.

7.  You will need to learn how to adjust your attitudes and beliefs about trading in such a way that you can trade without the slightest bit of fear, but at the same time keep a framework in place that does not allow you to become reckless.

8. Trading is an activity that offers the individual unlimited freedom of creative expression.

9. The unlimited characteristics of the trading environment require that we act with some degree of restraint and self-control, at least if we want to create some measure of consistent success.

10. The hard reality of trading is that, if you want to create consistency, you have to start from the premise that no matter what the outcome, you are completely responsible.

11. One of the principal reasons so many successful people have failed miserably at trading is that their success is partly attributable to their superior ability to manipulate and control the social environment, to respond to what they want.  (Unfortunately) the market doesn’t respond to control and manipulation (unless you’re a very large trader).

12. The tools you will use to create this new version of yourself are your willingness and desire to learn, fuelled by your passion to be successful.  Successful traders have virtually eliminated the effects of fear and recklessness from their trading.

Selflessness

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

main_teresaThe markets are nothing more than a reflection of cumulative sum of human reactions to financial data inflow. As a trader, you are part of it, and millions like you create that entity that appears to be moving so intelligently in all time frames.
So how it is possible that you and millions like you can create the greatest illusionist, the market, and ironically fight against it in every moment of your trading life.
In other words, the market becomes the ultimate enemy of yours and you fight it all the time? As an unit reflection of the market’s image, can you defeat yourself?
Your fight can only be as good as your best, but you create your enemy with your best as well.
That is why this is an endless game because no one can win it all the time as no one can keep beating himself all the time… UNLESS YOU ARE A SELFLESS PERSON. (more…)

Go to top