Archives of “rhythm” tag

rss

Trading and Tennis

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

The accompanying comments  were inspired from Brad Gilbert‘s book,  Winning  Ugly, which was written about tennis. There are many parallels between tennis and trading, both being individual performance disciplines. 

And on that last note, remember that ATTITUDE is everything. How you frame out an individual experience or event will affect your success in the long run. Do you see a trading loss or bad drawdown period as a major setback, or do you see it as a learning experience from which you can figure out how to be on the RIGHT 

The accompanying comments (see sidebar) were inspired from Brad Gilbert‘s book,  Winning  Ugly, which was written about tennis. There are many parallels between tennis and trading, both being individual performance disciplines.

 

 

And on that last note, remember that ATTITUDE is everything. How you frame out an individual experience or event will affect your success in the long run. Do you see a trading loss or bad drawdown period as a major setback, or do you see it as a learning experience from which you can figure out how to be on the RIGHT

●     Desire. The most successful players are the ones who have a burning desire to win.

●     Defy Failure! Don’t check out of the game. Never give up!

●     Consistency. Improve your consistency. Stay active, stay involved, and keep your feet moving.

●     Patience. Be patient. Do not force a trade that isn’t there. Wait for the play to set up.

●     Management. When you get a good trade, go for it.

Manage it. Trail a stop. Don’t be too eager to get out.

●     Flexibility. Be flexible – if what you are doing isn’t working, change what you are doing!

●     Confidence. When down, get a little rhythm and confidence going. Don’t worry about being too ambitious.

●     Concentration. Stay with your game. Don’t let outside distractions bother you. They take energy and break your concentration.

●     Know Yourself. Match your particular strengths to the type of market conditions.

●     Clean Up Your Act. Hate making stupid mistakes and unforced errors. This includes not getting out of a bad trade when you know you are wrong.

●     Stay Positive. Many players will play their best game when they are coming from behind.

TRADING EMOTIONS

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

The hardest thing to master as a trader once you understand Market Rhythm is not the market, it is YOU. Emotional trading will break you fast.

Trading is not hard, it is mastering your emotions that is. Trading will teach you more about your human short coming than visiting a psychiatrist. As a trader, you must learn the discipline of waiting for proper market set-ups. That is hard!

Your EMOTIONS are screaming for you to jump in or you will miss out. NOT TRUE!! If you miss one trade set-up, the market is generous and will give you another. Learn to trade in harmony with your trend and with proper signals.

The emotions that are deadly to your trading success.

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. (more…)

The Right Side

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

A quote from one the best traders of our time, Jesse Livermore: “It takes a man a long time to learn all the lessons of all his mistakes. They say there are two sides to everything. But there is only one side to the stock market; and it is not the bull side or the bear side, but the right side. It took me longer to get that general principle fixed firmly in my mind than it did most of the more technical phases of the game of stock speculation.”

Being a bull or a bear alone is meaningless out of the crucial context of the current market conditions. All that really matters for the great game of speculation is being on the “right side”, knowing when the markets are in a bull or a bear trend and deploying your speculative capital accordingly.

Once again Livermore ties speculation back into the speculator’s own internal emotions. He points out that it makes no sense to be bullish or bearish as a rule, but to carefully watch the market conditions in order to be on “the right side” at any given moment. Most speculators are burdened with an innate emotional bias to be bullish that is dangerous and must be eradicated if they wish to succeed in speculation. (more…)

7 More Trading Lessons for Traders

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #
  1. You don’t choose the stock market; it chooses you.  A little bit of early trading success can have a profound effect on a person’s soul.  If it does choose you, you’ll have to accept that your life and investing will become forever connected.
  2. Your methodology must provide an unshakeable foundation that you believe in totally, and you must have the conviction to trade based upon it.   If your belief is tentative or if you don’t have complete faith in your methodology, then a few bad trades will destabilize and erode your confidence. 
  3. A calm mindset that can focus on the execution and not on the outcome is what produces profits.  It takes total emotional control.  You must maintain your balance, rhythm and patience.  You need all three to stay in the game.
  4. The markets are always conniving with ingenious techniques to get you to lose your patience, to get you frustrated or mad, to bait you to do the wrong thing when you know you shouldn’t.  A champion doesn’t allow the markets to get under his skin and take him out of his game.
  5. Like a great painting, all good trades start with a blank canvas.  Winning traders first paint the trade in their mind’s eye so that their emotional selves can reproduce it accurately with clarity and consistency, void of emotions as they play it out in the markets.
  6. The “here and now” is all that matters.  You can’t think about the last trade or the last shot or worry about the future.  You need to put on your “amnesia hat” in order to remain completely unfazed by what came before.  Only by doing so can you be totally absorbed in executing your present trade.
  7. Being prepared and having put in the work results in the bringing together of your intuition and confidence.  The two go hand in hand.  Extraordinary results can be expected when you are able to see it, feel it and trust it. 

Effects of the Full Moon

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

The full moon was discussed many years ago on this site by Mr. McDonnell with respect to markets with results “consistent with randomness”. It would seem though that the day(s) after a full moon and particularly near the end of a difficult week might cause some sleep deficit effects to show in sensitive individuals–but perhaps extra coffee is used to counter such things.

“Blame Bad night’s Sleep on the Moon“:

Malcom von Schantz, a sleep and circadian researcher at the University of Surrey in the U.K., called the new findings “fascinating” because they run counter to the results of several other studies that failed to find a link between the moon and human behavior.

“Essentially, every report published to date has failed to show significant associations between the phase of the moon and any number of behavioral and physiological parameters,” von Schantz, who was not involved in the study, said in an email.”This is the very first report that suggests an association with one behavior, sleep, and of course it’s a behavior that in our species normally occurs at night.”

“Evidence That the Lunar Cycle Influences Human Sleep”:

We found that around full moon, electroencephalogram (EEG) delta activity during NREM sleep, an indicator of deep sleep, decreased by 30%, time to fall asleep increased by 5 min, and EEG-assessed total sleep duration was reduced by 20 min. These changes were associated with a decrease in subjective sleep quality and diminished endogenous melatonin levels. This is the first reliable evidence that a lunar rhythm can modulate sleep structure in humans when measured under the highly controlled conditions of a circadian laboratory study protocol without time cues.

7 Points for Traders

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

 

  1. You don’t choose the stock market; it chooses you.  A little bit of early trading success can have a profound effect on a person’s soul.  If it does choose you, you’ll have to accept that your life and investing will become forever connected.
  2. Your methodology must provide an unshakeable foundation that you believe in totally, and you must have the conviction to trade based upon it.   If your belief is tentative or if you don’t have complete faith in your methodology, then a few bad trades will destabilize and erode your confidence. 
  3. A calm mindset that can focus on the execution and not on the outcome is what produces profits.  It takes total emotional control.  You must maintain your balance, rhythm and patience.  You need all three to stay in the game.
  4. The markets are always conniving with ingenious techniques to get you to lose your patience, to get you frustrated or mad, to bait you to do the wrong thing when you know you shouldn’t.  A champion doesn’t allow the markets to get under his skin and take him out of his game.
  5. Like a great painting, all good trades start with a blank canvas.  Winning traders first paint the trade in their mind’s eye so that their emotional selves can reproduce it accurately with clarity and consistency, void of emotions as they play it out in the markets. (more…)

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…)

The Right Side

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

A quote from one the best traders of our time, Jesse Livermore: “It takes a man a long time to learn all the lessons of all his mistakes. They say there are two sides to everything. But there is only one side to the stock market; and it is not the bull side or the bear side, but the right side. It took me longer to get that general principle fixed firmly in my mind than it did most of the more technical phases of the game of stock speculation.”

Being a bull or a bear alone is meaningless out of the crucial context of the current market conditions. All that really matters for the great game of speculation is being on the “right side”, knowing when the markets are in a bull or a bear trend and deploying your speculative capital accordingly.

Once again Livermore ties speculation back into the speculator’s own internal emotions. He points out that it makes no sense to be bullish or bearish as a rule, but to carefully watch the market conditions in order to be on “the right side” at any given moment. Most speculators are burdened with an innate emotional bias to be bullish that is dangerous and must be eradicated if they wish to succeed in speculation.

A speculator must not foolishly try to bend the markets to his will, but instead prudently bend his will to the markets! If a bull trend is evident, be long. If a bear trend dominates, be short. An elite speculator doesn’t care at all which way the markets are moving, he just wants to be “right” and recognize the trend early enough to prudently deploy his own capital and be blessed to harvest profitable trades.

Forget the endless bull and bear arguments and don’t let any other speculators try to pigeonhole you into one of the two warring camps. Instead of being a perma-bull or perma-bear, instead strive to listen to the rhythm of the markets and simply be “right” about what is coming to pass next and trade accordingly.

Assessing Your level of Impatience

  
  Education
#  #  #  #  #  #  #  #  #
  • Do u wait for your Predetermined signal to exit a trade ?
  • Do u enter trades early with insufficient evidence ?
  • Do u change your trading plan after the market starts trading ?
  • Can u wait for the market to fill your at your price ?
  • Do u feel rushed or hurried as you trade ?
  • Do u sometimes trade just to have something to do ?
  • How does this help  or hurt your trading ?
  • One way to slow things down is to write each days’s trading plan in advance.
  • Set your firm intention to follow your plan.
  • At the first violation of the trading plan ,take a break ,and recommit to a steady application of the plan.

SUPPORTIVE BELIEFS :

  • Time is on my side
  • I have all the time I need to accomplish what I want.
  • The world is an abundant place.
  • The market is rich source of unending opportunity
  • I can be in alignment with the quiet part of me even as I watch the market.
  • The Market moves in its own rhythm ,and I can move fast or slow depending on it’s pace.
  • A person is able to create wealth slowly through trading.

4 Trading Mistakes

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

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. 

Go to top