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10 Signs You Might still be a New Trader

  
  Education
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  1. New Traders do not understand what all the fuss is about risk management and trader psychology they do not need all that they are special.

  2. New Traders believe there is some magic trading method that always wins, they search for the Holy Grail of trading.
  3. New Traders do not understand that the very best traders have strings of losses , losing months, and sometimes even losing years. They think rich traders always win.
  4. New Traders want to know what is going up or down, they focus on tips instead of the mechanics of trading.
  5. New Traders hand out advice freely to others, good traders realize that decisions are based on individual methods and do not give out tips.
  6. New Traders are looking for that one big winning trade to go all in on, good traders are trading good systems that they risk 1% per trade on.
  7. New Traders confuse bull markets for skill.
  8. New Traders confuse luck for skill.
  9. New Traders want advice, good traders want robust systems.
  10. New Traders run from method to method and from mentor to mentor after every losing streak, good traders know exactly who they are and what methods they trade.

 

The Four Elements Of Successful Trading. Do You have all Four?

  
  Education
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The Knowledge

If we don’t do the homework to know what we need to know we will fail due to ignorance. Understanding historical price action, reading books by and about the best traders, seminars, mentor-ships, and  systems testing is all part of the homework we must do to get the needed knowledge.

The Resources

While trading with a small account is a good place to start it is not a good place to stay. Traders must be adequately capitalized for meaningful trading. We must have an affordable broker that does not charge bloated commissions and gives great execution on orders. A trader must have a platform and charting service that is adequate for his trading style. Trading a small account with an expensive broker with poor execution is a path to eventual failure. (more…)

5 Mistakes Traders Make Again & Again

  
  Education
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There is a big difference between bad traders and good traders, here is what I think separates one from the other:

  1. Bad traders continually have the desire to short the hottest  stocks with the strongest momentum. What is their reasoning? “It can’t go any higher, this price is ridiculous.” Do they understand it is a bull market, no. Do they understand the technicals or fundamentals that are driving this stock? No. Bad traders just trade their beliefs good traders trade proven methods.
  2. Bad traders continually believe they have found the trade “That just can’t lose.” It is a sure thing. No doubt about it. They trade BIG, they trade a HUGE position size. Unfortunately the most obvious trades are usually the losing trades, so they lose, and lose big. Good traders divide out their trades so that no one trade has too big of an impact on their account. Good traders realize EVERY trade can win or lose so they plan a quick exit for if they are wrong.
  3. Bad traders do not do the proper homework before they begin to trade. Really  Bad traders enter the markets with a mile of ego along with mud puddle deep understanding of what really works in trading. Bad traders have the belief that they are more clever than the markets and they can win based on their own intelligence. The problem is they do not do the homework of studying charts, trends, robust systems, winning methods, the right psychology for winning traders, risk/reward ratios, or the danger of the risk of ruin, or how the top performing stocks acted historically, and on and on. The good traders learn what it takes to succeed in trading, the complete story, while the bad traders learn some basics and think they are ready. They are wrong. The markets will show them.
  4. Bad traders make low probability trades, they are where the profits come from for the good traders. They go short in bull markets and long in bear markets. They sell naked puts on stocks collapsing into death spirals and sell calls on the best momentum stocks. They trade with big risks for small profits. They have a few small wins but some really huge losses. When they have a winner they take the profits quickly, but if they have a loser they let it run hoping that it will come back. They are the ones that lose the money, they are on the other side of the good traders trades.
  5. Bad traders want a good tip. They just want to be handed a winning system or a hot stock that just can’t lose. They do not even understand what all the talk of trading psychology and risk management is all about. They don’t need all that, they just want to make money. They just want the fish, they do not care about the fishing pole, bait, boat, or how to fish. Unfortunately they were to busy looking for that fish and didn’t understand the art of fishing, they will drown in the market ocean because they never learned how to swim themselves.

10 Points for Traders

  
  Education
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  1. Capital flows from those who fight trends to those who follow them.10 HABITS

  2. In the long term money flows to those who manage risk and are able to hold on to their profits from those who don’t manage risk. 
  3. Traders that persevere through the learning curve stick around long enough to make money from those that just trade with no understanding of what they are doing.
  4. Robust systems take money from traders with no edge over the markets.
  5. Traders that trade price action take money from those that trade opinions.
  6. Traders that enter a trade based on a reversal signal make money form those that stubbornly hold on to a losing trade and hope.
  7. Money flows to those who let winners run from those that hold losing trades and hope.
  8. Capital flows from those that trade a winning methodology from those that trade on emotions.
  9. Those with big egos pay a price to try to prove they are right by holding a losing trade those that admit they are wrong quickly keep hard earned profits.

  10. Money flows from those who do not know how to trade to those who do.

Desire -Skill

  
  Education
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The Desire
If you are trading just for the money you will quit before you are successful, Why? Anyone without a love for the game will quit during the long difficult learning process. After hundreds of hours of work and years of trading with nothing but a loss to show for all the effort anyone with common sense will think it is too hard and just quit. Those with a love and passion for trading will eventually succeed and usually make six figures or become a millionaire for their efforts. Those that do a cost benefit analysis in the first few years will generally quit due to the math.
The Skill
A trader must have the skill to trade in three dimensions. The management of the mind,  the method, and money management are all crucial for success. Traders must have the discipline and perseverance to trade robust systems through different market environments without giving up. They must have the ability to accept and deal with their thoughts and emotions as they arise during both winning and losing streaks. Risk must be managed on every single trade without the ego causing bets so big that they put your future trading at risk. The trader must also have the skill to not let fear take away the traders ability to pull the trigger on a good entry.

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