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The Wisdom of Paul Tudor Jones

  
  Education
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Here are some noteworthy quotes from the 80′s (yes 80′s) PBS special “Trader“, highlighting Paul Tudor Jones and his partner Peter Borish’s trading strategies. I’d like to thank Rodrigo for sending me this special, as I wasn’t familiar with Jone’s career. Even after a decade in the business you can still keep learning from successful traders in the hopes of fine tuning one’s craft.

What I found refreshing about Jones is his commitment to helping underprivileged high school students and his pledge to pay for their college education as long as they complete high school. And more importantly, the giving of his time each and every week to intervene in their lives.

“If life ever ceases to be an educational experience, I probably wouldn’t get out of bed.”

When the headlines are extremely negative day after day and the market refuses to go down, it’s “telling a different story than what the headlines are.” When the markets sell off in the morning and are bought up in the afternoon, it’s a sign of quite accumulation.

“After awhile size means nothing. It gets back to whether you’re making 100% rate of return on 10k or 100 million dollars. It doesn’t make any difference.”

“Trading requires an energy level, and it’s very difficult to sustain it 24 hrs a day, which is what this requires. To do the job right requires such an enormous amount of concentration that you’ve got to be able to…it’s physical and emotionally mandatory to find some time to relax, and you’ve got to be able to turn it off like that.”

“The whole world is simply nothing more than a flow chart for capital.” (more…)

"Truth and Trading"

  
  Education
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1. Truth: Truth is an absolute value. Some things are true in all places and times. Resisting evil, for example, is always right.

2. Justice: Justice consists of treating others as one would wish to be treated. “Do unto others as you would have them do unto you” summarizes this concept of justice.

3. Courage: Courage means standing up for justice.

4. Moderation: Nothing should be carried to excess.

5. Wisdom: Wisdom enables a person to know what justice is, to recognize when courage is required, and to do what is right.

So how do these values play out in our trading? In this column, let’s explore truth as it applies to your trading.

One of the clear, clean things about trading is that truth is immediately and finally manifested. The price goes up or down or nowhere. Your trade or position is profitable or not. You can’t spin it any other way. You’re right when you make money. You’re wrong when you lose money. That’s just the way it is.s

There are also other truths involved. You just got lucky. You have a robust and proven method for trading that you can rely upon over time. Your methods are flimsy at best, unpredictable at worst. You have no method or you have a million methods which amounts to the same thing. Your impulses frequently and easily override your methods, or you rigidly apply your rules even when you clearly should not.

You keep clear records so you can assess what works best, or you don’t and at the end of the day (or the week or the month), you have no idea. Your record of action is either clear or murky. To correct it, it needs to be clear.

You need to tell yourself the truth as you go along. No excuses. No complaints. No trumped up stories. If you can truthfully analyze your trading mistakes as well as your trading strengths, you can make adjustments, and develop a personal style that will lead to trading success.

Telling the truth about each day’s (week’s, month’s) trading doesn’t mean you have to be brutally cruel to yourself or gloomy about your trading. What it does mean is that you don’t have to do that again, and you can optimistically look forward to the next day’s trading. You will know the truth, and the truth will make you free.

You want to keep your trading in true alignment with any known or possible clues as to the on the ground truths in relevant areas. There are fundamental truths, technical truths, methodological truths, inter-relational truths, and personal truths. The closer you can get in any or all of these areas, the better your prospects. You will seek to know the truth, and those truths will power your trading.

Beliefs of Winning Traders

  
  Education
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winner1

Winners share certain behaviors and beliefs. Check to see if you possess the traits and beliefs of winning traders !!!

  1. If you have the belief that you will win, you increase your chances of trading to win. In order to have this level of conviction, you must have a thoroughly-tested plan. You also must have a clear vision of how you will proceed with your plan to reach your goal. The more detailed you can visualize your goals being achieved, the more you will strengthen your internal belief and confidence that you will reach your goals.
  2. I’m sure you’ve heard the saying “I didn’t plan to fail; I failed to plan.” Without a plan, your results will tend to be mixed and uninspiring. Commit to writing down your trading plan, and make sure you can answer the questions found in a recent TrendWatch on creating your trading plan. (more…)

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

  
  Education
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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…)

What you WILL DO vs. NOT DO is what it comes down to

  
  Education
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In trading you MUST take action and control.  It’s not the market makers, or the talking heads, or your neighbor, or any of the experts or people you entrust with your money that are causing your losses or your poor investing performance.  You are making the decisions, directly or indirectly.   Any trading and investing decisions made in your accounts are all DOWNSTREAM from you and your initial decisions, so you can make different ones in the future.

But you must take measurements.  You must have a plan.  You must assess, then make DECISIONS to GET you to your FINANCIAL, HEALTH and RELATIONSHIP goals.

In trading we teach a very simple and effective way to make consistent profits in the markets.  There is a learning curve and much of that curve is you getting to know you.  It’s understanding the psychological aspects of trading profitably with consistency and making those thought process changes that are necessary to get you in a winner’s trading mindset.

For many people this is a challenge.  The actual steps and actions you must take are not laborious or physically draining, they are simple things that need to be done but will go against the natural instinct to just want to go through each day on ‘autopilot’.

And this is why many a trader who is struggling slips into the ‘blame’ or ‘victim’ game.  Being aware of this is important and we are all human and capable of slipping off track……but the key is to catch it early, forgive yourself for it, and then learn and ‘zig zag’ your way back onto the path that will get you to your goals.

Trading in the Zone

  
  Education
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These Beliefs are the Seven Principles of Consistency from Mark Douglas’s “Trading in the Zone” I highly recommend picking this book up to add to your collection, because it has benefited me tremendously in understand how beliefs and values play a vital role in one’s trading and ultimate success.

I remember the first time I picked this book up I didn’t “get” it and put it away. About a year later I read it again and it just clicked. I now reference it on a weekly schedule just so the principles in the book stay fresh in my mind and to reinforce what I had learned.

I am a Consistent Winner Because:
1.  I objectively identify my edges.
2.  I predefine the risk in every trade.
3.  I completely accept the risk or I am willing to let go of the trade.
4.  I act on my edges without reservation or hesitation.
5.  I pay myself as the market makes money available to me.
6.  I continually monitor my susceptibility for making errors.
7.  I understand the absolute necessity of these principles of consistent success and , therefore, I never violate them.
Five Fundamental Truths: 
1. Anything can happen.
2. You don’t need to know what is going to happen next.
3. There is a random distribution between wins and losses for any given set of variables that define an edge.
4. An edge is nothing more than an indication of a higher probability of one thing happening over another.
5. Every moment in the market is unique.

Addional Mark Douglas Material in PDF form. (more…)

6 Trading Rules

  
  Education
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6 TRADING RULES1.IF YOU DON’T LIKE THE TRADE YOU’RE HOLDING, GET OUT.

2.AFTER TWO HOURS OF TRADING, ASK YOURSELF: “DO I FEEL GOOD ABOUT MYTRADING TODAY?” Once two hours have passed, A day trader should have made at least two, or perhaps more, trades, “but enough to evaluate what you have done.” If the trader feels good about the day’s trading, continue. If not, stop trading that day.

3.ALL CYLINDERS OF THE ENGINE MUST BE RUNNING EFFICIENTLY. “Day-trading is a job, and your paycheck is determined by your ability. You can only maximize your ability if you have all the information you need to make trading decisions. “If a piece of equipment that one uses for trading is not working, stop trading.

4.HAVE COMPLETE FAITH IN YOUR INDICATORS.This is a must for success.Many times your indicators give you a buy or sell signal, and you don’t follow it because you don’t have the confidence the signal is right this time. Successful day traders believe in their indicators, but also are aware that nothing is 100% foolproof.

5. TO ANYONE WHO ASPIRES TO BECOME A DAY TRADER, OBSERVE THOSE WHO ARE SUCCESSFUL. “Any information you can procure on the trading philosophies, mechanics and techniques is well worth your while.”

6.DAY-TRADING IS A LONG-TERM COMMITMENT. “I fervently believe it takes several years to become a true professional”

7 Deadly Sins of Trading

  
  Education
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7 Deadly Sins of TradingPerfectionism: There is no perfection in trading as far as making money on every trade or having a perfect system. All you can hope to be perfect at, is following your system, rules, and trading plan. A winning trade should be measured as one in which you followed all your preset guidelines. Even the best traders only average about a 50%-60% win rate at best over long periods of time. The key is having bigger winners than losers, not being perfect. Like in baseball where a .300 hitter can get into the hall of fame. A .500 trader in the market can become wealthy if his wins outpace his losses.

Fear:  Faith in your system is the only way to overcome your fear of trading. You must complete enoughback testing on your system until you know that you have a valid edge over the market in the long term. You must see opportunity in trading not possible losses. You must take your systems trade signals each time and if you can’t overcome your fear of loss and failure then perhaps trading is not the best profession for you.

Pride:  We are not our trading account and staring at our profit and loss too much is a major detriment in one’s trading. Traders must cut losses at their predetermined stop, not pridefully hang on trying to prove they are right. We must separate ourselves from the trading. A person’s value is not tied to a trade or performance record. If we followed our system then we can’t view that as a personal loss. Our system failed us. (more…)

Top Ten Reasons Traders Lose Their Discipline

  
  Education
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Losing discipline is not a trading problem; it is the common result of a number of trading-related problems. Here are the most common sources of loss of discipline, culled from my work with traders:

10) Environmental distractions and boredom cause a lack of focus;

9) Fatigue and mental overload create a loss of concentration;

8) Overconfidence follows a string of successes;

7) Unwillingness to accept losses, leading to alterations of trade plans after the trade has gone into the red;

6) Loss of confidence in one’s trading plan/strategy because it has not been adequately tested and battle-tested;

5) Personality traits that lead to impulsivity and low frustration tolerance in stressful situations;

4) Situational performance pressures, such as trading slumps and increased personal expenses, that change how traders trade (putting P/L ahead of making good trades);

3) Trading positions that are excessive for the account size, created exaggerated P/L swings and emotional reactions;

2) Not having a clearly defined trading plan/strategy in the first place;

1) Trading a time frame, style, or market that does not match your talents, skills, risk tolerance, and personality.

Who was having this NEWS ?

  
Analysis, Education
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http://www.business-standard.com/india/news/ril-loses-bid-for-canadian-firm/388837/

Above is the hrly chart of Reliance (Yesterday’s trading ).From 1030 to 1072…What a rally ?

On 3rd March ,LyondellBasell NEWS was out and stock zooomed from 992 to 1027 level in single session.

-Just think it over :Why this is happening with all companies listed in INDIA ?

-If u hunting to buy some company….is it Bad NEWS for company ?

If u lose …….and if u are not able to get Foreign Company…is it good for Domestic company ?

Technically ,I had written stock looking Hot only.

But who was having this NEWS …that it had has lost out on its $2-billion takeover bid for Calgary-based Value Creation.

-Media is reporting Today morning …so somebody was having this NEWS during trading hrs itself ??

Yes ,Chart indicated 2 days back only…Fiery move on card.

But reasons were known to some Insiders only…..Jai ho !!

Updated at 6:35/17th March/Baroda

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