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If you trading ,then read this

  
Analysis, Economy, Education
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Below, we share a presentation from Morgan Stanley’s Jim Caron, Measuring Risk: Extracting Market Sentiment from the Interest Rate Markets, in which the credit strategist provides a much more detailed framework of what critical credit signals are and how to interpret them. We recommend that all those still trading, either with their own, or other people’s money, familiarize themselves with this 27-page overview.

(Instead of Watching TV -Cricket Match -Movies ,Traders just read this -)

 

 


Wisdom From Jason Zweig

  
  Education
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  1. There are only three kinds of investors – those who think they are geniuses, those who think they are idiots, and those who aren’t sure.

  2. One of the clearest signals that you are wrong about an investment is having the hunch that you are right about it.
  3. Investors who focus on price levels earn between five and ten times higher profits than those who pay attention to price changes.
  4. The only way to be more certain it’s true is to search harder for proof that it is false.
  5. Business value changes over time, not all the time. Stocks are like weather, altering almost continually and without warning; businesses are like the climate, changing much more gradually and predictably.
  6. When rewards are near, the brain hates to wait.
  7. The market isn’t always right, but it’s right more often than it is wrong.
  8. Often, when we are asked to judge how likely things are, we instead judge how alike they are.
  9. Most of what seem to be patterns in stock prices are just random variations.
  10. In a rising market, enough of your bad ideas will pay off so that you’ll never learn that you should have fewer ideas.
  11. The more often people watch an investment heave up and down, the more likely they are to trade in and out over the short term – and the less likely they are to earn a high return over the long term.
  12. Investing is not you versus “Them”. It’s you versus you.
  13. The single greatest challenge you face as an investor is handling the truth about yourself.
  14. Hindsight bias keeps you from feeling like an idiot as you look back – but it can make you act like an idiot as you look forward.
  15. Ignorance of our own ignorance haunts our financial judgments. (more…)

Are You A Subjective or Objective Trader?

  
  Education
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Subjective: Based on or influenced by personal feelings, tastes, or opinions.Proceeding from or taking place in a person’s mind rather than the external world.

Subjective traders they are intertwined with their trades.Their signals are generally entering out of greed and exiting based on their own internal fear. The believe in their opinions more than the actually price action. They base trades off of whether they are feeling good or bad about a particular trade. A subjective trade comes out of the imagination of the trader, from their own beliefs, opinions, and what “should” happen in their view. Many times reality is not even cross checked as a reference, and if it is the subjective traders sees what they want to see instead of what is really going on. Their compass is their emotions and they have internal goals other than making money.

Objective: (Of a person or their judgment) not influenced by personal feelings or opinions in considering and representing facts. Having actual existence or reality. (more…)

Trading Psychology

  
  Education
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salespic5Are you trading because you want to trade? Consider trading a business not a game.
Are you not trading? This is the opposite of trading too often. You may be so scared
of taking a loss that you avoid trading altogether.
If you get stopped out of several stocks, walk away. Paper trade until the profits return.
Follow the system. Would you be making more money if you followed your trading
signals? Understand why you’re ignoring the signals you receive.
Don’t overtrade. Sometimes the best place for cash is in the bank. You don’t HAVE
to trade.
Learn from mistakes. Review your trades periodically. It’ll uncover bad habits.
Focus on the positive. The loss your suffered today pales to the killing you made last
week.
Ignore profits. If you find yourself getting nervous about a winning trade or making
too much money, then concentrate not on the bottom line but on improving your
trading skills. Get used to making too much money.
Obey your trading signals. Otherwise, what are you trading for? Plan your trade and
trade your plan.
Don’t trade when you’re upset. This also goes for being too excited.
Abandoning a winning system. Don’t become bored with your winning system and
search for new, more exciting ways to lose money.

 

Book Review : Cloud Charts: Trading Success with the Ichimoku Technique by

  
  Education
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David Linton’s Cloud Charts provides a good introduction for new traders seeking to learn more about Ichimoku (or Cloud Charts).

It is divided into 3 sections with a total of 16 chapters.

The first section (comprising of 7 chapters) deals with general Technical Analysis

The second section (comprising of 5 chapters) introduces the reader to Ichimoku

The last section (comprising of 3 chapters) discuss more about Advanced Cloud Chart Techniques.

For the experienced traders, it is possible to skip the first 7 chapters and head straight to the second section where it introduces the Ichimoku indicators, the constructions of the chart and the various signals for trading.

In my opinion, the author (David Linton) is able to depicts pretty clearly on the construction of the charts; how various Ichimoku indicators are constructed and how it is represented on Ichimoku.

As a trader, there are times where we choose to neglect the construction of the indicators. On hindsight, I am glad that the chapters reinforce my understanding of the charts and its possible implications when I am looking for support/resistance and the possible change in trend.

One important aspect of Ichimoku charts is the use of colours to differentiate different ‘moving averages’ and the change in cloud direction (or kumo twist). The book did not fall short in this area with all the charts in colour. (more…)

Hesitation

  
  Education
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Hesitation-1You are watching a stock that has all the signals you look for in an opportunity. The proper point to enter comes, but you wait. You second guess the opportunity and don’t buy the stock. Or, you bid for the stock at a price that is not likely to get filled if the opportunity does pan out the way you anticipate it will. As a result, you get left behind while the market pushes the stock higher. A short while after the initial entry signal, when the stock has made a decent gain, you decide to finally enter the trade. After all, the market has proven your analysis correct, so you must be smart, and right! Not long after you enter, the stock turns south and you end up with a losing trade. If only you had bought when you first thought about it.

The Solution

This is really just a confidence issue. You are either not confident in your ability to analyze stocks, or you are not confident in the methodology that you are using to pick trades. (more…)

Five market scenarios that place you at the most risk.

  
  Education
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FIVE-







  1. 1.Bad Markets – A good pattern won’t bail you out of a bad market, so move to the sidelines when conflict and indecision take hold of the tape. Your long-term survival depends on effective trade management. The bottom line: don’t trade when you can’t measure your risk, and stand aside when you can’t find your edge.
  2. Bad Timing – It’s easy to be right but still lose money. Financial instruments are forced to negotiate a minefield of conflicting trends, each dependent on different time frames. Your positions need to align with the majority of these cycles in order to capture the profits visualized in your trade analysis.
  3. Bad Trades – There are a lot of stinkers out there, vying for your attention, so look for perfect convergence before risking capital on a questionable play, and then get out at the first sign of danger. It’s easy to go brain dead and step into a weak-handed position that makes absolutely no sense, whether it moves in your favor or not. The bottom line: it’s never too late to get out of a stupid trade.
  4. Bad Stops – Poor stops will shake you out of good positions. Stops do their best work when placed outside the market noise, while keeping risk to a minimum. Many traders believe professionals hit their stops because they have inside knowledge, but the truth is less mysterious. Most of us stick them in the same old places.
  5. Bad Action – Modern markets try to burn everyone before they launch definable trends. These shakeouts occur because most traders play popular strategies that have been deconstructed by market professionals. In a sense, the buy and sell signals found in TA books are turned against the naïve folks using them.

Discretionary & Systematic Traders

  
  Education
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Discretionary Traders…

  • …trade information flow.
  • …are trying to anticipate what the market will do.
  • …are subjective; they read their own opinions and past experiences into the current market action.
  • …trade what they want and have rules to govern their trading.
  • …are usually very emotional in their trading and taking their losses personally because their opinion was wrong and their ego is hurt.
  • …use many different indicators to trade at different times. Sometimes it may be macro economic indicators, chart patterns, or even macroeconomic news. Many discretionary traders are trying to game what they believe the majority of other traders will be doing based on market psychology as if it is one big poker game.. They are trying to form an opinion on what the market will do.
  • … generally have a very small watch list of stocks and markets to trade based on their expertise of the markets they trade.

Systematic Traders…

  • …trade price flow.
  • …are participating in what the market is doing.
  • …are objective. They have no opinion about the market and are following what the market is actually doing, i.e. following that trend.
  • …have few but very strict and defined rules to govern their entries and exits, risk management, and position size.
  • …are unemotional because when they lose it is simply that the market was not conducive to their system. They know that they will win over the long term.
  • …always use the exact same technical indicators for their entries and exits. They never change them.
  • …trade many markets and are trading their technical system based on prices and trends so they do not need to be an expert on the fundamentals. (more…)

Losses & Discipline in Trading

  
  Education
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Losses

  1. Remain mentally and emotionally focused while trading.
  2. Losses are part of all systems; knowing when to take losses is important.
  3. Always try to be extremely disciplined, and exit your losing trades when your system requires you to do so.
  4. Not taking losses when indicated is dangerous.
  5. Riding losing trades for too long usually results in larger losses and risk of ruin increases.
  6. It’s not a good idea to keep changing stops to avoid a loss.
  7. System traders use stops consistently.
  8. Separate yourself as a trader from yourself as a person.
  9. No system can trade the markets without taking losses at times.
  10. Clumping can happen on the losing side as well as the winning side.
  11. Your ability to take losses quickly is a great asset to your trading.

Discipline

Now this is vital to trading success. Imagine a person trying to become a pro athlete, but he or she sleeps in every day, eats excessively, stays up late and parties every night. Is this person going to become an elite athlete or not? The answer is no, and the reason why has everything to do with the amount of discipline. Discipline, in my mind, is like homework, only it’s homework that pays off in dollars in the trading industry. Here are a few rules that I use when it comes to discipline in my life as a trader:

  1. Good trading discipline is vital to my success.
  2. My three successes to the market are: doing my market homework, following through, and using my stop losses.
  3. I train my mind every day to be disciplined and focused.
  4. I see myself every day doing my market homework and following the signals, setting stops.
  5. I track my system exactly as it dictates.
  6. If my system gives me daily signals, I follow them every day.
  7. If my system gives me intraday signals, I follow them during the day.
  8. I do not allow outside influences to affect my discipline.
  9. Placing my orders correctly as my system dictates increases my odds for success.
  10. Discipline to follow through with my system is my friend.
  11. A system without stop losses puts me in a position of unlimited or unknown loss.
  12. I understand that a major aspect of being disciplined is using stops.
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