Archives of “stock market” tag

rss

12 Trading Mantras from Trading Legend Mark Douglas

  
Analysis, Education
#  #  #  #  #  #  #  #

Fill the “profit gap” with the right things…

In his books and seminars, Mark Douglas often refers to something he calls the “profit gap”. What he is talking about is basically the difference or “gap” between the potential profit you could achieve if you had just followed your trading method and what your actual bottom line results are.

Traders often begin trading a method with very high hopes. They want to produce an income they can rely on and get consistent results from their trading. However, this is only possible if you are trading an effective method with discipline and consistency, which most people simply do not do and as a result, they experience the profit gap that Mark refers to.

The key point that Mr. Douglas makes about this profit gap is that traders typically try to fill the gap by learning more about the market, changing methods, spending more time in front of their computers etc. However, what they really need to learn is more about themselves and how they interact with the market. Essentially, they need to acquire the “proper mental skills” to trade their method as they should and to get the most out of it, in order to properly fill the profit gap.

Winning and being a winning trader are two different things…

Anyone, and I literally mean anyone, even a 5-year-old child, can find themselves in a winning trade. It does not require any special skill to get lucky on any particular trade and hit a winner. All you have to do is open your trading platform and push a few buttons and if you get lucky, you can make a lot of money in a short amount of time.

As a result of the above, it’s natural for a trader who has not yet developed his or her trading skills to take the leap from “it’s easy to win” to “it can’t be that much harder to make a living from this”.

This is how many traders’ careers get started. Needless to say, it is also how they get on the path to losing a whole lot of money just as fast or even faster than they made it.

A winning trader has the mental skills to realize, understand and utilize the FACT that any particular trade he or she takes has basically a random outcome. That is to say, they cannot possibly know the outcome of that trade until it is over. The winning trader knows this and they also know that they must trade in-line with this belief over a large series of trades and ignore all the temptations and feelings that get kicked up on each trade they take. They are able to do this because they keep their eyes on the bigger picture. That bigger picture is the fact that IF they execute their method flawlessly, over and over, over a long enough period of time / series of trades, they will come out profitable.

Thus, do not mistake a winning trade for you being a winning trader, yet. A very easy trap to fall into. (more…)

10 Thing u should learn from Market

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

1. “There is no such thing as easy money”

This is so true, in the markets, in everything. Those who happen upon money where it DID come to them easily, it seems, as a witness, have had it very fleetingly. In my own case, although I am supremely confident in the profitabliity of what I am doing, in practically any market, in virtually any “regime,” doesn’t mean it’s easy. It works like clockwork and is incredibly painful and distressing. It would be so much easier to simply sell buckets of blood.”

2. It’s bad to try to make money the same way several days in a row
3. Markets that have little liquidity are almost impossible to profit from.
4. When the stock market is way down, policy makers take notice and do what they can to remedy the situation.
5. The market puts infinitely more emphasis on ephemeral announcements that it should.
6. It is good to go against the trend followers after they have become committed.
7. One should not make one’s analysis more precise than one’s actual trading could ever possibly be.

8.If the rational mind has not determined the parameters of a trade, then upon execution, the lizard brain will decide.
9. Never go on vacation with open trading positions.
10.  All higher forms of math and statistics are useless in uncovering regularities.
Technically Yours/ASR TEAM/BARODA/INDIA

Be Yourself

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

Everyone in this business will tell you how to be and what to do, but the bottom line is that you’ve got to always be yourself – flaws, emotions, stupidity, and all.

There’s a saying that the stock market is an expensive place to figure how who you really are but I completely disagree. Through the many years I’ve been trading, I’ve learned much more about myself and the way I am both good and bad than I think I would have any other way. And, for that I’m so very grateful.

It is with little doubt that my experience in the markets have in turn made me into a much better human being. For example, one who thinks before acting, one that appreciates the importance of looking at situations from different points of view, one that knows that you can do everything right but still be wrong, one that understands the influence that emotion has on decision-making, one that remembers that no matter what mistakes you and I make today – tomorrow we will have another opportunity to do better. I’ve learned a great deal more, but I think you get the point.

Speaking of which, a number of people have asked me recently that if train people to “be more like me” in my mentorship group. The truth is that I try my darndest to never do that. My goal with those who I personally mentor is to help them become who they really are and, by extension, to take full advantage of their own personality and skills whatever they may be and at whatever level they currently are. The primary problem, however, is that many of us really believe the key to success is to be more like others whether it be Warren Buffett, David Einhorn, George Soros, Doug Kass, Jim Chanos, Whitney Tilson, Jim Cramer, or whoever you admire and respect. As you know, one of the fastest growing businesses on the Internet right now is to enable you in new and exciting ways to trade and invest just like others, but in my view, that will only take you so far in your personal journey. In the markets, sooner or later, you have to find your own path!

Each of us have our own skills, strengths, weaknesses and personalities and matching those with a strategy you can use and develop over time is the closest key to your future success that I can help you with.

Bottom line – don’t be like me or anyone else for that matter, but instead just be yourself. Use this time in your life to find ways to take full advantage of your own God-given talents and skills as you develop them. While it is ok and, in fact recommended, that you try to learn as much as you can from others (I know I have), at the same time you must also understand and appreciate that to true key to success is to find your own path just like every trader and investor who you so admire right now has already done.

Active vs Passive Catalysts

  
  Education
#  #  #  #

Catalysts have the potential to change investors and traders’ expectations. There are two distinctive types of catalysts in the stock market – active and passive.

Active catalysts tell you when to buy or sell.

Passive catalysts tell you what is the potential behind a move once an active catalyst is introduced. Their role is to explain intelligently the reason behind a move.

The only active catalyst is Price action. Simply put, it does not matter how smart you are or how genius your investing thesis is. Unless and until the market agrees with you, you won’t make a cent. (more…)

How To Reduce The Effects of GREED?- 6 Points

  
  Education
#  #  #  #  #  #  #  #
  • Trade Small: If you are a beginner, trading a small account can be a worthwhile exercise. Use small position sizes and manage risk fiercely. Many traders get into trouble when they haven’t considered risk exposure while taking positions that are too large for their accounts.
  • Expect to Lose: Be prepared to lose when you enter a trade and DEFINE how much you are ready to lose. Don’t panic and change your mind if the market reaches that point.
  • Plan to WIN: Likewise, DETERMINE the amount of profit that is enough to quench your Greed Buds.
  • Time Horizon: Trade with short time horizon. Even if you are not an intraday trader, a shorter-term viewpoint in today’s volatile market environment gives a quick feedback about your analysis and can decrease the time you are exposed to the unpredictable marketplace.
  • Scared Money Never Wins: Trade only with money you can afford to lose that is less important and not significant enough to be protected. Treat your money well and trade well.
  • Nothing Ventured, Nothing Gained:  Be a little greedy! If you don’t trade, you are engulfed by fear. Come up with a trading style that cuts down the influence of greed and fear and is easy for you.

10 Foolish Things a Trader are Doing

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #
  1. Try to predict the future movement of a stock, and stay in it no matter what.
  2. Risk your entire account on one trade with no stop loss plan.
  3. Have a winning trade but no exit strategy to get out, no trailing stop or exhaustion top signal.
  4. Ask for and follow the advice of others instead of trading with your own trading plan, method, rules, and system.
  5. Trade your emotions instead of signals: buy when you are greedy and sell when you are afraid.
  6. Trade your opinions, not a quantified method.
  7. Do not bother to do your homework on trading, just jump in and trade, you are smart, you will figure it out.
  8. Short the best and most expensive stocks in the stock market and buy the cheapest junk stocks.
  9. Put on trades you are 100% sure are winners so you do not even need a stop loss or risk management.
  10. Buy more of a trade that you are losing money in and sell your winners quickly to lock in small profits.

10 Greedy Characteristics

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

1.  You find yourself forgetting your rules.  Which during day trading is the last thing you want to happen since your profit margins are often based on smaller movements.

2.  When reviewing your pre-market plays, every stock looks like a winner.

3.  Shortly after opening your position you see a price target that is much higher but you have no justification for the target.

4.  Trading feels stressful all of the time.  From the minute you get up in the morning, until you close your last position.  Instead of approaching trading with a calm head, you have a constant feeling of fighting and living on the edge.

5.  You stop reviewing your trades.  If someone were to ask your win/loss percentage over the last week you would have no idea; however, you would know how much money you need to make for the week.

6.  You abandon limit orders and start placing more and more trades at market.  Most of the times this will occur when you are trying to get into the position, because you can’t stand the idea of not being in on the winning trade.

7. You start to over trade.  If you normally put on 3 trades per day, you will now find yourself placing 6 or more trades per day.  This sort of behavior will run its course as the increase in trading activity while abandoning your day trading rules always points to losing money. (more…)

The Success Of Warren Buffett

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

Singular focus – Since Warren Buffett was a young boy, he had almost a singular focus to accumulate wealth. He also believed his way to wealth would be through the stock market. At a very early age, he knew what he wanted and where he wanted to go. Successful people always have long-term visions of their life. This is a lesson especially for younger folks. You will only really succeed in life once you know what you want to accomplish. As Yogi Berra said, “If you don’t know where you are going, you may end up some place else.”

Dedication – Mr. Buffett spends about 18 hours every day dedicated to investing capital. This is the type of dedication needed to succeed at his level. I doubt he wastes anytime in front of the television or shopping at the mall. Almost all his time is spent thinking and working on Berkshire Hathaway. This type of dedication can have its drawbacks as well. The book does not portray his family life in a very positive manner. He was separated from his first wife (it appears they did not divorce for P.R. reasons) and did not spend much time with his children as they grew up. There is only so much time in a day, and he spent it mostly on business-related activities.

Independent thinking – Buffett has come up with his criteria for investing in companies. These criteria have been developed over years of studying and reading about his craft. He will only invest in companies that meet these criteria. He does not feel pressured when things do not go his way nor when outside sources suggest new rules for investing. The most telling story of this was back in 1999 during the “technology stock bubble”. Many people were saying he was too old and out of touch. They said he did not understand the “new economy”. Buffett continued to plot his course using the rules he knew and understood. He has been vindicated as the technology market crashed and Berkshire Hathaway has continued to thrive.

Alliances – Mr. Buffett has developed partners and allies to help him attain his goals. He uses these partners to manage his businesses, help find new investments, and to obtain access to capital. Mr. Buffett will be the first to tell you that his wealth would be a small fraction of what it is today without these business associates. (more…)

Buy & Hold -Long Term Investors :Must Read it

  
  Education
#  #  #  #  #  #  #
  • Placing $100 in U.S. equities in 1900 and holding for 111 years, reinvesting all dividends would see a portfolio of $2,383,810 by 20100056
  • If spending dividends, the portfolio would be worth $744
  • “all of the real stock market returns earned over the past 111 years can be attributed to just an 18 year period – the great bull market that began in August 1982 and ended in August 2000.  Without those years the real, inflation-adjusted return of stocks, without reinvesting dividends, was negative.”

You Should Have All 4 Elements To Be Successful

  
  Education
#  #  #  #  #  #  #  #

Trading is a very complex undertaking and if you miss one element you will likely eventually fail  in this endeavor.

Here are the four different elements we must have working for us for success in trading:

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.

The Desire (more…)

Go to top