- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
Archives of “stock market” tag
rssOVERCONFIDENCE in Trading
It is common for traders to complain of a lack of confidence in their trading, but very often it is overconfidence that does them in. Overconfidence results from a lack of appreciation of the complexity of markets and an underestimation of the challenges of trading them successfully. In a sense, overconfident traders lack respect for the markets. They think that reading about a few setups or buying the newest software will prepare them to make money. Overconfident traders don’t want to work their way up the trading ladder: they resist the idea that screen time is the best teacher. They also chafe at the idea of growing their account. Rather than start with one contract and wait until they’re profitable before trading larger size, they want big positions—and profits—right away. Because they’re so eager to make money—and so sure they can make it—overconfident traders generally trade impulsively. They won’t wait for the setup to form; they’ll jump the gun—and get whipsawed in the process. Instead of being patient and waiting for short-term patterns to align with longer-term patterns, they will take every trade, enriching their brokers in the process. (more…)
How to Become a More Disciplined Trader-15 points
1.Treat trading as a business.
2. Get someone to keep you on track.
3. Review your trades.
4. Set reasonable trading goals.
5. Tackle the easy problems first.
6. Review your performance.
7. Make trading rules and keep them visible at all times.
8. Make a trading plan.
9. Make a game plan.
10. Have a trading strategy to follow.
11. Ask yourself before every trade, “Is this the right thing to do?”
12. Do your homework.
13. Work hard to improve.
14. Use hypnosis.
15. Just do it.
Warren Buffett: Markets are like sex
There’s nothing like getting a big bang for your buck, and no one knows that more than billionaire investor Warren Buffett.
The 83-year-old founder of Berkshire Hathaway, whose investments have consistently beaten the stock market over the past 50 years, shared a few tips in this year’s annual letter to shareholders, including comparing the stock market with sex.
Mr Buffett said new investors tend to buy shares when the markets are rising and optimism is high, only to get disillusioned when prices fall.
Quoting the late money manager Barton Biggs, whose attention to emerging markets in the 1980s marked him as one of the world’s first and foremost global investment strategists, Mr Buffett added: “A bull market is like sex. It feels best just before it ends.”
He advised investors to “keep things simple” by “accumulating shares over a long period, and never sell when the news is bad and stocks are well off their highs”.
20 Naked Truth For Traders
1. You have to have passion for learning to trade; passion is the energy that you need to take you to your goals.
2. You have to have the perseverance to keep going after you want to give up. 90% of new traders quit when they were very frustrated while 100% of successful traders didn’t quit until they reached their goals
3. New traders spend too much time looking for what to trade instead of focusing on who they are as traders. You have to know who you are as trader first then you can start building your trading system.
4. Traders have to be able to manage their stress by trading inside their current comfort zone. Traders have to grow themselves and trade size step by step.
5. The vast majority of new traders fail simply because they did not do their homework before they started trading.
6. A trader has to build a trading system that matches their own personality and risk tolerance levels.
7. A trader that chooses to be master a specific type of trading method or trading vehicles has a much better chance of success than the traders that just dabble in many different things and never make much progress.
8. A trader has to write a good trading plan while the market is closed to guide their trading while the market is open. (more…)
Do You want to Win or Lose at Trading?
There are things that make you win in the stock market over the long term and then there are things that make you lose quickly even in the short term. The key to trading success is learning the difference quickly and doing what really works not what you emotions or opinions tell you to do.
If you want to win then you must create your own trading plan and follow it, if you want to lose just trade whatever you want whenever you want based on your own opinion.
If you want to win then you must control your risk carefully with only 1% or 2% of your capital at stake in every individual trade, if you want to lose then just trade huge position sizes, put all your chips on the table.
If you want to win plan your entries and exits before you enter a trade then follow them, if you want to lose ask for everyone’s opinion and just make decisions based on other people.
If you want to win cut your losses short and let your winners run, if you want to lose hold your losers and hope that they come back and sell your winners quickly to lock in gains.
If you want to win trade only the best high quality stocks in the market, if you want to lose trade the junk and hope for a miracle come back.
If you want to win then build complete confidence for your system through chart studies and back testing, if you want to lose trade with no idea of if what you are doing even works.
If you want to win go with the current trend of the market, if you want to lose fight the trend and trade against it.
If you want to win then go long the hottest stocks in a bull market, if you want to lose short the hottest stocks in a bull market.
Do what makes money not what you feel like doing.
10 Friends & 10 Enemies of Traders
A Trader’s 10 Best Friends
- Studying the markets to understand what works. $Study
- You are comfortable with uncertainty. ????
- Being optimistic about winning in the long term. #Winning
- You manage risk very carefully on each trade. #RiskofRuin
- Thinking in probabilities and asymmetrical trades. #RiskReward
- Following your trading plan. #Discipline
- Accepting losses. #StopLoss
- Letting winners run. #TrendFollowing
- A plan on exactly how you will trade. #TradingPlan
- A robust trading system. #EDGE
A Trader’s 10 Worst Enemies
- Scared to enter a trade.#Fear
- Feeling the need to be right on every trade. #Pride
- Entering a trade too late or taking profits too soon. #Impatience (more…)
Did You Know
Know that the market never lies.I have met so many liars in the stock market business over the past 15 years. I think that many of them actually believe what they are saying but, the truth is, people’s judgment is clouded by greed.The stock market is a giant polling mechanism allowing people to cast their opinion with their money. If you think the stock market is going up, you buy. If you are right, you make money. It is a simple and powerful machine that determines value and, since no one wants to lose money, it is very efficient at telling the truth.The truth may change from one moment to the next but one thing will not change. Arguing against the market is a fast way to lose money.
14 Emotions of Traders-Really Dangerous
- Anger- Revenge trading
- Fear- Inability to take an entry or hold a winner in a trend.
- Disgust- Can lead to loss of a traders confidence.
- Happiness- Surprisingly can lead to trading too big and taking on too many positions.
- Sadness- Can lead to having difficulty taking the next trade entry or cutting a loss.
- Surprise- Can many times lead to making decisions based on emotions and abandoning a trading plan.
- Neutral- Trading is a lot of work and only passion and energy can move you toward doing the required homework that leads to eventual success.
- Anxiety- Can lead to exhaustion due to excessive stress.
- Love- If you truly love trading the markets then only time separates you from success. If you love the wrong things or people it can be destructive.
- Depression- Leads to abandoning your trading.
- Contempt- Having contempt for the markets or other traders will result in bias and bad decision making.
- Pride- Leads to trading too big, not cutting losses fast enough, and wanting to be right and prove something more than being a rational trader.
- Shame- Makes it difficult to talk to others about your trading and look at your account capital due to your bad decisions.
- Envy- Leads to external focus instead of the internal focus needed to trade successfully.
- Trading is only successful long term when it is done with the mind, emotions are only valuable if they create the energy in you to get you where you truly want to be. Emotions are positive if they protect our psychological boundaries, not so great if they just support an out of control ego. Emotions are great tools at times but terrible masters.
What is Hope ?What is Regret ?
What is Hope?
Hope is a feeling of expectation and desire for a certain thing to happen. It’s an individual’s desire to want or wish for a desired event to happen.
Hope may be the most dangerous of all human emotions when it comes to trading. Hope is what keeps a trader in a losing trade after it has hit the stop. Greed and hope are what often prevent a trader from taking profits on a winning trade. When a stock is going up, traders will often remain in the trade in the “hope” of recouping past losses. Every swing trader hopes that a losing trade will somehow become a winning trade, but stock markets are not a charity. This type of thinking is dangerous because the group (stock market) could not care less about what you hope for, or what is in your best interest. Rest assured, when your thinking slips into hope mode, the market will punish you by taking your money.
What is regret?
Regret is defined as a feeling of sadness or disappointment over something that has happened or been done, especially when it involves a loss or a missed opportunity. (more…)