- 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. (more…)
Archives of “stock market” tag
rssFor Stocks, September May Be the Cruelest Month
September is fewer than three weeks away. Feeling nervous? Maybe you should be. For investors, the period between Labor Day and Halloween is proving an annual fright show. And no one knows why.
It was, of course, in September last year that Lehman collapsed and everything fell apart. But then it was also September-October 2002 that the last bear market plunged to its lows.
The 1998 financial crisis? It began late August, and rolled on for two months
The famous crash of 1987 came in October. But most people have forgotten that the market actually started sliding downhill in late August. (more…)
10 Rules If You USE Charts
Rule 1 – If you cannot see trends and patterns almost instantly when you look at a chart then they are not there. The longer you stare, the more your brain will try to apply order where there is none.
If you have to justify exceptions, stray data points and conflicting evidence then it is safe to say the market is not showing you what you think it is.
Rule 2 – You can torture a chart to say anything you want. Don’t do it.
This is very similar to Rule 2 but it there is an important point to drive home. You can cherry pick indicators to justify whatever biases you bring to the table and that attempts to impose your will on the market. You cannot tell the market what to do – ever.
Rule 3 – Be sure you check out one time frame larger than the one in which you are operating (a weekly chart for a swing trader, a monthly chart for a position trader).
It is very easy to get caught up in your own world and miss the bigger picture getting ready to smack you. It can mean the difference between buying the dip in a rising trend and selling a breakdown in a falling trend.
Rule 4 – Look at both bars (or candles) and close-only line charts to see if they agree. And look at both linear and semi-logarithmic scaled charts when price movements are large.
Short-term traders can ignore the latter since prices are not usually moving 30% in a day. But position traders must compare movements at different price levels.
As for bars and lines, sometimes important highs and lows are set by intraday or intra-week movements. And sometimes intrday or intra-week highs and lows are anomalies that can safely be ignored. Why not look at both?
Rule 5 – Patterns must be in proportion to the trends they are attempting to correct or reverse. I like the trend to be at least three times as long as the pattern. (more…)
Trade Like an O'Neil Disciple:Must Buy -Must Read !
Here is my brief review. Detail review will follow later.
In a year around 40 to 50 books on trading are published, I read most of them, there are very few which have actionable trading ideas and can help you enhance your trading skills. Trade Like an O’Neil Disciple: How We Made 18,000% in the Stock Market is one of the best books I have read in recent years. I am already reading it second time and taking extensive notes.
If you are growth/ IBD/ momentum/ CANSLIM kind investor you will find practical ideas and some new ways of entering and exiting trades. You will also learn how explosive returns are possible under right circumstances using those methods.
The book also goes in to details of short selling and has couple of good short selling strategies.
The book is not for beginners and those looking for simple methods without much effort, you need to have some foundation about growth and momentum investing before appreciating and understanding it.
A must buy for growth/momentum investor who want explosive returns…..
Anything can happen in Stock Market
Traded at Nasdaq ,Just see movement of 4th March and look at what happened on 14th May.
-In single session crashed by 41% and see volume (Mind Blowing )
Really anything is possible and it’s a old saying :Crows everywhere are equally black
Technically Yours
Anirudh Sethi/Baroda/India
Strategy
- Adaptable- a strategy must be able to adapt to a changing market. It must also be able to adapt to your internal changes. If nothing changes there would be limited chances for profit. Every trader must root for changes but it does not matter if you cannot adapt.
- Definable- there are times when you need to override your strategy but that happens for less frequently than we think. A majority of your trades you should have a definite reason for a action.
- Quickly explainable– if you can’t explain your strategy or reason for a trade in a minute or less it is probably too complicated. Until you fully understand your strategy a majority of your “indicators” are just putting a band-aid over a gaping wound that is your lack of understanding.
- Personal- You are an input into the way you execute. You cannot be something you are not. Do not get me wrong there are things about yourself that you need to bend to trading but strategy should not be that one. It is hard to fake being tall and expensive to be a type of trader you are not.
I am not saying a trading plan will make you a successful trader, there are other factors. It is a necessary first step. You need a trading plan to consistently and confidently execute. Your trading rules should answer whatever questions the market asks you. Originally I made the mistake of planning out my trades, for example. If the market does x I am going to do y. Well when I was creating that plan that was what was working. When I started to apply that plan the market had changed. That is why many probably scrap their plans or do not work on them in the first place.
You are either a system trader or a discretionary trader. Each has it’s own equity curve and set of responsibilities. Below are some videos that you will find helpful.
Probability in Trading :Two Quotes
“A trader who has a good chance of success has the following attributes: (1) is properly capitalized; (2) treats trading like a business; (3) has a low tolerance of risk; (4) trades only when the market provides an opportunity; (5) can control emotions; (6) has a trading plan; (7) has a risk management plan; (8.) is incredibly disciplined; (9) is focused; and (10) has backtested his trading methodology.” Marcel Link
“A trader who has a good chance of failure has any of the following attributes: (1) is undercapitalized; (2) lacks discipline; (3) overtrades; (4) does not understand the markets; (5) rushes into trades; (6) chases the market; (7) is afraid of missing a move; (8.) is stubborn and marries a position or idea; (9) misinterprets news; (10) is always looking for home runs; (11) lets losers get too big; (12) takes winners prematurely; (13) takes trading too lightly; (14) takes large risks; and (15) has little control of his emotions.” Marcel Link
TEN Elements of Successful Trading
In trading you have heard that bulls make money, bears make money, but pigs get slaughtered.
Here is a more expanded truth:
Traders that have the right mind set, money management, and winning method make money, those that are missing even one of the three, will eventually ‘blow up’ their account. This applies to both professionals and amateurs.
Whether you are a swing trader just trading the market with the $SPY ETF, a growth investor up to your eyeballs in Google and Apple, or even a day trader, these principles still apply to you. I believe these are universal principles for all traders, many professionals have proven they are not bigger than these laws of trading, by destroying the capital in hedge funds and even entire banks.
Trading Methodology:
- Winning system-Only trade tested systems with a positive expectancy in the long term.
- Faith– Your system has to allow you to trade your beliefs about the market.
- Risk/Reward-Never trade unless your profit expectations are greater than your capital at risk.
10 Trading Truth
An entry does not determine profitability it only determines potential profit the exit is where the win or lost occurs, focus on that.
- A robust trading system means nothing unless you can follow it with discipline and self control.
- Charts don’t care about any one persons opinions why should you?
- Good trading will make you some money but only good risk management will allow you to keep the money.
- Good traders search for the right entries, great traders search for the right systems.
- Bad traders have an opinion, good traders have a plan. (more…)
Art Huprich’s Market Truisms and Axioms
Raymond James’ P. Arthur Huprich published a terrific list of rules at year’s end. Other than commandment #1, they are in no particular order:
• Commandment #1: “Thou Shall Not Trade Against the Trend.”
• Portfolios heavy with underperforming stocks rarely outperform the stock market!
• There is nothing new on Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again, mostly due to human nature.
• Sell when you can, not when you have to.
• Bulls make money, bears make money, and “pigs” get slaughtered.
• We can’t control the stock market. The very best we can do is to try to understand what the stock market is trying to tell us.
• Understanding mass psychology is just as important as understanding fundamentals and economics.
• Learn to take losses quickly, don’t expect to be right all the time, and learn from your mistakes.
• Don’t think you can consistently buy at the bottom or sell at the top. This can rarely be consistently done.
• When trading, remain objective. Don’t have a preconceived idea or prejudice. Said another way, “the great names in Trading all have the same trait: An ability to shift on a dime when the shifting time comes.”
• Any dead fish can go with the flow. Yet, it takes a strong fish to swim against the flow. In other words, what seems “hard” at the time is usually, over time, right.
• Even the best looking chart can fall apart for no apparent reason. Thus, never fall in love with a position but instead remain vigilant in managing risk and expectations. Use volume as a confirming guidepost.
• When trading, if a stock doesn’t perform as expected within a short time period, either close it out or tighten your stop-loss point.
• As long as a stock is acting right and the market is “in-gear,” don’t be in a hurry to take a profit on the whole positions. Scale out instead.
• Never let a profitable trade turn into a loss, and never let an initial trading position turn into a long-term one because it is at a loss.
• Don’t buy a stock simply because it has had a big decline from its high and is now a “better value;” wait for the market to recognize “value” first.
• Don’t average trading losses, meaning don’t put “good” money after “bad.” Adding to a losing position will lead to ruin. Ask the Nobel Laureates of Long-Term Capital Management.
• Human emotion is a big enemy of the average investor and trader. Be patient and unemotional. There are periods where traders don’t need to trade.
• Wishful thinking can be detrimental to your financial wealth.
• Don’t make investment or trading decisions based on tips. Tips are something you leave for good service.
• Where there is smoke, there is fire, or there is never just one cockroach: In other words, bad news is usually not a one-time event, more usually follows.
• Realize that a loss in the stock market is part of the investment process. The key is not letting it turn into a big one as this could devastate a portfolio.
• Said another way, “It’s not the ones that you sell that keep going up that matter. It’s the one that you don’t sell that keeps going down that does.”
The table below depicts the percentage gain necessary to get back even, after a certain percentage loss. (more…)