Archives of “successful traders” tag

rss

10 Trend Commandments

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

  1. You shall learn from successful trend followers to make big returns in the market.

  2. You shall follow the trend only, and have no guru that you bow down to.
  3. You shall not try to predict the future in vain, but follow the current price trend.
  4. You shall remember the stop loss to keep your capital safe, you shall know your exit before your entry is taken.
  5. Follow your trend following system all the days that you are trading, so that through discipline you will be successful.
  6. You shall not give up on trading because of a draw down.
  7. You shall not change a winning system because it has had a few losing trades.
  8. You shall trade with the principles that have proven to work for successful traders.
  9. You shall keep faith in your trend following even in range bound markets, a trend will begin anew eventually.
  10. You shall not covet fundamentalists valuations, Blue Channels talking heads, newsletter predictions, holy grails, or the false claims of black box systems.

If you want news and entertainment watch BLUE CHANNELS, if you want to learn how to trade & Mint Money then Read www.AnirudhSethiReport.com 

Trading Thoughts

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

To truly become a proactive trader, you need to believe that your trade WILL go the direction you thought. This shows that you have belief in your system that finds your trade setups in the first place. If you put your trade on and the first thing you do is mark your stop or think “I hope this goes well”, then you are bound to fail as a trader. Successful traders do not hope. They do the research and use their system to find good candidates and enter the trades. It is at that point that they manage risk. They know exactly how much they have at risk and are perfectly fine if they lose that much. Why? Because it is baked into their system, and every trade does not go the way they thought.

You need to be the same way in your trading.You need to have the courage to fail, step off the curb, and enter the trade. Expect that the trade will go your way and use the power of positive thinking. Set your target, entry and your stop and then you know, at any point during the life of the trade, where you stand. If your target gets hit and you see the stock continue to go the same direction, you can’t get mad. You simply put the positive trade aside and evaluate it in a couple weeks to figure out why it continued to go beyond your target. It is at that point that perhaps you make an adjustment to your system. Perhaps you find out that it was a news item that caused the surge and then you know that it was atypical, rather than the norm, and no adjustment is needed.

In going through this thought process, you prepare yourself emotionally and as a result remove the chance of trading on emotion once in the trade. As an example, you need to be fully prepared to lose the amount invested in a single trade if your stop is triggered. If you aren’t fully prepared to take that risk, then you need to adjust the size of your trade or move on to another trade. If you prepare and emotionally accept the fact that you could be wrong, your trading becomes more mechanical and less emotional. Take some time to role-play the different scenarios and see what your reactions would be.

Sun TZU and Trading

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

artimg48 

As a trader you must have three pieces working in synch. Your equipment, your trading tools, and your mind. The Art of War by Sun Tzu is a book that has been applied to every facet of human experience. While originally meant to be a book that taught war strategies the lessons it imparts can and will change your life. (more…)

Trading Wisdom From Legend Bruce Kovner

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

On protecting emotional equilibrium:
To this day, when something happens to disturb my emotional equilibrium and my sense of what the world is like, I close out all positions related to that event.
On the first rule of trading:
The first rule of trading — there are probably many first rules — is don’t get caught in a situation in which you can lose a great deal of money for reasons you don’t understand.
On making a million:
Michael [Marcus] taught me one thing that was incredibly important… He taught me that you could make a million dollars. He showed me that if you applied yourself, great things could happen. It is very easy to miss the point that you really can do it. He showed me that if you take a position and use discipline, you can actually make it.”
On allowing for mistakes:
He also taught me one other thing that is absolutely critical: You have to be willing to make mistakes regularly; there is nothing wrong with it. Michael taught me about making your best judgment, being wrong, making your next best judgment, being wrong, making your third best judgment, and then doubling your money.
On elements of a successful trading:
I’m not sure one can really define why some traders make it, while others do not. For myself, I can think of two important elements. First, I have the ability to imagine configurations of the world different from today and really believe it can happen. I can imagine that soybean prices can double or that the dollar can fall to 100 yen. Second, I stay rational and disciplined under pressure.
[Successful traders are] strong, independent, and contrary in the extreme. They are able to take positions others are unwilling to take. They are disciplined enough to take the right size positions. A greedy trader always blows out.
On having a market view:
I almost always trade on a market view; I don’t trade simply on technical information. I use technical analysis a great deal and it is terrific, but I can’t hold a position unless I understand why the market should move.
…there are well-informed traders who know much more than I do. I simply put things together… The market usually leads because there are people who know more than you do.
On technical analysis:
Technical analysis, I think, has a great deal that is right and a great deal that is mumbo jumbo… There is a great deal of hype attached to technical analysis by some technicians who claim that it predicts the future. Technical analysis tracks the past; it does not predict the future. You have to use your own intelligence to draw conclusions about what the past activity of some traders may say about the future activity of other traders.
…For me, technical analysis is like a thermometer. Fundamentalists who say they are not going to pay any attention to the charts are like a doctor who says he’s not going to take a patient’s temperature. But, of course, that would be sheer folly. If you are a responsible participant in the market, you always want to know where the market is — whether it is hot and excitable, or cold and stagnant. You want to know everything you can about the market to give you an edge.
…Technical analysis reflects the voice of the entire marketplace and, therefore, does pick up unusual behavior. By definition, anything that creates a new chart pattern is something unusual. It is very important for me to study the details of price action to see if I can observe something about how everybody is voting. Studying the charts is absolutely critical and alerts me to existing disequilibria and potential changes.
On trading ranges and price patterns: (more…)

Ignore Your Guts

  
  Education
#  #  #  #  #  #  #

In my studies I have often found something that is rather interesting and maybe different than most would suspect. The most successful traders I have studied don’t rely on gut calls or feels, but rather adhere to a disciplined set of rules or guidelines and are humbled enough to admit that their emotional decisions aren’t consistent enough to hold up during the heat of the moment.

Ironically, most would think just the opposite that the more successful a trader is, the more ‘feel’ he or she has or the more ‘instinct.’ Sure, it looks macho to make calls or predictions and when proven correct a person is often praised and viewed as having some superior knowledge, but in reality these people are one step below those that have already moved through this stage and left it behind.

As an individual trader it is simply impossible to remain emotionless, making the proper trading decisions at all times, when the action is heated. Even when there is a lull, our emotions kick in and we feel a change is needed or something should be done, when in reality our rules may say to stay put or do nothing.

Characteristics of Successful Trader

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

SUCESS1From time to time I have been asked to offer my perspectives on things I have found common in successful traders. I have always struggled with my reply to that question because there are only a few traders of which I have gained enough understanding of what they do every day to achieve their results.

However, in Van Tharp’s latest book “Super Trader,” he provides 10 common characteristics frequently found among the best of the best among the hundreds of traders he’s worked with throughout his career. Like me, I think you may find it of interest!

  1. They all have a tested, positive expectancy system that’s proved to make money for the market type for which it was designed.

  2. They all have systems that fit them and their beliefs. They understand that they make money with their systems because their systems fit them.

  3. They totally understand the concepts they are trading and how those concepts generate low-risk ideas. (more…)

Trading should be boring

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

Perfect description of what trading should be all about. As you might have heard from lots of great and successful traders, trading should be boring. Don’t get me wrong. You need to be passionate about trading in order to succeed. That applies to all things in life. For me, the research I do, all the stuff I read in order to improve my trading, increase my knowledge and my technical skills is what I am passionate about. The process of putting on trades and doing what the charts tell me to do is what is boring.

My trading philosophy is really simple. If I had to put it in one sentence it would be the following: ‘There is no way I am going to argue with price.’ The gist of it really is that opinions do not matter. I do have very strong opinions but when the charts tell me otherwise I change my mind. No hard feelings. A great quote dealing with the subject is the following:

When the facts change, I change my mind. What do you do Sir? – Lord Maynard Keynes

So why the ’same old, same old’ title? Because today was one of those days where I did what I have to do. My job as a trader is to be objective in my analysis of what is going on. The most important part is looking at my portfolio positions and sort them in descending order. The first one on the list is the one with the highest profit. The last one is the worst performer. I change the order in the streaming watch list of my broker whenever the ranking changes. Doing this manually is a ‘conscious and active’ process, as it literally forces me to ignore my opinions and therefore forces me to acknowledge the strength or weakness of  a stock. Remember:

There are no good or bad stocks. There are only stocks that make you money and stocks that don’t.

Successful trader needs five essentials

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

goodtrader1. A Method

You must have a method that is objectively definable. This method should be thought out to the extent that if someone asks how you make decisions to trade, you can quickly and easily explain. Possibly even more important, if the same question is asked again in six months, your answer will be the same. This is not to say that the method cannot be altered or improved; it must, however, be developed as a totality before implementing it.

2. The Discipline to Follow Your Method

‘Discipline to follow the method’ is so widely understood by true professionals that among them it almost sounds like a cliché. Nevertheless, it is such an important cliché that it cannot be ignored. Without discipline, you really have no method in the first place. And this is precisely why many consistently successful traders have military experience – the epitome of discipline.

3. Experience

It takes experience to succeed. Now, some people advocate “paper trading” as a learning tool. Paper trading is useful for testing methodologies, but it has no real value in learning about trading. In fact, it can be detrimental, because it imbues the novice with a false sense of security. “Knowing” that he has successfully paper-traded during the past six months, he believes that the next six months trading with real money will be no different. In fact, nothing could be farther from the truth. Why? Because the markets are not merely an intellectual exercise, they are an emotional one as well. Think about it, just because you are mechanically inclined and like to drive fast doesn’t mean you have the necessary skills to win the Daytona 500. (more…)

Risk Size Is Key

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

YOUR WINNERS CAN RUN….IF YOU LET THEM
The proponents of risk/reward ratios say that in order to be successful the trade must out produce the amount of money you have at risk by at least double or triple your risk amount but what they fail to take into consideration is that the reward side of any trade is unknown. 
WHAT YOU CONTROL
You see the only part of the trading equation that you have any control over is the risk side of the trade. The reward side of any trade is a complete mystery. Oh sure, we all have our best guesses as to where the market might go next, but in the end it’s really just a crap shoot. Sometimes we’re right and sometimes we’re wrong and if we’re honest with ourselves we will admit that we really don’t know where the market is going next. 
If we don’t really know where the market is going, namely the reward side of the trade, why would we even include it in our trade scenario never mind making it the deciding factor of whether to take a trade or not? Obvious, right? Yet in spite of this I continue to encounter traders who insist on only taking high risk/reward trades thinking that they are being smart investors by doing so. (more…)

Trading Success, Fear, and Endurance

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

“What makes a great endurance athlete is the ability to absorb potential embarrassment, and to suffer without complaint. I was discovering that if it was a matter of gritting my teeth, not caring how it looked, and outlasting everyone else, I won. It didn’t seem to matter what the sport was–in a straight-ahead, long-distance race, I could beat anybody.

If it was a suffer-fest, I was good at it.”

Lance Armstrong
It’s Not About the Bike
p. 23

“You can lash out at people, you can get mad at yourself–you can even end up hating yourself without ever realizing that fear is the interference, the block in the road of progress. Fear only causes me to react. Fear only causes me to wait. Fear moves me away from effective action. When you find yourself acting like a jerk, stop for a second and just ask yourself, What am I afraid of here?”

Richard Machowicz
Unleash the Warrior Within
p. 61

What do you fear most as a trader?

Embarrassment of loss?

Being wrong?

Losing a dream?

How does your fear manifest itself?

What negative trading behaviors do you engage in to mask your fears? Getting mad? Walking away?

There’s much to be said for trading as an endurance sport. One of the things successful traders learn to endure–and overcome–is fear. And that starts with a simple question: What am I afraid of here?

Go to top