ACCEPTANCE OF OFTENTIMES ILLOGICAL MARKET BEHAVIOR
DISCIPLINE IN THE FACE OF UNCERTAINTY
PATIENCE WHEN LITTLE IS TO BE ACCOMPLISHED OTHERWISE
FOCUS ON THE RIGHT NOW INSTEAD OF WHAT MIGHT BE
PERSONAL RESPONSIBILITY FOR EVERY ACTION AND REACTION
PASSION WHEN ALL ELSE FAILS
MAKING MONEY WHEN WRONG
Some thoughts on what characterizes great and successful traders:
As you probably know by now the single biggest mistake a trader can make is to hold on to a losing position. Failing to cut losses quickly and letting them develop into huge losses is mentally and financially devastating. The underlying psychology which is responsible for this behavior is the ‘need to be right’ and the fear to sell at a loss. What aggravates the situation is adding to a losing position.Dennis Gartman says: “Do more of the things that work and less of the things that don’t.“
Conclusion:
Isolate yourself from the opinions of other people. Make trading decisions your own. Focus on proper execution. Have the courage to do the right thing because it is right.
CHAPTER 1
The Power of the Gut
“The intuitive mind is a sacred gift and the rational mind is a faithful servant. We have created a society that honors the servant and has forgotten the gift.”
—Albert Einstein
George Soros, one of the greatest traders alive, trades from the gut. He has widely remarked on the correlation between his backaches and trading choices. In the autobiographical Soros on Soros, he wrote:
I rely a great deal on animal instincts. When I was actively running the fund, I suffered from backache. I used the onset of acute pain as a signal that there was something wrong in my portfolio. The backache didn’t tell me what was wrong—you know, lower back for short positions, left shoulder for currencies—but it did prompt me to look for something amiss when I might not have done so otherwise.
Some traders might scoff at the idea of making decisions based on “feelings” or intuition. They see the trader’s role as one who remains calm and collected, rationally choosing the right course while those around them are tossed about by their emotions. They believe that Soros is either lying or fooling himself. They don’t see how gut instinct can help. Yet many successful traders feel otherwise. Who is right? Is one approach better than the other?
If you are one of those traders who doesn’t believe that gut instinct or intuition has any place in trading, I invite you to keep an open mind. I, too, once felt as you did. After all, I was trained to take a very systematic and logical approach to trading as a Turtle. I believed that it was important to keep your emotions in check. I didn’t believe in trading from the gut.
Trading from your gut is a way of tapping into the extra power of the right hemisphere of the brain.
What I didn’t realize at the time, however, is that there is a big difference between trading emotionally and trading from your gut. Trading emotionally means reacting to fear and hope, which can destroy your trading decisions. Trading from your gut is different. It is a way of tapping into the extra power of the right hemisphere of the brain, which can be a powerful, effective, and entirely rational addition to any trader’s repertoire. (more…)
Successful traders do not allow negative emotions to affect their decision-making. Trading is a stressful process, and you will experience many setbacks. Expect them, however, and don’t see losses as indications that you will never succeed. Instead, be prepared to identify your negative reactions and act on them in positive ways.
Successful traders turn fear into gain. They realize that losses are a part of their business, and they expect them. But while they know that some trades will cost them money, they let those same trades become a gain in knowledge. Remember that each time you have a loss, this gives you some guidelines on how to alter your strategy. Perhaps your stop loss needs to be set higher, perhaps you need to alter how you identify trends, or perhaps you need to use new indicators.
The key point is to remember to turn fear of loss into anticipation of learning. Otherwise, your fear can cause you to forget to ask why that trade was unsuccessful and, in the worst cases, to unwisely overtrade to try to compensate for your loss.
Along similar lines, successful traders do not blame anyone or anything for their losses. They accept their setbacks and refuse to dwell on them. Instead, they learn from their mistakes and move on with their trading. Focusing on blame can cause you to feel insecure and lead you to make unwise trades to compensate for your losses. Or you may feel a desire for revenge against some non-existent enemy that “caused” your loss. Both of these emotions will distract you from your real goal of understanding how to revise your strategy based on what you learned from this trade.
Successful traders examine the current market conditions to determine if they are bullish, bearish, or a trading range environment. After determining the current market environment traders can select the tools from the their trading tool box that perform best in the current conditions. When the market conditions change then traders need to adapt to the new market environment by selecting new tools that are most appropriate for the new market conditions.
In addition to adapting to the current market conditions by using the appropriate tools from the trading tool box there are several practical aspects of trading that traders need to master.
Never enter a position without having a plan for exiting the position. If you Do not know where to get out of a position you should not enter it in the first place. In swing trading time frames stocks often run to the next resistance or Support level and then stall. We have seen that stocks rarely remain outside the Bollinger bands for long, so when a position reaches the Bands it is often a good Place to look at profit taking, especially in trading range environments.
There is usually no need to rush in when the markets trend changes. Any trend worthTrading does not require you to be in on the first day, by definition. It is usually better to make sure the trend change is real and then react rather than assuming that the first Day of a potential change is something that is going to continue.
There are a lot of jobs where people get paid every Friday. Trading is not one of them. There will be profitable weeks and losing weeks as the normal statistics work out. Remember that if you make enough trades there is a reasonable probability of seeing…
ten losing trades at some point, even with good trading systems. This is part of trading and traders need to allow for it when they work out position sizing and money management techniques.
You do not have to trade every day or take trades just because they came upon the evening scan. Carefully consider the recent price and volume action in the market before taking positions. Look for the best trades, consider long trades that have not shown a lot of recent distribution and have ‘room to run’ before hitting the next resistance area or the upper Bollinger Band.
Make sure that your position sizing is such that if all your current positions were stopped out that the total loss is something that is still comfortable. This happens from time to time and wishing it did not will not change it. Be prepared by using sensible position sizes.
Review each of your positions every evening and determine if it is something you still want to be holding based on the recent market action and the price volume patterns of the position. Longs going up on declining volume are showing weakness and I generally close out those positions and put the money to work in something stronger. You are hiring a stock to do a job for you, if it is not doing the job fire it and hire another. (more…)
Losing traders often take themselves quite seriously and seldom find humor in market analysis or the trading environment. Successful traders are often the funniest and most imaginative people you will ever meet. They take joy in trading and are the first to laugh or relate a funny story. They take trading seriously, but they are always the first to laugh at themselves.
CONCLUSION:Its no wonder that one of the first things psychiatrists test for when treating a patient is whether or not the patient has any sense of humor about his affliction. The more serious the tone of the individual, the more likely that insanity has set in.
Above 5566….Target intact of 6336-6593 level !!
On Going is 34th Month from High of 6336 & This week will complete 144 weeks from High of 6336.
(Major Turning …Not ruled out )
I know u all missed rally from 5356 (Low level )…Kissed Trendline and Taken U Turn.No worry @ all.
But…..Why u all missed EXPLOSIVE rally of life …Once it closed above 5566 for 3 days and then Weekly close was also given.
-In Just 15 sessions it flared to 6184 level-
Jump of 618 points !!
On Friday it was Boldly written :Small Triangle formation had occured !Today or by Monday……..Exactly will come to Know :Nifty Future will zoom to kiss 6200 or will crash to 5800 level.
-On Friday itself……zoomed by 154 points !!!
-Again ,Iam writing here…Not interested to Impress anybody…that this happened that happened….(It’s by God Grace and Hard work only ).Levels ,Time will not give u money :U should have Strategy and Trading is an art (90% will never earn …it’s my challenge )
New High this week ?
Can Happen……Once NF crosses & closes above 6253 level…..will zoom to kiss 6291-6336+ level.
Today ,Just watch :6189-6197
Crossover above these levels…….More Firework upto 6221-6229 level.
& there after :6253 level.
Suppose not crosses Friday’s High ( 6184 ) and Remains below 6170……then Intraday slide upto 6129————–6115 not ruled out !
Major Support at 3DEMA :6100 & 7DEMA :6048
(Untill and Unless ……Powerful Intraday Reversal …not occuring …No need to go short in Big Qty !! )
Writing/Barking…Since NF closed above 5566 level….it will kiss 6336-6592 level.
Daily Chart may Look……..Overbought
But Weekly chart………Still Hot !
& Monthly chart indicates………more Fiery move on card !
I will Update more to our Subscribers …During Trading hrs.
Updated at 6:57/04th Oct/Baroda/India
Russell Sands was one of the original “turtles” trained by the famous commodity trader Richard Dennis. Dennis believed that commodity traders could be trained, as opposed to a colleague who believed great trading was an innate ablility. To settle a bet, Dennis placed ads in trade magazines and interviewed hundreds of candidates, eventually choosing 32 trainees. The new traders were named turtles, after the turtles Dennis saw being raised on a farm in Singapore.
By the way, if that story line sounds familiar, you may have seen the movie Trading Places, starring Eddie Murphy and Dan Akroyd. And for my only movie review on this site, I give it two thumbs up. Very funny. (more…)
There’s no one formula for trading success, but there are a few common denominators that I’ve tracked in my years of working with traders:
1) The amount of time spent on their trading outside of trading hours (preparation, reading, etc.);
2) Dedicated periods to reviewing trading performance and making adjustments to shifting market conditions;
3) The ability to stop trading when not trading well to institute reviews and when conviction is lacking;
4) The ability to become more aggressive and risk taking when trading well and with conviction;
5) A keen awareness of risk management in the sizing of positions and in daily, weekly, and monthly loss limits, as well as loss limits per position; (more…)
Trading is one of the most difficult profession, winning traders have business plans. They have set of rules and guidelines to help keep their ship sailing in the right direction. Business plan in trading would cover time spend to study markets and trading, techniques and strategies to focus on, systems to use, expenses involved, maximum loss per trade, maximum drawdown, objectives and goals, etc. Best traders keep revisiting there business plans and change them when necessary, improving it with each iteration. Last but not least, the most important trait you would see in all successful traders is discipline. Without discipline no trader could be competent, because knowing in not the same as doing. Competence means that one has progressed beyond knowing what to do, to doing what one knows. Discipline makes trader competent.
A recent review highlighted different models and definitions of emotional intelligence. Among the features associated with emotional intelligence are:
* Ability to accurately read emotion in others and respond in empathic and appropriate ways;
* Ability to effectively assimilate emotion in thought and action for coping and problem solving;
* Ability to regulate emotion, channeling it into motivation, persistence, and effective relationships.
The traits assessed by questionnaires measuring emotional intelligence are wide ranging:
* Adaptability – Flexibility and willingness to adapt to new conditions;
* Emotional Regulation – Ability to control emotions and their expression;
* Low Impulsiveness – Ability to refrain from giving into urges;
* Self Motivation – Tendency to persist in the face of adversity;
* Social Awareness – Ability to effectively network with others;
* Stress Management – Ability to withstand pressure and perform effectively;
* Empathy – Ability to take the perspective of others;
* Optimism – Tendency to look on the bright side of life;
* Happiness – Tendency toward cheerfulness and satisfaction. (more…)
