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10 Mistakes -Done By 95% Traders

  
  Education
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  1. Not honoring your original stops. Big losses make winning systems losing ones.
  2. Quit trading it during drawdowns. All systems have losing streaks, the key is to manage risk and stick to it until the system has time to play out with profits as the market becomes conducive to your system’s method.
  3. Lack of discipline, drifting from taking defined entries and exit signals to  your own opinions is hazardous.
  4. Trading too big, no system can survive huge positions sizing that makes the first string of losses the last.
  5. Style drift is deadly, slowly changing your trading system during active trades is not good. Research has to happen after hours when the market is closed and backtested before changes are made.
  6. If you can’t mentally and emotionally deal with the equity curve of your trading style then you can’t trade it long term. You can’t quite during losing streaks or get too excited during winning streaks.
  7. You have to believe that your method will work over the long term, confidence comes from research, backtesting, and homework.
  8. Don’t trade someone else’s system, build your own. Custom to fit who you are by using the principles that you believe in and work.
  9. Trading too big during losing streaks ruins the potential of winning, don’t try to get back the blood the market took from you instead try to stop the bleeding by trading smaller and smaller until a new winning streak emerges.
  10. Straying from the trading plan and making one big, bold, can’t miss trade and blow up all your previous profits. Don’t let greed make you do something stupid, stick to the plan.

The Market As Uncertain Possibility — an Ocean of Possibility

  
Analysis, Education
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Imagine the market as the totality of possibility. Unlimited in potential in any direction at any time. Potential for profit. Potential for loss. Potential beyond your capacity to ever comprehend. What you know is that the market goes up and down. Rarely does it stay unchanged for any length of time. Then imagine you as an observer watching the market. The market is an ocean of possibility, while you, the observer, represent someone in a small boat navigating in this infinite sea of possibility. What do you, as a buyer or seller, see? The tide goes in, the tide goes out. Storms come and go. There is no telling what this ocean of possibility is really going to do at any given time. 
Yet, depending on the skill of the navigator of the boat in this ocean of infinite possibility, he either harvests what the ocean is willing to give him or he keeps looking for what he wants from the ocean. If his vision is locked on finding what he is looking for, he becomes blind to other possibility that the ocean presents. The ocean, as well as the market, does not know the fisherman is there. It is incapable of wanting to help or hurt the fisherman. Possibility opens and possibility closes irrelevant to the fisherman. The ocean simply is. 
Opportunity and disaster both exist as possibility to the navigator of the boat in the sea of possibility. It is the discernment of the navigator, beyond fear, that opens or closes possibility in the market. Until fear is taken off-line, the fisherman of possibility sees through the eyes of fear and can not see the potential of a long term beneficial relationship with the ocean of possibility called the market.

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50 One Liners for Traders

  
Analysis, Education
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  1. Don’t try to read into other people’s trading decisions.
  2. By all means like a stock, but don’t try to be best friends with it forever. Instead, spend time nurturing positions that are being kind to you.
  3. Beware the Beginners Cycle. The want to be right will cause you to collect courses and books and will only be a costly and frustrating exercise. The secret is elsewhere.
  4. Actually, there is no secret. It’s all in the maths.
  5. Losses when trading are inevitable, but losses should always be limited.
  6. Have a prepared trading plan so you don’t rush into bad decisions. Time spent planning will help you avoid catastrophic losses, riding the emotional roller coaster, and other unnecessary headaches.
  7. Get off your high horse. Your ego will eventually cost you dearly.
  8. Validate your strategy before you risk your capital.
  9. Don’t waste your time on other trader’s successes. The only person you’re competing against is yourself.
  10. 10. Ignore any broker that tells you to buy when there is blood in the streets. You can be sure it’s not theirs.
  11. Outsource to people who do the stuff they’re better at so you can do the stuff you’re better at.
  12. Make haste slowly. Ensure you have a validated strategy that has an edge and ensure you have a full understanding of the journey ahead of you. The markets will always be there. What won’t be there if you’re in too much of a hurry is the capital in your account.
  13. Understand positive expectancy. When you see it, you’ll get it.
  14. Ask someone you trust if you are unsure.
  15. Risk a small amount of capital on each trade.
  16. Sentiment will drive the market, or a stock, a lot further than logic ever will.
  17. Only fools claim to know the future.
  18. Don’t be a dick for a tick. Saving a few cents here and there will only cost you dollars later on.
  19. You can’t control the market. Don’t waste your time by watching every trade tick along.
  20. Find a strategy that makes sense to you.
  21. Be curious and keep a trading diary. Don’t be scared to learn something new.
  22. Explore new ideas and opportunities often.
  23. Let go of things you can’t change. Concentrate on things you can.
  24. There is no point questioning the market.
  25. The market will pay you when it’s ready. You just need to be there when it does.
  26. Find a strategy you actually enjoy following.
  27. Realize that the harder you work, the luckier you will become.
  28. Risk not thy whole wad. There is a reason why compounding is the 8th Wonder of the World.
  29. However good or bad a situation is now, it will change. Accept that positive expectancy sometimes takes time to show its hand.
  30. Realize that being right does not equate to profits.
  31. 45% of trades will tend be profitable. 45% will tend be losses. 10% will be breakeven. Your job is to make the winners count.
  32. Make mistakes, learn from them, laugh about them, and move along.
  33. Successful trading is not a sprint. Buffet didn’t earn his reputation in a single year – or decade.
  34. The only thing you can control is the amount of money you’re willing to lose on each trade.
  35. Don’t over think things. Simple works best. Complex will eventually break.
  36. Understand why your strategy makes money.
  37. If you can’t pull the trigger it’s usually because you don’t trust the strategy you’re using. Stop and re-evaluate.
  38. Trends can’t not exist.
  39. The biggest hurdle to overcome is between your ears.
  40. Don’t fear the market. It can’t actually hurt you. You can hurt you though.
  41. The object of gaining a trading education isn’t knowledge; it’s to enable action.
  42. Never move a stop backward. You’re mind is screwing with you.
  43. Rules you can’t or won’t follow are of no use to you.
  44. Your initial reaction to any adverse situation is usually wrong.
  45. Risk and volatility are not the same. Volatility can increase returns. Risk can increase losses.
  46. Think long term with regard to strategy application. Performance and trade outcomes in the short term are random.
  47. The keys to success are consistency, discipline and patience. They cannot be bought.
  48. Every stock that goes bankrupt exhibits a sustained downtrend first.
  49. Any strategy is only as good as the person using it.
  50. Take responsibility for every decision you make.

Short Term Trading and Day Trading Is No Nostrum

  
  Education
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Consider an excerpt from Trend Following:

When you trade more or with higher frequency, the profit that you can earn per trade decreases, whereas your transaction costs stay the same. This is not a winning strategy. Yet, traders still believe that short-term trading is less risky. Short-term trading, by definition, is not less risky, as evidenced by the catastrophic blowout of Victor Niederhoffer and Long Term Capital Management (LTCM). Do some short-term traders excel? Yes. However, think about the likes of whom you might be competing with when you are trading short term. Professional short-term traders, such as Jim Simons, have hundreds of staffers working as a team 24/7. They are playing for keeps, looking to eat your lunch in the zero-sum world. You don’t stand a chance.

Unfortunately, the flaws in day trading are often invisible to those who must know better. Sumner Redstone, CEO of Viacom, was interviewed recently and talked of constantly watching Viacom’s stock price, hour after hour, day after day. Although Redstone is a brilliant entrepreneur and has built one of the great media companies of our time, his obsession with following his company’s share price is not a good example to follow. Redstone might feel his company is undervalued, but staring at the screen will not boost his share price.

DOs and DONTs of any sort of correction

  
  Education
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DOs and DONTS of a market crash

1. DO notice how cyclical markets are
2. DONT react emotionally
3. DO stick with your plan
4. DONT rely on gurus, shamans or talking heads (1000% Avoid Blue Channels )
5. DO note your own state of mind
6. DONT take actions while in a state of discomfort
7. DO notice the panic around you
8. DONT try to time the markets
9. DO look for signs of capitulation
10. DONT confuse the short term for the long term

Bonus: DO have a sense of humor

13 Things :5 % of Successful Traders Do Differently

  
  Education
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  1. They pursue realistic goals as their returns.
  2. They take decisive and immediate action when their buy or sell signal is hit.
  3. They focus on winning trades and not quantity of trades.
  4. They make logical, informed trading decisions within their system, based on the probabilities.
  5. They avoid the trap of trying to make perfect trades, and instead focus on being profitable in the long term.
  6. They trade the right position size that is within their comfort zone.
  7. They keep things simple and focus on winning trades, not complexity in their trading.
  8. They focus on learning and making small continuous improvements in their trading system.
  9. They measure and track their progress with a trading journal.
  10. They maintain a positive outlook as they learn from their mistakes, and focus on trading with discipline.
  11. They spend time learning from better traders.
  12. They maintain balance in their life by spending time with family and friends.
  13. They love what they do and their passion keeps them going through the rough times.
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