One of the biggest misconceptions about trading is that it is all just luck. Is trading really just a game of chance? Is there any way to improve your odds? The answer is no, and yes. Trading isn’t all about luck because you can make intelligent decisions on what trades to take, but at the same time not every trade will be successful. You have to accept failure in order to succeed.
##The idea of luck is a misconception:
The idea of luck is a misconception. It’s not about who has the most money, or even who knows what they are doing…it’s all about how your brain handles risk and reward in our complex world.
Do you know that research shows we make more impulsive decisions when stressed out? Stress may be one cause for some people to have an increased vulnerability to gambling addiction. This doesn’t sound like much fun! Some other factors which can increase susceptibility to gambling addiction include poverty, social isolation, prior mental illness, access to addictive substances such as alcohol or drugs, and family history of addictions (including “dipsomania”).
A study published in the Journal of Gambling Studies found that gamblers with a family history of addiction were more likely to have worsened gambling symptoms than those without such a history.
People who are addicted might not be able to control their behaviors and they may experience cravings for the activity – even if it’s harmful or dangerous. This is where trading all about luck comes in! If you can take your emotions out, then this will give you an edge over other traders on Wall Street. Is Trading All About Luck?
It’s possible some people just aren’t wired right when it comes to making decisions under duress which would explain why these people seem “luckier” at times – but luckily doesn’t mean there isn’t skill involved as well!
##Trading is about managing risk and being disciplined: (more…)
To HEAR you have to listen and listen intentionally. You will not HEAR properly if you are focused on other things. This situation is especially true on a webinar or during the trading day when the markets are open. It is essential to set distractions aside and HEAR what is being stated.
To RECEIVE something you have to HEAR it and come into agreement with it. To RECEIVE is to take it unto yourself and personally grab hold of what you have heard and make it your own.
To be successful you have to believe that what you HEAR and RECEIVE can add value to your current situation. You have to BELIEVE that a specific strategy repeated and correctly executed, regards of any specific outcome, will provide successful results over time. You will act on what you believe In all areas of life. Please make sure you really do BELIEVE it and are not allowing any contradictory mindset to compete with your belief because it is possible to hold two opposing beliefs at once. This is being double minded and leads to instability. Being firm and unswayed in what you BELIEVE can lead to becoming a successful trader.
APPLY Is taking action on what you BELIEVE. You will not fully apply something until you fully believe it. Application requires action. You must be willing to pull the trigger on a trade when all of your rules are meet or when all the T’s have been crossed. You must also without reservation pull the trigger to exit at your predetermined stop loss. Regardless of what we think or BELIEVE we will also act out of core or dominant belief. To properly apply ourselves we have to revise our core beliefs. If I APPLY all of my predefined rules for entry and exit even when the trades go against me, my core belief will keep me confident that I did the right thing in making this trade and over time I will accomplish my goals. In addition my loss will not stress me because based on following my predefined rules it was a small loss based on a predetermined, well thought out process.
As we move forward we should focus on hearing , receiving, believing and applying.
Probably one of the biggest hurdles most traders are struggling with is their obsession with entry prices. You will often hear people brag about their entry price and how they picked a bottom. You mostly never hear them talk about their overall performance. Let alone the bad trades they made. Throw a few darts – you’ll be lucky every now and then.
Here is an example to show what I mean. One of the stocks I plan to enter is PCX – Patriot Coal. It is on my public list and I’ve annotated it. What I am looking for is a flag pattern to develop. If we get one – and right now it looks like PCX is indeed starting to build one – I will be watching it very closely. I will watch for clues if my entry rationale is still valid. Is price retreating in orderly fashion? Is volume decreasing during the consolidation?
So what about price? Does it make any difference if I buy at 9.00 or 8.50 or 8.00? You guessed it. I couldn’t care less. If the pressure is there and the stock is acting right I want to buy. If my timing is right I will make money. My entry price won’t matter.
Timing is more important than price!
A huge earnings calendar next week.
In addition to any escalation of the coronavirus, the stock markets will be tested next week by a plethora of earnings announcements. The “Who’s Who” of companies will be announcing. Below is the schedule of the major releases (subject to change):
Monday, January 27
- Lockheed Martin
Wednesday, January 29
- General Electric
Thursday, January 30
- Electronic Arts
- Northrop Grumman
Friday, January 31
- Exxon Mobil
1. Always change a losing game; never change a winning game.
2. Always have a plan going into a match, and a backup plan.
3. Always have a surprise to pull out all the stops.
4. Reconnoiter your opponent before the match for his strengths and weaknesses.
5. Have a general strategy against all power players, and another against all control players.
6. Analyze every match – how would you play it differently next time.
7. Keep a log of your strategies, and of the opponents.
8. Always have a customized strategy against each opponent, if possible.
9. Call a timeout whenever you skip two straight shots, or the opponent runs three straight points.
10. Keep a coach in the crowd for a second opinion. (more…)