The key to trading these markets, or ANY market, is to REMAIN PATIENT! Learn from the Patient Bear!
Archives of “Trade” tag
rssHallmark of a Position Day Trader
Mistakes -Traders Must Read
- A mistake means not following your rules. If you don’t have rules, everything you do is a mistake.
- It is much better to trade a lower-scoring SQN system that fits you than a higher-scoring SQN system that doesn’t fit you.
- You are responsible for everything that happens to you. When you understand this, you can correct your mistakes. We call this respond-ability.
- Repeating the same mistake over and over again is self-sabotage.
- A trader who makes one mistake in 10 trades is 90 percent efficient; that 10 percent drop in efficiency could be enough to make him/her a losing trader.
Probability and reward-to Risk Assessment -Traders Must Read
- Never open a position without knowing the initial risk.
- Define your profits and losses as a multiple of your initial risk (R-multiples).
- Limit your losses to 1R or less.
- Make sure your profits on the average are bigger than 1R.
- Never take a trade unless the reward-to-risk ratio of that trade is at least 2:1 and perhaps even 3:1.
- Your trading system is a distribution of R-multiples.
- When you understand #6, you should be able to hear/see a description of a system and know the kind of R-multiple distribution it would generate.
- The mean of that distribution is the expectancy, and it tells you what you’ll make on the average trade. It should be a positive number.
- The mean, standard deviation, and number of trades determine the SQN score for your system.
- Your SQN score tells you how easy it will be to meet your objectives using position sizing strategies. Other than that, your system has nothing to do with meeting your objectives.
- Systems are usually named after their setups, which are usually based on some attempt to predict future prices. Prediction has nothing to do with trading well.
- System performance has to do with controlling risk and managing the position through your exits.
20 Points of Successful Traders
- They have the resilience to come back from early losses and account blow ups.
- They focus on what really matters in trading success.
- They have developed a trading method that fits their own personality.
- They trade with an edge.
- The harder they work at trading the luckier they get.
- They do the homework to develop a methodology through researching ideas.
- The principles they use in their trading models are simple.
- They have mental and emotional control is key while winning or losing.
- They manage the risk to avoid failure and pain.
- They have the discipline to follow their trading plan.
- Market wizards have confidence and independence in themselves as traders
- They are patient with winning trades and impatient with losing trades.
- Emotions are dangerous masters to the trader; they know how to manage their own emotions.
- Market wizards evolve as a trader to avoid eventually failing in a method that has lost its edge over time.
- It is not the news but how the market reacts to that news is what they watch for.
- The fully understand the right way to position size for their goals of returns and drawdowns based on their risk/reward and winning percentage.
- Market wizards understand comfortable trades are usually losing trades while the more uncomfortable trades are usually the winners.
- They are good losers. Cutting losses when proven wrong and even reversing the direction of their trades when the price action dictates it.
- The best traders are always learning through their own mistakes.
- Passion for trading was the fuel for their eventual success.
Trade base on Facts, Not on Hope -Anirudh Sethi
Knowledge is the key to winning and gain in the Stock, Commodity and Futures, and Forex markets.
Trading on trust is a fools game.
Do not attempt to place a trade. If the market triggers the exit signal you had predefined, without emotion follow it immediately. Many traders enter the market with more ‘hope’ than understanding. You have to take complete charge of your trading. The best way to do this is to get knowledge and all of the information you can about the market you wish to trade and then form a plan.
You plan should include not only the entry parameters but also the exit parameters. The departure is the most important. Your trade should be protected. Failure to admit that you’re wrong when the trade is moving south is one of the reasons.
Learn to trade on knowledge. There isn’t any need for fear and hope that get in your way. When you’re able to trade on knowledge, you’ll have the ability to react to trading opportunities when it’s time to do 31 and to exit out.
Your best friend needs to be the Stop Loss order. (more…)
Evaluating Yourself as a Trader-Anirudh Sethi
Trading firms frequently assess traders before contracting them. One of the approaches to assess a trader is to get some information about their greatest trading lament in the course of the most recent six months. At the point when the trader depicts the lament is normally a vast losing trade. A trader as of late asked me how I assess my execution as a trader and keeping in mind that to numerous, the appropriate response may appear glaringly evident, as a general rule, there’s unquestionably more than one answer. That is on the grounds that there are various approaches to assess our execution as traders. However, we should take a gander at 2 general classes with the end goal of this post. The most widely recognized approach to assess execution is constructing simply with respect to the consequences of P&L, win rate, and maximum picks up versus maximum loss, draw down profundity from account highs, and so on. That is the fast conclusion the vast majority hop to, and those insights are unquestionably vital, especially to the individuals who essentially need to know the primary concern. The main issue with the information is that it just recounts some portion of the story. Numerous traders know the main issue. However, they aren’t sure where to find solutions relating to how to enhance it. It is critical for you to recall that you can just trade your convictions about the market. So what are the key convictions that are managing you? To truly comprehend what’s controlling your trading, you should list your convictions.
Learners Make Best Traders
Evaluating trade achievement rates or potential outcomes are exclusively credited to those traders who say, “I committed an error. I didn’t know what truly occurred until the point that I backpedaled and broke down what I did. I discovered I clutched a supposition that wasn’t justified.” These traders acknowledge the obligation that they made the mistake and attempted to make sense of why. They grasp affliction instead of keeping running from it. This is the best demeanor to develop on the off chance that you need to improve as a trader. Numerous traders hide missteps and loss away from plain view. This is never a smart thought. Going up against deficiencies is difficult, yet concealing them just guarantees you will encounter them—and their agony—once more. Another approach to talking with potential traders is to get some information about something in their trading that they are especially glad for, once more, finished the previous six months. Many will discuss extraordinary trades that were made. They would clarify in detail a period when they performed particularly well. That is justifiable. We as a whole jump at the chance to give the splendor a chance to sparkle. Be that as it may, it is the calmer, less ostentatious things that truly matter over the long haul. When somebody reveals to me that they are most glad for the exertion they put into their trading in the course of the most recent six months, I sit up and pay heed. As traders, our attention ought to be on the things we can do each day to convey our trading to a larger amount. These incorporate our day by day work, work on trading to enhance particular trading abilities, contemplating outlines and market development, tending to constraints in our trading execution, and pondering approaches to manage challenges and turn out to be better traders. Another approach to assessing our execution as traders are too intently looking at our trading procedure. With a specific end goal to achieve this, however, we need to put forth some troublesome inquiries in the look for reality, some of which may be like
• “Did I have a particular arrangement for that trade and tail it?”
• “Am I taking plays which I comprehend and which are appropriate for my trading time allotment?”
• “Am I trading too substantial, and accordingly settling on poor choices as I react just to my P&L?”
• “Am I setting myself up for the trading day by getting my work done?”
• “Am I trading capable?”
• “Do I have some dependable techniques which can create a benefit after some time?” (more…)
JPM Develops A.I. Robot To Execute High Speed Trades, Put Humans Out Of Work
With high-margin FICC revenues stuck in a secular decline across the financial industry, banks are forced to extract as much profit as possible from existing product lines. Which explains why JPMorgan will soon be using a “first-of-its-kind robot” to do away with carbon-based traders altogether and execute trades across its global equities algorithms business using a “robot”, after a recent trial of JPM’s new artificial intelligence (AI) program showed it was “much more efficient than traditional methods of buying and selling“, the FT reports.
JPMorgan, the world’s biggest bank by revenue, believes it is the first on Wall Street to use AI with trade execution and said it would take rivals 18 to 24 months and an investment of “multiple millions” to come up with similar technology.
The AI — known internally as LOXM — has been used in the bank’s European equities algorithms business since the first quarter and will be launched across Asia and the US in the fourth quarter, Daniel Ciment, JPMorgan’s head of global equities electronic trading, told the Financial Times.
In the latest victory for robot kind over humans, LOXM’s job will be to execute client orders with maximum speed at the best price, “using lessons it has learnt from billions of past trades — both real and simulated — to tackle problems such as how best to offload big equity stakes without moving market prices.” (more…)
These 7 Things -Traders Must Avoid
- Trading with no stop losses. You can’t control how big your profits are, the market will trend as far as it does. However, you can control and limit the size of your losses with a stop loss and a carefully managed positions size. Not having an exit plan if you are wrong can be very expensive when a trend takes off against your position and you start hoping instead of just cutting your losses and moving on.
- Your opinion can cost you money. Trading your opinion against all other market participants can be very expensive. The market goes where it wants and when you disagree with where it is going it will cost you. Going with the flow in your time frame is the best way to make money. Fighting the flow of the market can be expensive.
- Egos are expensive things. Inflated egos cause a trader’s #1 priority to be proving they are right and refusing to admit when they are wrong. It is very expensive for ego gratification to be higher on a trader’s list than making money.
- Trading off predictions can cost a lot of money when they are wrong. There is more to be made by reacting to what the market is doing instead of predicting what you think it will do later. The future does not exist and it is expensive to pretend like it does.
- Stubbornness causes small losses to become big losses. It causes a trader to make the same mistake over and over because they do not assimilate feedback. Instead they keep doing the same thing over and over and expect different results but keep getting the same results. Stubbornness is expensive.
- Not having an exit strategy for a winning trade can be very expensive. It is possible to ride a big winning trade back to even. If there is no plan to lock in profits while they are there a winning trade can even turn into a big loser. Trailing stops and targets can put the profits in the bank.
- Trading too big of position sizes for your account can be very costly because no manner how good your winning trades are you are set up to give back the profits with a few big losing trades in a row,
Succeeding At Trading By Not Trading
One important performance variable that isn’t tracked often is the variability in a trader’s risk-taking. Opportunities are not distributed perfectly evenly over time: some markets offer more opportunity, some less. As a result, the skilled trader will vary risk-taking as a function of the opportunity set: sometimes trading actively and in size, other times pulling back from trading. What traders refer to as “overtrading” is the result of an inability to regulate decision-making by opportunity set: taking risk when rewards are quite uncertain.
“When are you mostly out of markets?” is a question I like to ask. The ability to not trade is itself a performance edge when it helps traders hang onto their gains during times of market uncertainty. This is yet another area where having a full and rich personal life becomes important to trading success. If all you have to sustain you psychologically is your trading, it is going to be difficult to not trade. If you have a full and rich life outside of trading, then it is much easier to take risk when rewards justify the effort—and put trading aside otherwise.
It’s great to have a passion for trading; better to have a passion for successful trading. And sometimes that means engaging in other passions and refraining from marginal trades.