Always wait for the setup: no setup – no trade. Agree. If your strategy doesn’t provide you a good risk/reward trade to make, then your job is to be patient until it does. Ironically, this often requires you to sit out some very good moves in the market and be inactive at the very same times you want to be aggressive.- The best trades work almost right away. Agree, but with one important caveat – this rule greatly depends upon your strategy. Some strategies will require greater patience than others. If trading short-term, this rule is almost always correct, but if your time frames are longer, then you also have time on your side which requires more patience but that patience can pay off if your analysis is correct.
- Never take a big loss. If it doesn’t ‘feel’ right. Remove it!Disagree. Sometimes you have to take a big loss to prevent the risk of an even greater loss. Refusing to take a big loss when a mistake has been made can be very costly. I also disagree with the view that “If it doesn’t feel right, remove it.” Actually, some of the best trades you will ever make in your career are those trades that feel wrong and about as far from “right” as you can make it. Don’t believe me? Think over the last month or so about the trades you missed because they didn’t feel right but your strategy told you to hold or buy them anyway! It is also interesting to me that this rule says to trade by feel and at the same time advises in another rule not to trade by emotion. You can’t do one without the other!
- Always perfect your craft and sharpen your skills – good traders are constantly learning. Agree. No matter how skilled, intelligent, and successful you have been, there is always room for improvement. Moreover, because of the ever-growing changing nature of the market, what you do now to trade successfully won’t always work in every situation and the next market environment. Only experience and constant dedication to your job will provide you with the weapons for enduring market success. (more…)
Archives of “trades” tag
rssFocus On Playing To Win – Want To Know Why?
The focus on avoiding losing is an easy condition to slip into. I found it especially so if you’ve had some tough periods in your life. Perhaps you lost a business, blew up a trading account or went for that promotion and failed to get it.
It is particularly easy when you are taking down data to analyse your performance as most effective performers do. That data is right in front of you. Clear as day. You can see exactly how many losing trades you have had, how many losing days, weeks etc.
You have an understanding that it’s all about probabilities and that if you follow the old saying “limit your losses and let your winners run” you can be a successful trader with a seemingly bad win rate (30-40%). As long as your winners outshine your string of small losers you will be OK. (more…)
Winning Traders -Never Quit
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1. They accept losing trades quickly but it does not define them, they learn and try again. This trade more wise than the last one. 2. They compartmentalize emotions by not blaming themselves but understanding the historical expectancy of their systems returns. 3. They have a bias toward action by constantly doing things that move them closer to their goal of being a rich trader. (Homework, chart study, reading, being mentored, back testing) 4. They change their minds sometimes, they know when to stop doing something that does not work and move in the direction of trading success through new lessons. 5. They prepare for things to go wrong through risk management an position sizing instead of just going naively toward their goals they are ready to make adjustments as needed. 6. They’re comfortable with discomfort, they will accept losses and draw downs in their method, they are willing to pay tuition to the markets to get to where they want to be. 7. They’re willing to wait, they patiently improve each day setting themselves up for those winning trades that will be very profitable in the future. 8. They have trading heroes that inspire them to be better than they are now and give them the hope of achieving their dreams. 9. They have more than passion they are on a mission, their desire for success gives them the drive to not quit until they win. 10. They know only time separates them from their goals of wealth. |
Goals for Consistency
Consistency, consistency, this is one of the most important quality I wanna achieve. Here I have a set of goals pertaining to consistency. I got the material from an article sometimes ago. I have no idea who is the author. Anyway, here is the abstract and I have added my own ideas.
I want to consistently..
- Visualize myself in tune with the market
Seeing oneself in tune with the market and apart of the ebb and flow. Great athletes constantly visualize themselves performing at their peak. In trading, which is purely a mental game, is just as incumbent upon us to do this as well and even more often.
- Be as professional as possible.
Trading is not a pastime activity. It has to be treated seriouly , and professionally. We have to do the best job ,possible leaving no regrets at the end of the day.
- Record my trades for review and analysis
By recording our trades and thoughts, we allow ourselves to internalize the markets actions even more and objectively analyze our own actions.
- Look to be the agressor and proactive
Looking for setups and taking a dynamic approach to the market is critical in succedding. Those that can consistently seek out great opportunities and then execute on them are usually rewarded.
- Following my trading plan
Having a plan is important. Being able to execute the plan is the key to success. Stick to it.
- Be patient and hit the same high quality spots
By executing on the same game plan, we remove a great deal of the emotional turmoil that trading can bring.
At last, consistency in our approach leads to consistency in our profits!
20 Trading Rules for your weekend
1. KNOW THYSELFWhat kind of trading style fits your personality…Trend following? Day Trading? Buy and hold (please NO)? Next, what do you want to accomplish with your trading…Monthly Income? Long-Term Growth? Risk Aversion? And finally, you must have a grip on your emotions, because you will experience failure and success in trading and you need to know how you will react to both.
2. KEEP IT SIMPLE
You should be able to describe each trading strategy in your war chest on a 3×5 index card. There are so many different trading tools and indicators out there that it is easy to make trading and investing harder than it is. Find a few technical and/or fundamental indicators that you can apply to your trading, and master them.
3. DIVERSIFY
Specialize in a few different trading strategies and then spread your risk out across multiple asset classes using those trading strategies. Make sure all of your trades are not dependent on the same sector, commodity, industry, or idea.
4. LOSERS AVERAGE LOSERS
Only losers add to losing positions. If a trade is going against you, move on and find another trade. It’s not about pride, it’s about profits.
5. NEVER STOP LEARNING
You must constantly make an investment in your trading education. Read books, go to seminars, or talk to other traders, because over time the traders that make a commitment to never stop learning will be the traders that stay in the game and are able to adjust their trading style to any market environment.
6. CREATE A TRADING PLAN
Having a trading plan creates discipline. Why are you making this trade? What’s your risk? What’s your reward? How much margin is required? What will you do if things get bad, or really good? These are questions you should be able to answer on every trade you execute.
7. BAD TRADE MOVE ON
I don’t care who you are, you are going to have bad trades. When you have a bad trade, take a break from trading, go to a movie, or kick the dog (once), but don’t sit around and pout. It’s important that you move on and start planning how you are going to get it back.
8. TRADE WITH CONFIDENCE
Trust your research, feel confident in the time and energy you have put into your trading strategy and know that no matter what the market does in the short term, you have the ability to make money in the long term.
9. THE MARKET IS GOING…????
Nobody knows where the market is going and you don’t either. So pick trading strategies that allow a little wiggle room in case you wake up one morning and the market doesn’t do exactly what you told it to. (See trade schools)
10. DICSIPLINE
This word sums up a long term trader. You must have the discipline to follow your systems and manage your emotions hour after hour, day after day, year after year. If you are undisciplined in other areas of your life, don’t be surprised if one day you break your trading rules. You must practice discipline 24 hours a day. (more…)
Self-Control and Discipline
Cultivating discipline and self-control is vital for consistent and profitable trading. You implement proven trading strategies, over and over, so that across a series of trades, the strategies work enough to produce an overall profit. It’s like making shot after shot on the basketball court so as to accumulate a winning number of points. The more shots you take, the more likely you will amass points. But the winning player is the person who first develops the skill to make the shot consistently, so that at every possible opportunity, the ball is likely to go through the basket. To a great extent, consistency is the key. If the player uses one approach one time and a different approach at another time, performance is haphazard.
It’s the same for trading. One must trade consistently, following a specific trading plan on each and every single trade. This allows the law of averages to work in your favor, so that across the series of trades, you will make an overall profit. If you follow the plan sometimes and abandon it at other times, you throw off the probabilities. Suppose you used a strategy that had a track record of 80%. Under the best-case scenario, you could only expect to win 80% of the time. But since history doesn’t always repeat itself, it’s likely that you will win less than 80% of the time. If you don’t execute the trading strategy the same way each time, you will decrease your winning odds. And fewer winning trades may mean an overall loss. That’s why discipline and self-control are so important. (more…)
Be patient
Be patient. If a trade is missed, wait for a correction to occur before putting the trade on.
Be patient. Once a trade is put on, allow it time to develop and give it time to create the profits you expected.
Be patient. The old adage that “you never go broke taking a profit” is maybe the most worthless piece of advice ever given. Taking small profits is the surest way to ultimate loss I can think of, for small profits are never allowed to develop into enormous profits. The real money in trading is made from the one, two or three large trades that develop each year. You must develop the ability to patiently stay with winning trades to allow them to develop into that sort of trade.
Be patient. Once a trade is put on, give it time to work; give it time to insulate itself from random noise; give it time for others to see the merit of what you saw earlier than they.
Thought from Peter Brandt
“The irony is that in real time, I never fully feel like I am trading successfully because I am always aiming for performance that is higher than I am attaining. I am generally my own worst critic and constantly set the bar higher than my last jump. The result is that it is difficult for me to crow about the “successes” of my trading career.
But, to the degree I have been consistently successful through the years, I believe it is due to three factors. First, I am obsessed with risk management. I spend more time and mental energy focusing on risk control protocols than on anything else. Managing losses and losing periods is my number one priority. If I can just tread water during the inevitable tough periods, sooner or later I will find myself caught in a favorable tide.
Second, my trading approach is overly simple by design. The result is that I know with as much certainty as is possible with a discretionary approach when there is a trade entry in my program. It does not mean that the trade will be profitable – only that the trade is there.
Third, I have tried to engage market speculation systematically, breaking down the process of trading into every conceivable component. What flows from this is an understanding of what components of trading are controllable and measurable and what components are uncontrollable. By the way, whether the next trade or series of trades will be profitable is not a controllable factor. Once a trader learns this — it is then possible to remove ego from the equation.” – Peter Brandt
The Power of Regret
Everyone knows that chasing price is usually not beneficial, we either end up catching the move too late, or we get poor trade location, which makes it more difficult to manage the trade.
However, there are other forms of chasing that are just as common, maybe more common, and just as counter-productive. As a trading psychologist I see these all the time.
Traders who are not profitable are often too quick to chase after new set-ups and indicators, or a different chat room, if that’s your thing. Obviously, we need to have a trading edge, whether it is from the statistical perspective of a positive expectancy, or simply the confidence in a particular discretionary strategy such as tape reading, following order flow, market profile, etc.
Chasing a trade is the fear of missing out. The fear of missing out is associated with various emotions, including regret. In my work with traders and in my own trading, I’ve seen the incredible power of regret. There’s a lot of talk about fear and greed in trading, but the power of regret is often overlooked. Some of my own worst trades, and those of my clients, often have a ‘regret from missing a prior opportunity’ component. When I finally finish my book on the psychology of financial risk taking, I will include much about this overlooked but very powerful emotion. (more…)
Questions after the hit
When you take a hit, you have got to think your way through it logically.
Questions to ask yourself when you have taken a hit.
What is the lesson here???
What did I learn????
How can I avoid this next time????
What is my strategy the next time I encounter this situation????
Did I remember to pat myself on the back for the good trades this month?????
Did I remind myself that I have had many more successes this month??????
Did I remind myself that this is just an opportunity to do it better next time?????
Did I use proper discipline????????
Did I wait for a proper trade set-up??????
Did I follow my trading rules????????
How long am I going to wallow here???????
Did I remind myself that the market is very generous and will always give me plenty of opportunities for profit???????
Do I have more money now than I did at the beginning of the month???? (more…)