Successful traders know that discipline is what allows them to enter their trades when the odds are in their favor and, more importantly, to get out when they’re wrong.
Being right is not the problem. What you do when you’re wrong is the crucial issue.
There are a lot of traders who buy then pray while the market goes against them, because they think that it will eventually go their way.
Most traders average down and wait for the market to turn their way.
Trading my way, I always have defined amount of money that I am willing to lose.
I let the market decide how much money I’m going to make.
Archives of “trades” tag
rssSo – you want to be a trader?
• In 1973 Larry Williams published a book titled “How I Made One Million Dollars Last Year Trading Commodities” detailing his trading success that year. The next year he lost the million dollars.
• Michael Marcus started with $30,000, borrowed another $20,000 from his mother and then proceeded to lose 84% of their combined capital (imagine trying explain that to your Mom) before becoming a successful trader.
• In 1987 several commodity funds managed by Richard Dennis lost 50% of their capital and were forced to stop trading.
It is the most competitive field out there, not only we have to fight each other (yes – this is what we do), but we have to oppose enormous computing power of heartless machines turning trades in nanoseconds.
Here is a simple test if you cut to be a trader – if you can stay emotions free when you finish it – try stock betting…just don’t bet your house on it – that was a job of banksters. (Just remember – 99% of you will be better of sticking with just a test and not moving to real trading)
Step 1. Go to your bank on a windy day.
Step 2. Withdraw a minimum of Rs10,0000 in cash.
Step 3. Walk outside and with both hands starting throwing your money up into the air.
Step 4. After all of the money has blown away, go home and sit down in your favorite chair and calmly say, “Gosh that was foolish. I wish I hadn’t done that.”
Step 5. Get on with your life.
Mint Money -Avoid Blue Channels
Just see Nifty Future kissed low of 4790..Not broken till this time of 12:40.
SBI as written zoomed above 1934 & kissed 1960 level (Written tgt for Traders : 1960-1967)
Sterlite :Cracked heavily from 745—716 level.
Refresh your memory :Last week written to sell and exit from all Real Estate stocks and my Focus was on HDIL ,DLF….Just see what happened ?
RNRL :On Friday kissed 92.25..never crossed that level and now kissed low of 87.
Always Remember :Trading runs in cycles: some good; most bad. Trade large and aggressively when trading well; trade small and modestly when trading poorly. In “good times,” even errors are profitable; in “bad times” even the most well researched trades go awry. This is the nature of trading; accept it.
-Awesome for Readers …But Routine for my Subscribers……
Updated at 12:48/14th Sept/Baroda
Don't Overtrade !!!
Even a daytrader trading a five minute chart has no need to trade every day nor to trade all day long. You should be filtering your trades so that you take only the best of the best.
Overtrading was a problem that took me a long time to overcome because I did not know what I was looking for. Overtrading is a very serious problem, and veteran traders learn to avoid it. In fact, one way to know if a trader is a mature professional is to know if that trader conquered the problem of over trading. (more…)
Dealing with entry timing
How do you personally get around from being “too early” or “too late” on an entry?
How do you personally get around from being “too early” or “too late” on an entry?There are a few things that have helped me get over missing a trade or “being right” and not making money.
- Opportunity vs profit. I thought the market owed me profits. Now, I see the bars on the chart not as profit but an opportunity to profit. The market does not owe me anything. I owe it to myself to execute my plan to the best of my ability. Good things happen.
- Important feedback. If a trade develops in a way that I had not anticipated, it means I did not notice a change. It is now up to me to understand why or determine it was an aberration. Either way the market is giving me valuable feedback.
- Unlimited time horizon. One of the side effects of trading is missing trades. It is something that you have to get over. It is a fact of life. The next trade is always more important than the last one. You should have more experience and knowledge, right? Knowledge of yourself, the market, and the interaction between the two.
Said in one sentence. I get over missing trades because I do not have a sense of entitlement, willing to use the feedback, and know that it is just one trade in 1000′s or hopefully 10,000′s.
Heads or Tails
“There is a random distribution between wins and losses for any given set of variables that defines an edge. In other words, based on the past performance of your edge, you may know that out of the next 20 trades, 12 will be winners and 8 will be losers. What you don’t know is the sequence of wins and losses or how much money the market is going to make available on the winning trades. This truth makes trading a probability or numbers game. When you really believe that trading is simply a probability game, concepts like “right” and “wrong” or “win” and “lose” no longer have the same significance. As a result, your expectations will be in harmony with the possibilities.”
7 Words for Traders
- Think risk first and profit second — Profitable traders view every potential and actual trade through the lens of risk or whether they are willing to truly accept the potential damage to their account as opposed to focusing on the potential reward of trades.
- Accept risk — Profitable traders truly accept the associated risks once they decide the potential reward is worth it. These traders understand that in order to win consistently they MUST experience controlled losses. They know that if they minimize losses and exercise patience with winners, they can reap incredible profits.
- Think more/Trade less – Profitable traders know that their profit on every trade lay in the short distance between their ears. They understand that the siren song of securities is an invitation to trouble much of the time. They spend more time assessing a security’s overall chart structure and identifying optimal transaction points rather than focusing on the physical activity of clicking an entry or exit.
- Stalkers — Profitable traders are disciplined and patient. They will pass up a good entry to wait for a great one.
- Decisive — Profitable traders make decisions. They know that as long as their decisions are framed properly (i.e. from a risk perspective), their first thought is generally the right one.
- Forgetful — Profitable traders have short memories. As we were told many years ago on a Wall Street trading desk, “If you have a losing trade, forget it quickly… the chance to profit is coming up. If you have a winning trade, forget it even more quickly… the chance to give up those profits is coming up… stay in the moment.”
- Group think — Profitable traders care little for any one trade. They know they have already taken steps to minimize the impact of any single trade. Instead they focus on groups of trades as groups are more indicative of their process… which is what’s really important.
40 Trading Lessons
1. Trading is simple, but it is not easy.
2. When you get into a trade watch for the signs that you might be wrong.
3. Trading should be boring.
4. Amateur traders turn into professional traders once they stop looking for the “next great indicator.”
5. You are trading other traders, not stocks or futures contracts.
6. Be very aware of your own emotions.
7. Watch yourself for too much excitement.
8. Don’t overtrade.
9. If you come into trading with the idea of making big money you are doomed.
10. Don’t focus on the money.
11. Do not impose your will on the market.
12. The best way to minimize risk is to not trade when it is not time to trade.
13. There is no need to trade five days a week.
14. Refuse to damage your capital.
15. Stay relaxed.
16. Never let a day trade turn into an overnight trade.
17. Keep winners as long as they are moving your way.
18. Don’t overweight your trades.
19. There is no logical reason to hesitate in taking a stop.
20. Professional traders take losses because they trust themselves to do what is right. (more…)
Effectiveness Is the Measure of Truth
In trading as in life, effectiveness has to be the measure of truth. If something doesn’t work, there is no point in continuing to do it. Misperceptions, false unconscious or conscious beliefs, and unhelpful behaviors can contaminate and desecrate your most sought after results.
Imagine the frustration of a trader who perceives that a market is changing direction when in fact it is persisting in its original thrust. Or consider, for further example, an investor who bought into the belief that buy and hold is a valid investment strategy. That investor had to have experienced devastating losses over the past year. Or ponder the trader who repeatedly fails to utilize stop losses and experiences numerous outsize losses because he won’t accept a loss.
When you choose effectiveness as your measure of truth, you can learn from your mistakes. You can make plans, take action, receive feedback, and assess the results. You can revise your plans, take new actions, receive new feedback, on and on, until you find a viable strategy that will work most of the time.
When you fear loss, when greed overcomes you, when you get reckless, or when you hesitate, you become grossly ineffective. When you’re confused or ambivalent yet think you need to take action, you do yourself no good. In each case you need to sort through your thoughts, develop a clear focus, search for the high probabilities, and take prompt and calm action. (more…)
5 Thoughts for Traders-Must Read
1. We want all trades to be winners. The foolproof system for trading profits is attractive and the seller of such systems can be convincing, yet the profits are elusive. The market could care less about our system, a past trading record, or the trading record of the one selling the system. You do know that the market’s attorney requires that the following be posted in a prominent place…like on our foreheads beside the big L sign!: “Past results are not indicative of future returns.” By the way, the market says, “you’re doing it wrong”.
2. We want to add to losers. The last time I checked the only reason we add to a loser is when the discussion is about our weight! Get on the scales and add up more losing pounds! Be the BIGGEST LOSER! The market, however, says the way to tip the scales in our favor is to add to the winners and lighten up on the losers. To do otherwise is to “do it wrong”.
3. We want to be right. Two wrongs don’t make a right in life but in the stock market two wrongs (and plenty more) will help you get on the right road to making money. The market says the trading game is about making money not about stroking the ego. The “right” road is the “wrong” road when your on Wall Street. Hey, if you doing it to be right, then you’re “doing it wrong!” (more…)