Overtrading is a major obstacle for profitability. People tend to overtrade when they don’t have a plan for the trading day/week.
If overtrading is a major issue for professional traders, lack of discipline is a major issue for developing traders. (more…)
Archives of “trades” tag
rssART OF TRADING Golden Rules
1. Always wait for the setup: No Setup-No Trade. 2. THE BEST trades work almost right away. 3. Never take a big loss. If it doesn’t ‘feel’ right. Remove it! 4. Always perfect your craft and sharpen your skills(good traders are constantly learning) 5. Be patient with winning trades: Impatient with trades that fight back. 6. DISCIPLINE is the key to winning at everything! 7. Never get emotionally attached to trades, trading, losses or profits. 8. Always trade with the size that makes you unemotional(emotional trading is the quickest way out of this game). 9. Keeps things simple and do not over-think or over-complicate your trading. LESS IS ALWAYS MORE. 10. Stay humble at all times.
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The mark of a professional Trader
- It is my fault. I traded this position too large for my account size.
- It is my fault. I didn’t stick to my own risk parameters.
- It is my fault. I allowed my emotions to dictate my day trading.
- It is my fault. I was not disciplined in my trades.
- It is my fault. I knew there was a risk in holding this trade into earnings, and I didn’t fully comprehend them when I took this trade.
Why do you think most traders fail?
- Poor selection criteria; usually based on personal opinion, theory or tips and bad advice
They don’t stick to and commit to an approach; style drift
Don’t cut losses (#1 mistake made by virtually all investors)
Don’t know the truth about their trading – they fail to conduct in-depth post analysis
Treat trading as a hobby and not a business
- Want too much too fast; learning a skill takes time
There’s a lot of important meat in those few lines of text. We all recognize that it’s not easy to cut losses, but I firmly believe that this results in more grief for traders than anything else. What causes a trader to suffer a big hit? I believe that it’s the unwilligness to accept that a trade is not working, and that it’s not likely to get any better if held longer. Under those conditions, losses mount. The only way to prevent that big loss is to cut it off at its knees – and the time to do that occurs when it’s a much smaller loss.The difficulty with that is sacrificing the possibility that the trade would turn profitable. My advice: Get over it. Many trades will be unprofitable. That’s a fact of life for a trader.
I understand that on a rare occasion a gap opening may do irreparable damage, and not provide an opportunity to take the small loss. However, that’s also a preventable occurrence. If the damage is too great, then the position was too large. It really is as simple as that.
How many of us look at trades after the position is closed? How many dissect the entire trade in an attempt to find out what was done correctly and what mistakes were made? Very few.
A mistake is not a trade that loses money. A mistake is making a decision that was clearly incorrect at the time, but the trader was unable to see that. Another mistake is avoiding a trading plan and not doing postmortems on your trades. It all takes so much time. However, if you take trading seriously, and do not consider it to be a hobby, there’s work to be done.
Mistakes are part of the game. Making the same mistake repeatedly is not. At least it’s not part of any successful trader’s game.
Three Pieces of Trading Wisdom
1) Before you put your capital at risk, have a well-formed trade idea;
2) When your idea pays you out quickly, take some profits;
3) Don’t get caught up in individual trades; focus on profitability over a series of trades and days.
I know, I know. These things sound ridiculously simple. But it’s only been in the 4-5 years that I can look myself in the mirror and say that I’m doing all three consistently. The spinning reverse dunks get the attention in basketball; the long touchdown pass makes the evening replays; and the big winning trades are the ones we like to talk about. The greater part of success, however, boils down to Xs and Os on the basketball court; blocking and tackling on the football field; and following basic fundamentals about framing and managing trades. It may not be sexy to execute on the fundamentals, but it gets the job done day after day and builds a career.
Three Tips to Better Handle Losses
It is very unlikely that a medication is going to help you feel better about a trading loss. There is no simple fix to the emotional problem of losses. No one likes to lose money, and a loss can be very painful. But, being able to take losses is also a part of the trader’s job description. One of our tasks as traders is to take losses as a routine function of the trading role.
To help make losses more of a routine event rather than an event that throws us into emotional turmoil, here are three key tips to help you better handle losses:
1. Have a trading edge. Define your setups well and be sure they have an edge. By an edge I mean that these setups have a certain probability of winning over a large number of trades. In other words, based on your experience or historical testing, your trade setup should possess a positive expectancy that over, say, 100 trades some percentage (e.g., 67%) will be winners and produce a sufficient profit over loss to make the trade worthwhile. If you don’t have a trading edge, you are likely trading random patterns and you are likely to have many, many losses. (more…)
Trading Rules
Trading rules are an important part of the trading strategy. Without them you might end up in some messy trades and feel almost as bad as this guy.
10 Points -Why Traders lose Money
Not honoring your original stops. Big losses make winning systems losing ones.
- Quit trading it during draw downs. All systems have losing streaks, the key is to manage risk and stick to it until the system gets make to a winning streak.
- Lack of discipline, drifting from taking defined entries and exit signals to opinions is hazardous.
- Trading too big, no system can survive huge positions sizing that makes the first string of losses the last.
- Style drift is deadly, slowly changing your trading plan during active trades is not good. Research comes after hours and before changes are made. (more…)
Thinking Can Make Impossible Become Possible
I am sure that all of us have seen the statue of The Thinking Man. It is an amazing sculpture that evokes in individuals many different emotions and ideas.
As a trader, if we are always worrying about what might happen if we do this or do that and if it is wrong that we will lose money, then we will rarely if ever have a successful session.
I submit that if we take time before we begin a trading session to think about all of the correct decisions we will make, all of the good trades we will execute, all of the money management actions that we will adhere to and so much more, then we will be so far ahead of multitudes of other traders.
When we take time to think about what we desire to accomplish and what skill sets we have and how we will put them to use while we trade, when the session is over we will many times be amazed at what we have accomplished.
Don’t begin trading with thoughts of it being impossible to succeed or else your results will match those thoughts. Fill your thoughts with confidence and focus on what you truly desire to happen and then let yourself just go ahead and make it happen.
The Easiest Daytrade To Make
Essentially there are 3 timeframes to trade when it comes to “daytrades”:
1) the open
2) the close
3) and everything else in between
As you know by now, #3 is really the toughest to trade. It is the lowest probability trade of the three types, and your stops frequently get hit. Frequently, even if we get the direction right it is not very profitable because we get whipsawed like crazy. However, this is where many trades can be made, so the scalps do add up to a good chunk if you know what you’re doing.
So those who had joined us and getting Intraday calls-ofcourse having upperhand and minting money. (more…)