| If your not sure and don’t have an edge, cash IS a strategy. If you are on a cold streak, reduce size by 70% and tighten stops for a week. Stocks aren’t people, they cant be trusted, an algorithm doesn’t care that you think you know the story or the chart. Don’t be “all in” in any name, you will blow up your account. It’s totally cool to change your mind right after a trade, the market changes by the minute, so should you. Pick one strategy and stick to it. This may take time if you are a beginner. You have to break a few eggs to make an omelet, so take losses but keep them very small. I haven’t taken someone else s idea in a long time, you have just as good a chance of being right or wrong as some other putz. Don’t have 15 technical indicators on your screen, that’s and EKG not a chart. Less is more. Don’t trade pissed off, it will crush your P&L Guess who wins when you “revenge” trade? Take partial profits on the way up and raise your stops. When you have three losing trades in a row, take a walk around the block. You may get an epiphany, at the very least it’s therapeutic. Realize early that the market will always be smarter than you. |
Archives of “trades” tag
rssBrooks, Trading Price Action Reversals
The third and final volume of Al Brooks’s series is Trading Price Action Reversals: Technical Analysis of Price Charts Bar by Bar for the Serious Trader (Wiley, 2012). A trader does indeed have to be serious to read all three volumes because, according to the author himself, the task is daunting: some 570,000 words.
Only half of the final volume is about trend reversals. The rest deals with day trading, the first hour (the opening range), and putting it all together, including 78 trading guidelines, some of which you may not have encountered elsewhere.
This volume is the most accessible of the three, but then my very tired eyes did a lot of work before getting here. It would be difficult to skip the first two volumes and expect to understand the third.
Brooks himself is not primarily a reversal trader. As he writes, “I prefer high-percentage trades, and my most common trades are pullback entries and trading range fades. I especially like breakouts because when they are strong the probability of follow-through is often more than 70 percent. I look less often for reversal trades, because most reversal attempts fail, but I will take a strong reversal setup.” (p. 463) (more…)
Disaster
When the market becomes volatile or a series of trades produce loses, it is easy for us to become fearful.
We then start to verbalize excuses as to why we even executed those trades or why we use the trading strategy that we use or any of a long list of items.
For all of us as traders to continue to grow, we need to develop a better way to address these situations. The foundation for this is analysis.
If we will be honest and look at the entire situation, generally we had executed a solid trade, however due to the very nature of the financial markets; an unusual movement occurred that caused us to not receive the results we expected. If we do this, most of the time we will see this fear, this confusion or these excuses just evaporate.
Are these times comfortable, never. Chaos is not comfortable, nor will it ever be.
But the successful trader will step up to the plate and handle this challenge instead of succumb to it. Do not allow a challenging situation to become a disaster because of fear or excuses.
Get Out When You’re Wrong
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.
10 Points for Traders
1. “Between stimulus and response, lies our freedom to choose” – Steven Covey
This quote is very important. What it tells us as traders is that there should be a specific setup you’re looking for (a pattern of sorts) and then aspecific protocol that follows it. Too many traders just “wing it” when they are trading instead of having a specific setup and plan that they know works and they know what their risk/reward is. If you don’t know what you’re looking for and you don’t know exactly what you’re doing when you see it, you’re likely headed down the wrong path.
2. Stick to your plan.
It’s extremely easy to lose focus of what you’re doing and start doing what someone else is doing. Stick to your trading plan and what you know works.
3. Ignore the noise.
Noise comes in a variety of ways. At times it’s economics news, at times it’s other traders. It’s not uncommon for traders to seek what other traders think about their trades because they are unsure about their trade setups. Noise for many traders usually results in less profits and larger losses.
4. Be patient.
Anyone who is successful at anything has patience. Whether it’s an athlete, your favorite musician or successful entrepreneurs, they all have patience. You don’t become successful without having patience. Just as important it is to have a set plan and rules, patience is just as important. (more…)
Day Trading is like Monopoly
I know a lot of traders who are just eeking by or breaking even at the end of the month. Many of these traders ask what they could be doing better or what my “secret” is.Monopoly. You buy 4 houses and sell them to buy a hotel. In other words, you find a simple, routine, monotonous way of trading and you just do it over and over. Most of the guys I talk to have a trading strategy, most of them have tested it. What they don’t have is the confidence to just stick with it. Trading shouldn’t be a roller coaster, but rather it should be routine like filling out TPS reports.Mental Toughness by Daniel Teitelbaum. In his book he states that you need to break down the walls that are stopping you from reaching success. He has you work on several mental exercises to help you focus on what you need to do. After all, if you knew that you had to take that GOOG trade this morning or your family would die you’d be plenty motivated to take the trade and to do it right.
So what’s the secret? It’s painfully simple – Day Trading (or any type of trading) is like
I think the main reason that most traders can’t stick with it is that they haven’t got enough mental focus. They get tired and sleep in past market open, or they become unsure of themselves so they fail to initalize the first trade of the day when the setup is right in front of them, or they rationalize that some piece of news or the other will do such and such to the market. All of these rationalizations are subconscious disruptions coming to the surface.
If you’ve ever failed to stick with your trading plan and end up taking the one losing trade of the day, I strongly recommend you check out
Make a committment to yourself, to your family and to your trading by taking the next 30 signals without deviating from your trading plan and I guarantee that you will learn the secret to your trading success – you.
Symptoms of fear- For Traders
- Jumping into unplanned trades because you fear being left out
- Hesitate in pulling the trigger because you fear the prospects of a loss
- Cut winners short in fear of giving prof its back, affected by noise
- Hang on to losing trades because you fear taking the real loss
- Feeling helpless about trading results
- Fear of missing out on trade
- Afraid to pull the trigger on a tradeFeeling paralyzed once in a trade
- Living in denial about results
- Rationalizing poor results
- Chasing big moves only to find you bought top and sold low
- Not taking stops
- Take small gains to “catch up”, market leaves you behind
- Winners turn to losers and then you get out
- Wanting to get back at market
- Experiencing large mood swings; big highs, deep lows, anger and /or depression
Difference
In Trading, the STATISTICS show that smarts, experience, etc. are not the differentiating factor. So, what does make a difference?
These are many of the factors that allow some people to become monster traders over time. It’s not my opinion, just my observations. |
Booking Losses Before They Occur
There is a meaningful difference between trading to win and trading to not lose. The average person feels more psychological pain over a loss than they feel pleasure over a gain–particularly once they have already “booked” that gain mentally.
When we enter a trade, we expect to be paid out. Mentally, we book a potential profit. When a loss materializes, it is the unexpected event–and we respond more strongly to the unexpected than to the familiar.
What is the solution to this dilemma? The answer, surprisingly, is to book losses before they occur.
It’s human nature to not want to think about such unpleasant things as losses. But by knowing our maximum possible loss in advance and by mentally rehearsing what we’ll do on those occasions when the loss occurs, we normalize the losing process. That divests it of its emotional grip.
We can never eliminate loss from life or trading; nor can we repeal the basic uncertainties of markets. What we *can* do is develop an edge in the marketplace and, over the course of many trades, let that edge accumulate in our favor.
Trading Decision-Making Process
There is a huge difference between a wish and a decision. A wish is a negative and puts the trader in a frozen state waiting for something to happen (generally associated with trying to get even on losing trades). That is negatively charged energy. Decisions, on the other hand, are positively charged energy. It makes the trader take action. Taking action is taking responsibility. You alone are responsible for your current mental state or condition. Decisions can be both good and bad of course. The sooner the trader realized the bad decision, the sooner they can act to correct it.
The first step in the decision-making process is to realize that what you are doing is not working. Remember that falling down is a positive motions is you bounce right back. Make a list of the positive and negative things that will happen when you take action on the decision.
Don’t expect instant gratification if you make the decision. Decision-making is a process that begins with the first step but these steps are the foundation for a stronger behavioral structure. This structure will give you the confidence in your trading. Confidence plays a key role in successful trading. Having the confidence necessary for successful trading can help the trader in difficult trading environments. Whereas one trader lacking confidence and good decision-making skills may be frozen and unable to act, the trader who has taken the time to build this foundation will be prepared to take the appropriate actions.
Many times specific decisions a trader makes will not yield profits, they will result in a loss, but more importantly, it will position the trader to be able to recognize and act on the next opportunity. Practicing and applying this process will pay dividends throughout your lifetime.