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The art of War

  
  Education
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Sun Tzu, the author of The Art of War, would make a great stock trader.  Although The Art of War is a 2500 year old military treatise it could just as easily be written for today’s stock trader as the principles outlined therein are as applicable in the stock market as in the theatre of war.  I read The Art of War again this past weekend and highlighted what I believe are some of the most pertinent and applicable principles for stock traders as seen through the eyes of Sun Tzu the would be stock trader.   Make sure you copy and post these in a prominent place for quick reference when in the heat of battle.

I. 17  When the market is rewarding your trading strategy, you should modify your position sizing accordingly.

I. 26  Now the successful trader prepares before he enters battle.  The unsuccessful trader makes but a few, if any, preparations before he enters battle.  Proper preparation leads to victory; a little preparation leads to defeat; and no preparation leads to ultimate destruction!  The one who is properly prepared is the one who is most likely to win.

II. 7   Appreciating the gains better helps you accept the losses.

II. 19  In trading, let your great object be a quick and decisive victory, not the slow death of a lengthy loss.

III. 18  If you know who the enemy is and you know yourself, you will never fear the next trade.  If you know yourself but not the enemy, you will win one lose one.  If you do not know the enemy or yourself, you will lose on each trade.

IV. 1  The good traders of old first put themselves beyond the possibility of defeat and then waited for the right time to defeat the enemy.

IV. 4  It is possible to know technical analysis without being able to properly apply it.

IV. 13  The successful trader wins his battles by making no mistakes.  Making no mistakes establishes the certainty of victory.

V. 13  The quality of entry is like a well-timed swoop of a falcon which enables it to strike and destroy its victim.

V. 15  Proper preparation may be likened to the bending of a crossbow; decision, to the releasing of the trigger.

VI.  5  Take advantage of opportunities such as support and resistance where the enemy must put up a strong defense; take swift action and catch the enemy off guard.

VI. 19  Be prepared for battle by knowing the exact time and place for proper trade entry.

VI. 32  Just as water retains no constant shape, so in trading know the market is constantly changing.

VII. 5  Trading with familiar stocks is advantageous; with unfamiliar most dangerous.

VII. 13  We are not properly prepared to trade a stock until we are familiar with the most likely direction of the general market.

VII. 21  Ponder and deliberate before you enter a trade.

VII. 28  Now the trader’s spirit is keenest in the pre-market; by noon day it is becoming weary; and by post market ready to relax.

VII. 32  To refrain from entering a market that is prepared to defend its current course is the art of practicing patience by studying current market conditions.

VIII. 3  There are trades which must not be taken; sectors that are not ready to be attacked; patterns that are set up for failure; positions that are to be surrendered; egotistical commands that are not to be obeyed.

IX.  28  In a mixed market when some stocks are seen advancing and some retreating, it is a trap.

IX.  41  He who does not think through his trade while making light of the situation is sure to fall victim to a loss.

X.  24  The trader who makes money without coveting fame and loses money without fearing disgrace, whose only thought is to protect his equity and ignore his ego, is considered to be a jewel of the kingdom.

XI. 17  When it is to the trader’s advantage, he will enter a trade; when otherwise he will not.

XI. 67  Trade in the path defined by rules and do not face the enemy until you feel you can trade with confidence.

XII.  15  Unhappy is the fate of the trader who tries to win his battles and succeed in his decisions without cultivating the spirit of confidence, for the result will be a waste of time and a drain on his trading account.

XII.  17  Do not trade unless you see there is an advantage in doing so; use not your money unless there is something to be gained.

XII.  22 The successful trader is heedful and full of caution.  This is the way to have peace of mind and to live to trade another day.

XIII.  4  What enables the wise and successful traders to trade and conquer, and achieve things beyond the reach of ordinary traders, is proper preparation.

10 Questions for Trend Followers ,Yes Just Answer Them

  
  Education
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Now, let’s get practical. Answer the following five questions, and you have a trend following trading system:

1. What market do you buy or sell at any time?
2. How much of a market do you buy or sell at any time?
3. When do you buy or sell a market?
4. When do you get out of a losing position?
5. When do you get out of a winning position?

Said another way (Bill Eckhardt inspired):

1. What is the state of the market?
2. What is the volatility of the market?
3. What is the equity being traded?
4. What is the system or the trading orientation?
5. What is the risk aversion of the trader or client?

You want to be black or white with this. You do not want gray. If you can accept that mentality, you have got it.

FOCUS

  
  Education
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Focus your efforts on the things that work best for you. If there is one trading strategy that works for you, then stick to it as long as it works. Don’t waste time testing everything you find on the Internet and don’t listen to everything you hear or read. Too much information can lead to confusion, difficult choices and failure – eventually.

 

Trading Strategy for Nifty Future-04th October’10

  
  Education
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Losing traders often take themselves quite seriously and seldom find humor in market analysis or the trading environment. Successful traders are often the funniest and most imaginative people you will ever meet. They take joy in trading and are the first to laugh or relate a funny story. They take trading seriously, but they are always the first to laugh at themselves.

CONCLUSION:Its no wonder that one of the first things psychiatrists test for when treating a patient is whether or not the patient has any sense of humor about his affliction. The more serious the tone of the individual, the more likely that insanity has set in.

Above 5566….Target intact of 6336-6593 level !!

On Going is 34th Month from High of 6336 & This week will complete 144 weeks from High of 6336.

(Major Turning …Not ruled out )

I know u all missed rally from 5356 (Low level )…Kissed Trendline and Taken U Turn.No worry @ all.

But…..Why u all missed EXPLOSIVE rally of life …Once it closed above 5566 for 3 days and then Weekly close was also given.

-In Just 15 sessions it flared to 6184 level-

Jump of 618 points !!

On Friday it was Boldly written :Small Triangle formation had occured !Today or by Monday……..Exactly will come to Know :Nifty Future will zoom to kiss 6200 or will crash to 5800 level.

-On Friday itself……zoomed by 154 points !!!

-Again ,Iam writing here…Not interested to Impress anybody…that this happened that happened….(It’s by God Grace and Hard work only ).Levels ,Time will not give u money :U should have Strategy and Trading is an art (90% will never earn …it’s my challenge )

 New High this week ?

Can Happen……Once NF crosses & closes above 6253 level…..will zoom to kiss 6291-6336+ level.

Today ,Just watch :6189-6197

Crossover above these levels…….More Firework upto 6221-6229 level.

& there after :6253 level.

Suppose not crosses Friday’s High ( 6184 ) and Remains below 6170……then Intraday slide upto 6129————–6115 not ruled out !

Major Support at 3DEMA :6100 & 7DEMA :6048

(Untill and Unless ……Powerful Intraday Reversal …not occuring …No need to go short in Big Qty !! )

Writing/Barking…Since NF closed above 5566 level….it will kiss 6336-6592 level.

Daily Chart may Look……..Overbought

But Weekly chart………Still Hot !

& Monthly chart indicates………more Fiery move on card !

I will Update more to our Subscribers …During Trading hrs.

Updated at 6:57/04th Oct/Baroda/India

Russell Sands on What Causes the Market to Move.

  
Analysis, Education, Video
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Russell Sands was one of the original “turtles” trained by the famous commodity trader Richard Dennis. Dennis believed that commodity traders could be trained, as opposed to a colleague who believed great trading was an innate ablility. To settle a bet, Dennis placed ads in trade magazines and interviewed hundreds of candidates, eventually choosing 32 trainees. The new traders were named turtles, after the turtles Dennis saw being raised on a farm in Singapore.

   By the way, if that story line sounds familiar, you may have seen the movie Trading Places, starring Eddie Murphy and Dan Akroyd. And for my only movie review on this site, I give it two thumbs up. Very funny. (more…)

The James Bond Method To Stock Trading

  
  Education
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So you want to be high flyer? Drive fast cars, attract the hot women, and travel the world? What sounds like the James Bond way of living, isn’t actually too far off that of a successfully wild stock trader?

While this approach might not be the most risk-adverse style of trading , we can all learn a thing or two from James Bond when it comes to making big bucks in the stock market.

Don’t worry about the consequences

While he may get himself into some crazy situations, James Bond never lets fear get in the way of getting the job done. Bond will walk straight into dark hallways and rooms filled of bad guys, confident that he has the upper hand.

Just like Bond, you too can block out potential consequences of stock trading. Don’t let the fear of losing money or a failed trade scare you away. Head into any situation, confident in your trading strategy.

Never get stressed out

For as great as Bond is, no other action hero gets caught into messy situations as much as Bond does. From the initial capture to just seconds before he finds his way out, Bond never loses his cool.

He stays calm under pressure and focuses on what to do next, rather than what might happen.

Just like Bond, you too can learn to keep cool under difficult situations. Understand that you don’t necessarily need to sell at the first sign of red or throw more money at the stock. Simply stay calm, asses the situation, and find your way out.

Don’t stick around too long

Just as fast as the actual characters who play Bond shift, Bond himself never stays in one place too long. One second he could be in Russia and the next minute he is in Las Vegas. Even the time he spends with a woman is never too long to get him into any trouble.

Like Bond, you too should never stay around a stock too long. For quick action, jump from stocks to stocks finding the ones with the most momentum and skipping out on the stale ones.

Indulge

While Bond maybe running to stop a nuclear bomb from going off, there is always enough time for a drink or a romantic night with a lady friend.

While stock trading is a serious matter, it doesn’t have to all be about facts and figures. Make sure to set time aside and enjoy the fruits of your labor. It keeps the game interesting. (more…)

How to Become a More Disciplined Trader-15 points

  
  Education
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1.Treat trading as a business.
2. Get someone to keep you on track.
3. Review your trades.
4. Set reasonable trading goals.
5. Tackle the easy problems first.
6. Review your performance.
7. Make trading rules and keep them visible at all times.
8. Make a trading plan.
9. Make a game plan.
10. Have a trading strategy to follow.
11. Ask yourself before every trade, “Is this the right thing to do?”
12. Do your homework.
13. Work hard to improve.
14. Use hypnosis.
15. Just do it.

20 Naked Truth For Traders

  
  Education
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1.    You have to have passion for learning to trade; passion is the energy that you need to take you to your goals.

2.    You have to have the perseverance to keep going after you want to give up.  90% of new traders quit when they were very frustrated while 100% of successful traders didn’t quit until they reached their goals

3.    New traders spend too much time looking for what to trade instead of focusing on who they are as traders.  You have to know who you are as trader first then you can start building your trading system.

4.    Traders have to be able to manage their stress by trading inside their current comfort zone. Traders have to grow themselves and trade size step by step.

5.    The vast majority of new traders fail simply because they did not do their homework before they started trading.

6.    A trader has to build a trading system that matches their own personality and risk tolerance levels.

7.    A trader that chooses to be master a specific type of trading method or trading vehicles has a much better chance of success than the traders that just dabble in many different things and never make much progress.

8.    A trader has to write a good trading plan while the market is closed to guide their trading while the market is open. (more…)

Vision

  
  Education
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Vision – Although an expectation of total clairvoyance as to future price movement is unrealistic, it is my goal as a trader to assimilate as much information as possible with the goal of playing out scenarios that tie in with each other.

This is not always easy to do. Yet, understanding trading does not occur in a vacuum, and markets do exhibit oddities. You can get yourself mentally prepared to deal with these outlier events. Those who can think for themselves and need not rely on templatized news releases for their ideas usually put themselves in a position to benefit from their forward thinking.

We have heard many times about leaders who saw an industry trend before it happened. This was no accident. It came as a result of their understanding of their field and what could change it for the better. Traders who gain an understanding of how things can potentially play out and factor that into their trading strategy go a long way toward keeping their objectivity when things unfold in a fast and volatile market.

Traders -17-POINT QUESTIONNAIRE TO EVALUATE YOURSELF

  
  Education
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To help you with your self-assessment, Dr. Tharp developed a quick 17-point questionnaire you can use to evaluate yourself. Take it and pass it on to your friends; I’m sure you’ll all get some insights into your performance. Answer each question with true or false.

  1. I have a written business plan to guide my trading/investing. ____
  2. I understand the big picture about what the market isdoing and what is affecting it. ____
  3. I am totally responsible for my trading results, and as as result I can correct my mistakes continually. (If either part is false, all of this statement is false.) ____
  4. I honestly can say that I do a good job of letting my profits run and cutting my losses short. ____
  5. I have three trading strategies that I can use that fit the big picture. ____
  6. For trading strategy 1 I have collected an R-multiple distribution of at least 50 trades (i.e., from historical data or live trading). If you don’t know what an R-multiple distribution is, which you’ll learn later in this book, you haven’t collected one, so answer “False.” ____
  7. For trading strategy 2 I have collected an R-multiple distribution of at least 50 trades (i.e., from historical data or live trading). ____
  8. For trading strategy 3 I have collected an R-multiple distribution of at least 50 trades (i.e., from historical data or live trading). ____
  9. For each of my trading strategies, I know the expectancy and the standard deviation of the distribution. ____
  10. For each of my strategies, I know the types of markets in which they work and in which they don’t work. ____
  11. I trade my strategies only when the current market type is one in which the strategies will work. ____
  12. I have clear objectives for my trading. I know what I can tolerate in terms of drawdowns, and I know what I want to achieve this year. ____
  13. Based on my objectives, I have a clear position sizing strategy to meet those objectives. ____
  14. I totally understand that I am the most important factor in my trading, and I do more work on myself than on any other aspect of my trading/investing. ____
  15. I totally understand my psychological issues and work on them regularly. ____
  16. I do the top tasks of trading on a regular basis. ____
  17. I consider myself very disciplined as a trader/investor. ____

(more…)

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