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Trading Hints and Tips

  
  Education
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 tips-1

1. OPPORTUNITY. There are dozens of these every day, unfortunately you can’t buy them all, so only pick the top 10 and then narrow them down to 2 to 3.
 This is done by using your buying criteria which is part of your trading plan which you already have written down. (Hopefully you have one?)

 2. BUYING and SELLING. I have a pre planned strategy which I have developed by trial and error; this was achieved by learning by my trading mistakes  and the mistakes of others.
 3. PATIENCE.This is definitely a virtue worth developing. Sometimes the market is going up in the right direction, but is not going as fast upwards as you  would like.  Be patient and use a “stop loss” to lock in those profits. However small they may be.  Also don’t always be in a hurry to “buy that next share” just because you have that money burning a hole in your pocket.  Do your homework and then you have chosen the right share for the right reasons and not just because it looked good 

 4. STRESS.If it is hurting! Don’t do it, cut your losses or be content with a small profit and get out. (more…)

Implicit memory and Decisions

  
  Education
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brain_power_bigImplicit memory is comprised of unconscious emotional patterns of relating to ourselves and others. It’s the kind of memory you access without thinking. It’s what makes you feel characteristically you.

These are the types of behavioural patterns laid down implicitly in the brain:

How do you feel about yourself?

Are you good at self-care? Do you accept all aspects of your personality? Or do you tend to deny yourself, or verbally beat yourself up?

How are you with others?

Do you naturally gravitate towards others and enjoy their company? Or do you prefer being on your own?

Implicit memory guides our behavior automatically, without thought or effort. You can think of implicit memory as a set of instructions or procedures encoded in the brain. However, a procedure can’t easily be described in words or contained in images. These procedures are nonconscious and nonverbal. (more…)

6 Trading Sins

  
  Education
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1. Thinking that trading  is a get-rich-quick scheme.
2. Reacting emotionally to market movement instead of assessing the market rationally using proven methods for high probability trades.
3. Chasing the Market.
4. Lack of preparation – entering the market with little or no understanding of what the probabilities are and how to handle them. Being unaware of special events or announcements that may be big marketmovers.
5. Butterfly Trading. Trying one method after another without mastering any.
6. “Go-it-alone” Syndrome, hoping to discover the ‘secret code’ for trading. Most successful traders have learned from other successful traders. This can eliminate years of trial and error, and some very painful trading losses.

Focus & Anticipation

  
  Education
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Focus: Once all of the little things are taken care of you can now focus on what is important, the market. This will dramatically improve your execution. You can only execute well over time if it is you and the market. You can take more intelligent risks because you have more of the RIGHT information. Have you ever been in a trade, then when you go back to review a trade, you realize you missed something important? More than likely that is a process problem. It is important to accurately attribute the importance of that information and realize that hindsight is a horrible recorder. I would rather make that decision when I can do something about it. This takes trial and error but a pattern will develop and once it does it is your responsibility to constantly monitor it for change.

Anticipation: Anticipation is key in trading because the market is always leaving cues to what it is going to do next or that what it is going to do next is not tradeable. We teach our traders to have a progression, much like a quarterback would. Anything can happen and having a progression will help you to take advantage of it.

Common Trading Mistakes

  
  Education
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In trading, as in life in general, we all know that experience is the best teacher. However, failures in stock market trading bear more weight since you stand to lose thousands of dollars (or more) with each mistake that you make. So as to help you recognize red flags and prevent you from losing money further, here is a list of some common mistakes you might want to avoid.

# 1: Lack of proper knowledge
Many people who come into stock trading with the notion that they can simply learn the ropes along the way may be fatally mistaken. This is because this kind of activity requires some degree of stock market know-how, as well as experience. First, you have to learn how to trade stocks, because this is the only that you can be familiar with terms, such as “stocks,” “shares,” “dividends,” “trends,” and so on. Without proper education, you might make decisions that could prove to be costly in the future. If you want to engage in trading, the first rule is for you to learn about the basics-read a book, enroll in a course, attend lectures by experts-anything that can help you understand what this is all about.

# 2: Acting on Impulse
In learning stock trading, you will realize that many emotions may come into play as you go through each and every transaction-impatience, greed, fear, and over confidence are some of these emotions. One of the most common mistakes people commit while trading is making decisions based on impulse. While it is true that you can feel a wide range of emotions as you evaluate the data in front of you, do remember that a cool, logical reasoning must prevail. Do whatever you can to always make decisions on a clear head.

# 3: Not having enough practice
As you engage in trading, the saying that “practice makes perfect” could not be truer. Again, if you want to learn how to trade stocks and are serious about engaging in trading, then you should also enhance your skills apart from just learning the basics. However, you could not afford the trial and error method using real money, because this is impractical and a waste of time. Fortunately, there are now some sophisticated tools that can help you practice through simulated trading and practice accounts. For a fee, companies can help you set up a practice account, through which you can execute “simulated trading.” What this does is it helps you learn how to trade stocks by honing your skills without the risk of losing actual money.

# 4: Having unrealistic expectations
Finally, another common mistake in trading is having unrealistic expectations. Sure, we may have all heard of those who got rich quick because of the stock market, but you cannot expect to earn millions without being able to make sound decisions based on fact. In the process of learning stock trading, you must be able to set a clear set of objectives, and not unrealistic expectations that could lead you to make rash (and costly) decisions.

In the future, try to avoid committing similar mistakes so that you can truly benefit from the time and effort you are trading in the stock market.

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