Archives of “what the heck” tag

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7 Trading Rules for Flash Traders

  
  Education
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1. Keep adding to losing positions. 
What the heck, price bound to turn soon. Martingale method sounds great. Consider adding on double to loosing trades. When price turns I’ll laughing all the way to the bank even I have to close my initial entries at loss.

2. Don’t use any stop-loss
Why bother with stop-loss. It’s for pussies anyways

3. Don’t waste time with money management
Thank you very much but I already know how to manage my own money. Why bother with money management nonsense.

I can use my time doing more trading and making money instead delving into all that mumbo-jumbo technical jargon.

4. Keep trading
I cannot afford to loose any opportunities. I need to be always in markets, day in day out. After all life is to short to waste golden opportunities. I cannot afford them passing by me.

5. I trust my great indicators
Why bother to learn to read charts and all that price action garbage while my sweet indicators are doing it for me. Leave the hard work to those suckers.

6. Buy the bottoms and sell the tops
I cannot understand why those people wasting their time trying to read charts. When price moves up significantly I sell, when price moves down I buy. Simple, buy low sell high as the saying goes.

7. Always check media and internet for good tips.
Let those suckers do the hard work again and I just use their work. After all all those experienced people in media cannot be far of from the truth as they have the insight knowledge.

Ten Destructive Trading Thoughts

  
  Education
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  1. That resistance is way too close, I really shouldn’t have taken that signal. 
  2. I should definitely trade that breakout. My method doesn’t trade breakouts,but that’s areally good-looking trade.
  3. I’m long, this is a downtrend.  What the heck was I thinking?
  4. This going to be a loser, for sure.
  5. Price has ripped so far away from me – please don’t turn into a signal.
  6. This is clearly in a congestion range.  I’m going to ignore that signal and wait for a breakout.
  7. Buying spikes – this short is doomed.  See ya, money.
  8. Yippeee! It’s not turning into a signal!
  9. Ooh, nice profit – I should take that while it’s still there.
  10. Take the profit. TAKE THE PROFIT.  TAKE THE DAMN PROFIT!!!!!

Examine your assumptions

  
  Education
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assumptions

Everyone knows we need a good plan to succeed, but what the heck does a good plan entail? In the course of studying how to trade, we begin building assumptions that govern our outlook of what the
market is, and how the market should operate.These assumptions are stitched together by general concepts of technical analysis and stuffed in a little box like a holiday turkey left to bake, the finished product we label a “plan”.

Logically following, if your underlying assumptions are incorrect, your plan will fail no matter how well your analysis. The irony, of course, is that the more disciplined you are in following a bad plan the more money you will lose.

Game Theory:
Majority of traders are taught what trading should entail, but in the market the majority is wrong. It is often said that the market is set up to frustrate the most traders. (more…)

Ten Destructive Trading Thoughts

  
  Education
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  1. That resistance is way too close, I really shouldn’t have taken that signal. 
  2. I should definitely trade that breakout. My method doesn’t trade breakouts,but that’s areally good-looking trade.
  3. I’m long, this is a downtrend.  What the heck was I thinking?
  4. This going to be a loser, for sure.
  5. Price has ripped so far away from me – please don’t turn into a signal.
  6. This is clearly in a congestion range.  I’m going to ignore that signal and wait for a breakout.
  7. Buying spikes – this short is doomed.  See ya, money.
  8. Yippeee! It’s not turning into a signal!
  9. Ooh, nice profit – I should take that while it’s still there.
  10. Take the profit. TAKE THE PROFIT.  TAKE THE DAMN PROFIT!!!!!

The Gods are Human

  
  Education
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Idolization is a basic function of human nature.  I don’t think it has to be proven any more.  From the little child that looks up to his or her older sibling or parent, to the full grown man sitting down on any given weekend watching his favorite sports figure in a state of awe, we all seem to idolize someone.  In my case any one of Jack Schwager’s personalities mentioned in his “Market Wizards” books,  Jessie Livermore, or any number of not so popular yet successful traders such as Chris Lori or Carolyn Boroden.  To distort Dylan’s words:  “it might be the devil, it might be the lord but your gonna have to <idolize> some one”.

In our natural idolization we forget that these extraordinary people are after all just people.  Even though in many cases they have been able to accomplish extraordinary things, in the end they are subject to the same influences to which we are subjected.  Though it may be hard to believe at times, yes they all put their pants on one leg at a time.

What the heck does this have to do with trading?  I’m glad you asked.

I notice that our trading terminology is littered with idolized lingo.  We talk of “smart money”, “institutional investors”, “market makers”, and such.  When we talk of these folks it’s as if they are gods that are somehow immune to the effects of human nature such as fear and greed.  I believe that it’s not so much that they are immune, as it is that they have learned to subdue and control their reactions.  They are active thinkers, not reactive thinkers.  Even then, they do all they do in a human body, with a human mind, that has human constraints and habits.

This tells me that even the “smart money” or the “institutional investor” is subject to patterns in his thinking and behavior.  The smartest of money managers goes to sleep at certain times of certain days of the week and is trading at certain times of the day.  Institutional guys have to create and deal with the markets patterns and behavior within the constraints of their own daily routines.  This creates opportunity for those willing to sit back and try to think about it. (more…)

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