The 12 most important characteristics of a good speculator

In most fields, people know the necessary characteristics you need to be good. In speculating it is a bit different – most people have little idea what makes a good speculator. Here’s my opinion on what a good speculator needs:

1. Rationality. It is critical to be able to objectively analyse markets, reality, businesses, your own failings, your performance, using reason rather than emotion. It is also critical to be able to make decisions on the facts, and not be affected by how much money you made or lost recently. The ideal speculator would trade identically after making $1 million as he or she would after losing $1 million. Most people are way too emotional to be able to speculate successfully.

2. Pattern recognition. In my view, markets follow certain patterns, which generate predictability and thus inefficiency that can be exploited. I believe that these come from flaws in human psychology. People who detect patterns quicker, better, and more deeply than the norm, will pick up these inefficiencies faster than the rest. I think there is some artistry in recognising patterns – and this tends to handicap people who lack some artistic and creative talents. For example, engineers, doctors, and dentists are infamous for being poor speculators. If you are good at pattern-recognition games like chess, poker, backgammon, go etc, then there’s a good chance you have some of the traits needed to speculate.

3. Independent thought. Some of the most profitable speculations come from taking the opposite side to a dominant consensus; and some of the worst losses come from accepting conventional wisdom, or following the popular stocks and markets of the day. It is therefore absolutely critical to be able to think independently, and divorce your views from that of the crowd. Note that ‘the crowd’ is not necessarily the retail investor – often the crowd is most hedge funds and professional investors. If you are the sort of person who goes along with the majority, or is uncomfortable telling almost everyone that they are totally wrong and misguided, you are unlikely to be a good speculator. A speculator needs to be something of an iconoclast, maybe even a bit of a misanthrope.

4. Passion for studying the markets. It’s rare to succeed at something you don’t have a strong interest in. Markets, perhaps more than any other field, reward historical study – the same themes play out repeatedly, but over long periods of time, so superficial research (e.g. looking at US stock market behaviour for the last 30 years) often fails, where more in-depth study (such as researching the panic of 1907, the great silver bubble of the 1970s, or extreme boom/bust processes in obscure 3rd world markets) pays greater dividends. Good speculators know their market history.

5. Market experience. Speculation is a field where experience really counts – not just in time, but in variety and depth. The more market environments you have participated in, the more familiarity you get with how markets work – reading about the crash of 1987, or the dot-com bubble, is just not the same as actually living through it and trying to trade during such wild environments (although reading about something is better than not doing anything at all). There is a reason most great speculators don’t really get going until their 30s, and often hit their prime in their 40s and 50s. George Soros started his fund at 39, Julian Robertson in his early 40s, and Buffett made his biggest gains in the 70s through the 90s, for example.

6. Discipline and work ethic. My weak point. Markets are a tough game and the competition is fierce – the more time you put in, the better you will do. Personally I enjoy life a bit too much to be a workaholic, so I will probably not reach the top of my field – but it can be profitable, and more fun, to make a satisfactory living with a reasonable effort.

7. Contingency planning. Markets are a complex and hard-to-predict open system, a bit like wars in that respect. It is not enough to simply study the evidence, then form a view and hope that it is right. The skill comes not so much in handling cases where you are right (although that is important), but in handling situations where you are not sure, or where you might even be plain wrong. Minimising losses when you are wrong is critical. So is designing trading plans that can profit in multiple market scenarios, where other traders hold back because things aren’t clear (by the time things are clear, usually a lot of the profit potential has disappeared.). A good speculator, like a good general, prepares for all plausible eventualities – and even some implausible ones.

8. Patience. Speculation is a field where you don’t have to play unless the odds are strongly in your favour. If you are adequately capitalised and live below your means, the cost to waiting is low. Whereas the cost of making a bad trade is very high. So, you must remain patient and not take risks until opportunities come along that are so attractive that they justify the risk of losing money.

9. Risk control. A good speculator thinks like Andy Grove – only the paranoid survive. Good speculators are always thinking what can go wrong with a trade, with a portfolio, even with the markets or life. A great example is from Nassim Taleb’s early writings – he talked about a French risk manager at his bank who went through his trading positions, and asked Taleb what was his risk control plan if a plane crashed into the building. When I told this anecdote to friends pre-2001, they all laughed – I didn’t, and neither did any other good trader I told it to, rather we all thought “hmm good point” and started (if we hadn’t already) planning our response if something like a natural disaster, political assassination, terrorist attack, or war broke out. Furthermore, it is not enough to analyse rare event risks, you must also make sure that your ‘normal’ risk-taking is within certain limits. If you are right, but your risk is too big, you can suffer catastrophic losses that take you out of the game before you can profit – you may be right but still go bust. Good speculators control and limit both normal market risk, and so-called “Black Swan” risk.

10. Seeing the big picture. A good speculator is always seeking the connections between seemingly unconnected events. When Mount St. Helens erupted, an acquaintance of George Soros was surprised to see him trying to figure out what the impact would be on grain prices. But that’s what you must do as a speculator. People holding off buying iPhones in summer 2011 until the iPhone 4s comes out? Hmm, what impact might that have on Apple earnings? iPhone 4s now out on the market? Maybe next quarter will return to the familiar pattern of beating expectations. Civil war breaks out in the Ivory Coast? Better consider the implications for cocoa futures. Ditto for Orange Juice futures if a couple of hurricanes come close to the Florida coast during growing season after a multi-year bear market. Even the latest celebrity fad might result in a mini-boom in some obscure retail stock – a speculator should be promiscuous in their research into potential connections between society and the markets.

11. Decisiveness. Markets can move and change fast. It is critical to be able to act decisively when needed. There are many good analysts in the markets, but few of them are able to translate their analytical prowess into profitable speculation. Much of the reason for this is that they lack decisiveness, and tend to suffer ‘analysis paralysis’ or freeze when the pressure is on. Preparation and experience can help you to be more decisive, but ultimately you must have it in your nature to pull the trigger under stress situations. Someone with a gamer’s hair-trigger mentality will probably do better than a studious book-worm type who prefer to consider at length before making decisions.

12. Willingness to admit mistakes. Markets are an odds game. Even the best-prepared, highest conviction trade can be undermined by events. When you are wrong, often the price goes way further against you than you would expect, causing major losses. It is essential to put ego aside and be willing to not only admit mistakes, but also to immediately exit your position (and sometimes reverse). A good speculator can be maximum long one day, and then exit completely, get flat, and actually start shorting the same asset a few minutes or even seconds later, if he realises he was totally wrong. There is a good passage in one of Jack Schwager’s “Market Wizards” books, where Paul Tudor Jones is telling him about a time he was heavily long and then realised the market was going to collapse: Schwager said “so you knew you wanted to get flat” and Jones replied “No, I knew I wanted to get short”. That is the true speculator mentality – zero attachment to past opinions, positions, or core convictions, if the evidence changes on a dime.

So, these are the skills I think a good speculator needs: rationality, pattern recognition, independent thought, passion for studying the markets, market experience, discipline and work ethic, contingency planning, patience, risk control, seeing the big picture, decisiveness, and willingness to admit mistakes. You will notice that the list is dominated by abstract mental skills, and that most need either highly rational or creative and forward-looking thinking. If you are an original and creative but also very rational thinker, you may have what it takes to succeed as a speculator, should you wish to do so. Just remember that experience counts for more in this profession than most – for that reason, I feel it is better to start at a trading firm or under an experienced speculator (possibly as their trading assistant), than to go it alone from day 1. Study and observe the markets thoroughly and patiently, paper-trade, then graduate to trading small with minimal funds, and slowly scale up as your experience and results improve.
Source: https://fullmargin.wordpress.com

Quote for the day

"Optimism is the foundation of courage." - Nicholas Murray Butler

Five Stages of Trader Evolution

Gambler

This is the oldest trader’s ancestor. He was fairly naive, highly emotional and addicted gambler. The gambler perceived the market as his casino-like entertaining arena. He bet large and he bet often. His goal was to get rich quick. Most, if not all, of his capital was quickly distributed to more evolved traders.

Hunter
He came to understanding that markets are not random, but quite predictable. His quest was to find a single technical indicator which will make him rich. The hunter spent countless hours back testing expensive software algorithms and other people’s methods. Unfortunately, most of his capital was promptly distributed to more evolved traders. A great deal of traders stayed stuck in this stage of development for a relatively long time.

Analyst
He gave up the quest for “holly grail”. He came to understanding that the market is much more complex and dynamic place, so he applied his analytical skills to conquer it. The analyst developed better understanding of market interdependency and correlations. He was able to develop fairly sophisticated methods for identifying low risk/high reward trading opportunities. Unfortunately, he was not the master of his emotions. He would sell his winners too early and hang onto losers for too long. His capital was distributed over time, at relatively slow rate, to highly developed traders.

Manager
At this stage, our ancestors got grip of proper money management technique, which enabled them to control their emotions in the market place. The manager was extremely systematic in his decision making process. He fully understood importance of active account management, position sizing and capital preservation. Unfortunately, he was often under-capitalized, which affected his bottom line via high commissions and other cost of doing business. Also, he could not commit to trading full time. Although, he was not net loser, his results trailed those of professional traders.

Professional trader
The final stage of trader evolution. Properly capitalized, fully developed and highly motivated, the professional trader takes a full advantage of his predecessors. He is aware of his weaknesses, so he dedicates time and energy to work on them. He is humble, unemotional and self-sustaining. His only goal is to trade well.
Which stage are you at?
http://penguinsgoldenegg.blogspot.co.uk

Quote for the day

"Successful people save in prosperous times so they have a financial cushion in times of recession." - Brian Tracy

What Separates A Wealthy Mindset From A Poor Mindset

Quote for the day

"You don't need strength to let go of something. What you really need is understanding." - Guy Finley

Learn the 7 Secrets for Building Unstoppable Confidence

Become more powerful and successful in everything you do.

By Lolly Daskal

Building true confidence is a gradual process. No one is going to turn into a positive, self-confident person overnight.

But if you're in need of some extra confidence, here are seven secrets for building unstoppable confidence that are no longer undercover.

1. Stop comparing yourself to others.

The worst thing you can do is compare yourself to others. Remember that you're seeing the surface of their lives, not the underlying reality. Focus instead on what's important--your own strengths and goals.

2. Remember that the loudest is not the most confident.

We tend to look to the blow-your-own-horn types as the confident ones--but some of the most successful people are gentle giants, humble and self-effacing people who turn out to be the strongest, people we admire more and more as we come to appreciate their depth.

3. Keep your limiting beliefs at bay.

Even the most successful people have limiting beliefs about themselves, but the biggest difference is that they choose to focus on their strengths and possibilities instead of their limits.

4. Live in a positive reality.

Don't say anything about yourself that you don't want to become a reality. Positive thoughts and words alone won't make you a more confident person, but confident people do think a lot of positive things about themselves. Remind yourself of what you're capable of and what you've already accomplished.

5. Don't mask it.

Self-confidence isn't the impression you give others but how you feel about yourself. It's all about who you are, where you are, and where you want to be in your own life and leadership.

6. Change what you can.

Confident people know they cannot change the past, but they can change the future. They make daily choices that lead them toward the future they want to live out.

7. Be fully committed.

Be fully committed to doing whatever you can to build your success every single day, and to accepting full responsibility for your life. If it's uncomfortable, you're probably on the right track. Don't procrastinate; do what it takes without agonizing or drama.

These seven secrets can uncover your confidence from within--the kind of confidence that gives you sole responsibility for everything in your life.

Source: www.inc.com/

Quote for the day

"Are you willing to lose money on a trade? If not, then don't take it. You can only win if you're not afraid to lose. And you can only do that if you truly accept the risks in front of you." – Sami Abusaad,

10 New Trader Errors to Avoid

Trading is one of the few professional fields where anyone can go up against professionals very quickly and easily by simply opening a trading account. The barrier to entering the trading world is low and most people can get quick and easy access to trading live markets. There is no college required, no degree, or apprenticeship needed before a new trader steps up to compete in the world markets against seasoned traders and professional money managers. The profitable traders feed off the mistakes of the unprofitable traders. Doing things that put the odds against them cause them to lose money. Here are ten key things that cause losses over and over again and can lead to blowing up an account if not corrected.

1. New traders keep an opinion even after the market has proven them wrong, day after day. A stop loss is there to keep losses small, listen to a stop loss placed in the right price level will save you money.
2. New traders add to a losing trade making it bigger and bigger hoping for a reversal to get the trader back to even. Increasing a trade when on the wrong side of a trend is expensive.
3. Trading a big position size because you are 100% sure that the trade will work out is very expensive when it does not work out. The obvious trades are rarely the good trades.
4. Taking a trade that you do not fully understand can be surprising expensive. It could be wide bid/ask spreads, volatility, liquidity, time decay, implied volatility collapse, leverage, margin, etc. Ignorant trades almost always end badly. Know your trade before you enter it.
5. Being a bear in a new bull market is usually expensive.
6. Being a bull at the beginning of a bear market can be expensive trying to catch falling knives.
7. A trader starts down a dangerous road when instead of taking their initial stop loss when wrong about a trade convert their trading plan to hold and hope. In the markets emotions are expensive.
8. Buying far out of the money front month options with terrible odds of making money usually lead to losses.
9. Risking a large amount of money trying to make a little bit of money is almost always an unprofitable endeavor as a big loss will wipe out a lot of small gains.
10. Trading first before you have done the proper homework on what leads to trading success will lead to paying tuition to other more skilled market participants.

“The key to long-term survival and prosperity has a lot to do with the money management techniques incorporated into the technical system.” -Ed Seykota

“If you diversify, control your risk, and go with the trend, it just has to work.” -Larry Hite.

Quote for the day

"Enthusiasm is that ingredient of vitality mixed with a firm belief in what you are doing that ensures the success of any project you undertake." - Dale Carnegie

7 Errors Traders Make in Bull Markets

By Steve Burns

Here are the seven most common errors traders make in a bull market.

1. They wait for a correction to get long that never happens. So they end up missing a big part of the up trend.
2. They do not get long with a big enough position size or enough leverage so they end up underperforming the market.
3. They do not buy the small dips when they get a chance.
4. Perma bears do not believe in the bullish move higher so they sell short losing money in a market where it should be made easily by being long.
5. Some fundamentalists think the market is too expensive so they stay in cash missing a strong up trend as they wait for buying opportunities at better values.
6. When the dip they were waiting for finally happens they are too scared to buy it and they then begin to fear that the market will crash.
7. Instead of making money too many get obsessed with calling a market crash because they believe the market prices are too damn high.

The best strategy for a bull market is to not fight it but instead sit back and enjoy the ride.

www.newtraderu.com

Quote for the day

"Don't be indecisive and unstable in all your ways. Rather, walk in the strength, confidence, and boldness that come from decisive action." - Dan Miller

82 Tips For Successful Trading

 By Todd Mitchell

Every serious trader should not only understand each of these trading principles/statements, but abide by them as if your life depended on it, that is, if you truly want to be a Successful Trader!

(1) Always Listen to what the market is telling you.

(2) Do NOT try to outguess the market; but rather let it serve as the guide on how to trade the set-up.

(3) Waiting for the Trigger before taking a trade helps you trade consistently and avoid speculation.

(4) Many professional traders & institutional buyers buy breakouts. When money starts flowing you can ride the coattails of the large money on the way up.

(5) Buying bottoms and shorting tops is largely a failing method, despite the predisposition of most new traders to attempt these types of trades.

(6) All breakout traders have to deal with the reality of false moves and whipsaws, so I suggest NOT entering the market on breakouts, but rather buy and sell on pullbacks (i.e. retracements).

(7) Successful trading is much more difficult than it first appears. It requires a long process of market watching and practicing chart pattern recognition.

(8) There are NO Guarantees in trading, No absolutes. Anyone who tells you otherwise is trying to sell you something.

(9) People often underestimate the effectiveness of simple trading methods, focusing more on advanced techniques, in essence, equating complexity with profitability. Technology has fooled many traders into believing the more complicated a trading strategy is, the better the chances of success. However, simple trading rules CAN produce profitable systematic trading approaches that are easy to understand and execute.

(10) All traders are opportunists and will/should take advantage of any benefit offered to them.

(11) If a trader can't make money with what's available now, they won't make money by inventing a new indicator.

(12) We think even day traders need to do some macro work.

(13) Take what the market will give you, don't become greedy or you'll suffer.

(14) Personal issues that are not properly handled can sabotage the best trading methodology and most committed efforts.

(15) Streaming quotes and fast executions won't make you a penny if you don't have a sound trading methodology.

(16) Making money trading is never easy. But without a sound trading methodology, it can be virtually impossible.

(17) Always look to reduce your risk first and then look to increase your profitability second.

(18) To keep winning in the markets you have to continue and try to improve your skills as a trader.

(19) If you're truly serious about trading for a living, one of the first things you should set out to do is find a winner to emulate. Find a mentor who's been there.

(20) One of the most common reasons that traders put their trading on hold is fear; fear of making a serious mistake, of not being perfect, of failing, of losing face, of losing all their capital, and of feeling pain. In each case, the fear is of some kind of loss, and loss always results in pain.

(21) Profitable day trading often results from capturing market swings without regard to the overall market trend.

(22) Volatility is the essence of trading, creating the reward and risk that makes a market.

(23) Complacency with a trading approach is real danger in trading.

(24) Bulls make money and Bears make money, But PIGS get slaughtered.

(25) Oscillators can be used to help give trade signals, confirm trades, offer timing clues and help identify general market trends, but a successful trader still needs to understand price action analysis.

(26) Most traders real problems are in their failure to cut losses short, an inability to be disciplined, letting their egos get personally involved in the market, fear and greed, and a lack of risk management.

(27) I recommend analyzing every trade you make, it WILL be the best learning tool you'll ever have.

(28) Never think of trading in terms of the greed factor; always think of the loss potential first.

(29) What separates the pros from the amateurs is when a trade doesn't reach its potential profit level and you're still able to exit the market with a profit.

(30) If new traders can last six months to a year, they definitely have hope of succeeding.

(31) It's very important to do something to occupy your mind away from the market take breaks.

(32) Know your trading personality. That's what separates winning traders from losing traders.

(33) Trading losses need to be monitored, but profits take care of themselves.

(34) If you focus on the money, you tend to make more trading mistakes because you get too emotional. You must focus on your trading you will then make better trading decisions. Sometimes this is easier said than done but it is very important!

(35) A traders success or failure ALWAYS comes down to their mental state of mind very important!

(36) Emotions can never be completely eliminated from trading, but by cultivating an awareness of patterns that impact your trading, the better you will manage that emotional edge.

(37) An ongoing look at a trading journal and the analysis of individual trades WILL definitely help in your success as a trader!

(38) Understanding the risk and reward characteristics of your trading methodology/system is vital to consistent success with that trading approach.

(39) Discipline, patience, persistence & a well thought-out trading plan will definitely help with the emotions & psychology of trading.

(40) Most successful people have lost more than they made.

(41) You must believe in yourself & have confidence in yourself, without it you will never become a successful trader NO questions about it!

(42) You MUST have realistic (trading) goals when trading the markets.

(43) Let me ask you a simple question: What's the most you've ever lost in a trade & how long did it take you to lose that money? Were you able to recoup that money? And how long did it take to let go of your loss & move on?

(44) Let me tell you what one of the best kept secrets in the trading world is, Almost Nothing Turns Out As Expected.

(45) The best trading plans usually go wrong. Not occasionally, Not sometimes but Usually.

(46) Most traders want certainty & reliability  they want a system, or an advisor, or a market indicator they can count on to tell them what to do.And the more they don't get it, the more they want it.

(47) Trading systems NEVER produce the results advertised for them, forecasts rarely come true, trading advisors with records of phenomenal success almost always fail to deliver when you put your money with them, and the best trading analysis is contradicted by reality.

(48) Most traders lives are filled with a continuing series of examples that didn't turn out as planned. And a majority of traders continue to hope that success and certainty are just around the corner.

(49) Most people are first attracted to the markets by the thought of making a lot of money fast without having to really work for it, THINK AGAIN!  This is definitely the wrong thought process for success especially in this business.

(50) No one will look after and trade your money the way you will NO ONE Period! Do NOT let any supposedly competent advisor trade or manage your money.

(51) Most traders keep searching for the Holy Grail, but they never find it. A Holy Grail does NOT exist in this business.

(52) If you want Predictions, Read the Enquirer.

(53) When you give up the hope that some advisor, some system, some source of inside tips is going to give you a shortcut to wealth, you'll finally begin to gain control over your trading/investing future.

(54) When you finally give up the search for certainty, an enormous burden will be lifted from your shoulders — and then you can finally begin to learn to trade/invest realistically and successfully.

(55) Realize that trading is a psychological game rather than an economic, fundamental or technical game.

(56) Realize that understanding yourself is the KEY to profit making decisions and strategy.

(57) Don't Struggle. Remember, the market is always right. Always Try To Follow The Path Of Least Resistance.

(58) We as traders Don't Deal The Deck. We Just Play The Percentages.

(60) There are only three (3) areas to master in trading:

(1) Knowing Ourselves (psychological)

(2) Knowing What To Do, and

(3) Doing What You Know.

(61) Moving average crossover systems generally lead to Whipsaws most of the time.

(62) Realize that once you make up your mind that you are willing to work on issues that are blocking your success, there is no stopping you when you apply the right trading method(s).

(63) Always start off by paper trading to see if you truly understand what you're doing. Remember, there is NO rush the markets will still be around tomorrow.

(64) Setting logical Profit Objectives is one great way to take the guesswork out of exiting the market.

(65) Always Use Stop Losses! There are no exceptions.

(66) What you lose in money in the markets, gain in Skill and Knowledge — Learn From Your Mistakes!

(67) Always Protect Yourself with a stop loss technique, If you don't employ stops when you trade, You WILL Not Become Successful!

(68) There is truth in the old adage "A fool and his money soon part."

(69) Taking Profits is a balancing act: Hold on too long and you risk giving back your profits. Get out too soon and your gains might not be worth holding on to. But by using an approach to solve this puzzle you can establish intelligent profit targets that only help enhance your performance.

(70) Trading, like any other profession, is an acquired set of skills that you must take time to Learn in order to be successful.

(71) For most people, there's a learning curve  a step-by-step process of obtaining skills in areas such as trade entry, trade exits (profit targets, protective stops, etc.), trade management, money management, not to mention learning to manage yourself psychologically.

(72) Hindsight is one thing, but in real-time trading you don't know an exact outcome especially in the business of trading/investing.

(73) Major obstacles in successful trading are;

 

(1) Lack of Confidence, and 

(2) a High Anxiety Level.

(74) The more time frames you watch simultaneously, the more confused you will get.

(75) Some of the most profitable traders use a strategy of selling rallies in a downtrend and buying dips in an uptrend.

(76) Sell-offs accompanied by high volume often indicate downside exhaustion and are generally followed by quick bounces.

(77) Traders who act quickly and use strict risk control can do very well in the markets.

(78) What separates a successful trader from an unsuccessful trader is composure and discipline in the market.

(79) Look for trades with the market (TREND), not against the market.

(80) No matter what trading strategy successful traders use, they always know how to identify good trade set-ups and do NOT push trades when they are not there.

(81) While the key to real estate may be location, location, location — the key to successful trading/investing is discipline, discipline, discipline.

(82) It's not you against the market, but rather it's YOU AGAINST YOURSELF.

We hope you've been able to get something out of The 82 Statements of Successful Trading. We also hope you see / learn something you didn't already see / learn before.

Source: www.tradingconceptsinc.com/

Quote for the day

"Our fatigue is often caused not by work, but by worry, frustration and resentment." - Dale Carnegie

Fragile Trader, Anti-Fragile Trader

By Steve Burns

Reading Nicholas Taleb’s book Anti-Fragile really got me thinking about how traders are broken. (This may actually be my favorite book out of over a thousand I have read in my life.)

Traders can become fragile and be broken in several ways:

1. They can quit because they believe that trading successfully is impossible.
2. They can lose half their account or all of their account and just give up.
3. They can become emotionally traumatized by one huge loss or a string of losses and just not be able to trade any more due to the psychological pain of trying to have faith in their trading or methodology again. This is mental ruin.
4. A trader can lose faith in their self as a trader.
5. A trader can lose faith in their system.
6. A trader can trade too big and blow up their account, they want to trade and they believe they can make it back but have no money. left to trade with. This is financial ruin.

A trader can become anti-fragile and can even benefit from adversity at times by:

1. They have 100% confidence that they will be in the 10% of consistently winning traders, it is just a matter of time.
2. They do not give up after losing the majority of their very first account they just accept it as paying tuition and start again this time with faith they will win after much homework.
3. The anti-fragile trader trades small, their emotions do not bleed into their trades, each trade is just 1 of the next 100. They risk 1% of total trading capital per trade. No one trade makes them fragile they separate their risk over a long period of time and individual trades.
4. The successful trader identifies themselves as a successful trader, losing trades do not change who they are.
5. The trader believes that time is on their side and draw downs are just temporary, short term losses do not change the trader’s belief in long term success.
6. Successful traders know that their trading account is their life blood, guarding it against big losses is their #1 priority.
7. They truly believe that only time separates them from their goals as a trader because they are willing to do the home work and persevere until successful.

Fragile traders are inevitably broken due to ego, laziness, ignorance, or arrogance. Anti-fragile traders are not only not broken but benefit from circumstances by learning, growing, and becoming more resolved to win. Adversity makes them stronger.

www.newtraderu.com

Quote for the day

"You are never given a dream without also being given the power to make it true. You may have to work for it, however."- Richard Bach

Profitable Trading Step by Step

Profitable trading is simply making more money on your winning trades than you lose on your unprofitable trades. Profitable trading is not about being perfect and making money on every trade. It is not about predicting the future, making a great call, or any one big trade, it is all about the math.

Here is the real path to profitable trading.

You need a quantified trading system with an edge that creates only four things: a big win, a small win, a break even trade, or a small loss. If you have this type of process then you will make money over the long term as your edge plays out. The most important part of the process is eliminating big losses from your system.

The purpose of backtesting and historical chart studies is to develop a process of entries and exits that creates the big wins and the small losses. Stop losses keep losses small and trailing stops can maximize winning trades.

The psychology of execution of a trading system is one of the most important aspects of trading. The trader is the weakest link in any system. Ego, stress, and emotions can stop a trader from following their system with discipline and perseverance.

Position sizing is a crucial part of keeping losses small. The size of your trades must be based on the maximum loss you would experience if your stop loss is hit. A loss of 1% to 2% of total trading capital is a safe level to manage. Position sizing of 10% of your trading capital is generally safe in non-leveraged markets. Volatility and trading range is the best guide to a trade size, you may be able to trade a 100% positions size in the SPY ETF at times and other times only a 1% size in stock options.

The risk has to be worth the reward. On entry, the profit target should be at least twice as much as the stop loss placement. Creating good risk/reward ratios at entry is a primary key to profitable trading. The higher the reward to risk ratio, the less winning percentage it takes to be a profitable trader.

You must know your positive expectancy as a trader, it is defined as how much money, on average, you can expect to earn for every dollar you risk.

Calculate your profit factor, it is calculated as the gross profit divided by the gross loss (including any commissions and slippage) for a full trading period. This metric of performance shows the amount of profit per unit of risk and values greater than one indicate a system is profitable.

Profitable trading step by step

1. Do backtests and historical chart studies.
2. Develop a trading strategy with an edge.
3. Define exactly entry and exit parameters.
4. Define position sizing based on volatility and trading range.
5. Take trading signal entries.
6. Cut losing trades short when a stop loss is triggered.
7. Let winning trades run until a trailing stop is triggered or a profit target is reached.
8. Manage total risk exposure.
9. Trade the system with discipline and perseverance over the long term.

Source: www.newtraderu.com

Quote for the day

"Self-pity is our worst enemy and if we yield to it, we can never do anything wise in this world." - Helen Keller

10 Things A Trader Needs to Give Up

It is easy to become so obsessed with adding to our trading arsenal with knowledge, books, chart patterns, indicators, moving averages, and gurus, that we forget to analyse what we need to remove from our plan. One of the biggest things that determines whether a new trader ends up as a winning trader, is how well they can filter out what does not help them make money. Traders can’t follow every indicator, trade every method, and endlessly add to their trading methodology. As traders, we have to make choices, and we must know what makes money and what to remove from our trading strategy.

• Give up your need to be right: The market is always right, do not strive to be right in your predictions and opinions. Strive to go with the flow of the market.
• Give up control: No matter how long you watch a live stock stream, you have no power over the movements. Save your emotional energy by not trying to cheer on your positions and get wrapped up in every price tick.
• Give up blaming other factors for your losses: There is no mysterious ‘They’ causing you to lose money. Your choices cause you to lose money, or your system just had a losing trade. It is a free country and free market.
• Give up beating yourself up for losing trades: If you followed your trading plan, then there should be zero regrets involved in a losing trade. If you did not follow your plan and lost, then money was the tuition and you paid  to learn the lesson. You must move on to the next trade. 
  
• Give up your own opinions: If you took a trade based on your own opinion, you have to give up your opinion and get out if the trade moves to a place that proves you were wrong.
• Give up your inability to change your mind: The more you believe a trade just can’t miss, the more dangerous it is. It will cause you to trade too big and stay in too long. You have to always be ready to be wrong.
• Give up your past trades: Each trade is a new trade. Do not hold grudges against stocks and think they ‘owe’ you for past losses. Do not fall in love with a stock and hold it as it falls lower and lower.
• Give up letting your trading define your self worth: Do not let your trading define you. Diversify your life with friends, family, hobbies, and other interests. It is not healthy to become overly obsessed with the markets.
• Give up on losing trades quickly when your stop is hit: Your best trades will be the ones that are profitable from the start. If they immediately go against you, be prepared to be stopped out. You can destroy your trading account when you start the “It will come back, I just have to wait” chant in the midst of a death spiral.
• Give up on price targets let your winners run as far as they will go: In the right market conditions trends can go on to unbelievable levels. The big wins during these trends can make your entire career. If you set a predefined profit target, you will not miss the opportunity when it comes. Let a trailing stop take you out.

Instead of giving up on the markets, give up on these bad habits instead.

Source: newtrader.com

Quote for the day

“If you are positive, you’ll see opportunities instead of obstacles.” – Confucious

Are you a FOMO (Fear of missing out) trader? 8 things FOMO traders say.

Source: http://www.tradeciety.com/

Quote for the day

“Motivation is what gets you started. Habit is what keeps you going.” - Jim Rohn

Quote for the day

"The secret of success is to do the common thing uncommonly well." -John D. Rockefeller Jr.

Todd Mitchell’s 20 Rules for Trading Success

01. Always use stops. Risk control is the true measure of a good consistent trader. If you lose all your capital on the lemons, you can’t play when the great trades set up. Consider cash as having an option value.

02. Don’t over trade. This is the number one reason why individual traders and investors lose money. Look at your trades of the past year and apply the 90/10 rule. Dump the least profitable 90% and watch your performance skyrocket. Then aim for that 10%. Over trading is a great early retirement plan for your broker, not you.

03. Don’t forget to sell. Date, don’t marry your positions. Remember, pigs get slaughtered. Always leave the last 10%-15% of a move for the next guy.

04. Don’t chase the market. If you do, it will turn back and bite you. Wait for it to come to you. If your miss the train, there will be another one along in hours, days, weeks, or months. Patience is truly a virtue in this business.

05. When I put on a position, I calculate how much I am willing to lose to keep it. 

I then put a stop just below there. If I get triggered, I just walk away. Only enter a trade when the risk/ reward is in your favour. You can start at 2:1. That means only risk a dollar to potentially make two.

06. Always be willing to go Long (Buy) and Short (Sell). You have to be flexible and dynamic in your trading…one minute I could be long the market and the very next minute I may be short the market. You need to be able to flip flop and be quick and nimble in your trading.

07. You don’t have to be a genius to play this game. If that was required, Wall Street would have run out of players a long time ago. If you employ risk control and stops, then you can be wrong 40% of the time, and still make a living. That’s little better than a coin toss. If you’re wrong only 30% of the time, you can make millions. If you’re wrong only 20% of the time, you are heading a trading desk at Goldman Sachs. If you’re wrong a mere 10% of the time, you’re running a $20 billion hedge fund that the public only hears about when you pay/invest $100 million. And if someone tells you they’re never wrong, as is often claimed on the Internet, run a mile, because it’s simply impossible!

08. Trading is hard work. Trading attracts a lot of wide eyed, naïve, but lazy people because it appears so easy from the outside. You buy a stock (futures contract,forex, option, etf, etc.), watch it go up, and make money. How hard is that? The reality is that successful trading and or investing requires twice as much work as a normal job. The more research you put into a trade, the more comfortable you will become, and the more profitable it will be.

09. Don’t confuse a bull market with brilliance. When the market goes straight up (i.e. 1995 to 2000) anybody and their grandmother can make money.

10. John Maynard Keynes, the great economist and early hedge fund trader of the thirties, once said: “Markets can remain illogical longer than you can remain solvent.” Hang around long enough, and you will see this proven time and time again.

11. Don’t believe the media. Look for the hard data, the numbers, and you’ll see that often the talking heads, the paid industry apologists, and politicians don’t know what they’re talking about.

12. Sometimes the conventional wisdom is right.

13. INVEST like a fundamentalist, execute like a technical analyst. (Swing) TRADE using technical analysis…then by understanding basic fundamentals will make you even better.

14. Technical analysis…knowing how to read charts like a daily newspaper is key to successful trading. That said, learn what an “outside vertical bar” is, and who the hell is Leonardo Fibonacci.

15. The simpler a market approach, the better it works (the ‘KISS’ method). Everyone talks about “buy low and sell high”, but few actually do it. All black boxes eventually blow up, if they were ever there in the first place.

16. Markets are made up of people. Understand and anticipate how traders think, and you will make a lot of money. The market is made up of peoples fear and greed…it’s all psychological…learn how to read people and you’ll certainly be ahead of everybody else.

17. Understand what information is in the market and what isn't and you will make more money.

18. Do the hard trade, the one that everyone tells you that you are “Crazy” to do. If you add a position and then throw up or feel sick afterwards, then you know you've done the right thing.

19. If you are trying to get out of a hole, the first thing to do is quit digging and throw away the shovel – exit your trade asap. A blank/neutral/flat position can be invigorating.

20. Making money in the market is an unnatural act. We humans are predators and hunters evolved to track game on the horizon of an African savanna. Modern humans are maybe 5 million years old, but civilization has been around for only 10,000 years. Our brains have not had time to make the adjustment. In the market, this means that if a stock has gone up, you believe it will continue. This is why market tops and bottoms see volume spikes. To make money, you have to go against these innate instincts. Some people are born with this ability, while others can only learn it through decades of training.

Quote for the day

"True leadership strengthens the followers. It is a process of teaching, setting an example, and empowering others. If you seek to lead, your ability will ultimately be measured in the successes of those around you." - David Niven

10 golden rules of investing in stock markets

1. Avoid the herd mentality
The typical buyer’s decision is usually heavily influenced by the actions of his acquaintances, neighbours or relatives. Thus, if everybody around is investing in a particular stock, the tendency for potential investors is to do the same. But this strategy is bound to backfire in the long run.

No need to say that you should always avoid having the herd mentality if you don’t want to lose your hard-earned money in stock markets. The world’s greatest investor Warren Buffett was surely not wrong when he said, ‘Be fearful when others are greedy, and be greedy when others are fearful!’

2. Take informed decision
Proper research should always be undertaken before investing in stocks. But that is rarely done. Investors generally go by the name of a company or the industry they belong to. This is, however, not the right way of putting one’s money into the stock market.

If you don’t have time or temperament for studying the markets, you may even take the help of a suitable financial advisor. ‘Shares sooner or later reach their fair market value.

So, if you are able to identify shares quoting at a significant discount to their realistic value, you can go ahead and invest in them. Conversely, if some shares in your portfolio have moved significantly higher than their true value, it may a good time to book profits,’ says Ashish Kapur, CEO, Invest Shoppe India Ltd

3. Invest in business you understand
Never invest in a stock. Invest in a business instead. And invest in a business you understand. In other words, before investing in a company, you should know what business the company is in.

Understand, for instance, what they buy and sell, and how they make money. Thus, the more you understand the business of the company, the better you will be able to monitor your investment.

Also keep in mind the past performance of a company. That is because if a company has performed well in the past, it has a better chance of performing well in the future too.

4. Don’t try to time the market
One thing that even Warren Buffett doesn't do is to try to time the stock market, although he does have a very strong view on the price levels appropriate to individual shares. A majority of investors, however, do just the opposite, something that financial planners have always been warning them to avoid, and thus lose their hard-earned money in the process.

‘So, you should never try to time the market. In fact, nobody has ever done this successfully and consistently over multiple business or stock market cycles. Catching the tops and bottoms is a myth. It is so till today and will remain so in the future. In fact, in doing so, more people have lost far more money than people who have made money,’ says Anil Chopra, group CEO and director, Bajaj Capital.

5. Follow a disciplined investment approach
Historically it has been witnessed that even great bull runs have shown bouts of panic moments. The volatility witnessed in the markets has inevitably made investors lose money despite the great bull runs.

However, the investors who put in money systematically, in the right shares and held on to their investments patiently have been seen generating outstanding returns. Hence, it is prudent to have patience and follow a disciplined investment approach besides keeping a long-term broad picture in mind.

6. Do not let emotions cloud your judgement
Many investors have been losing money in stock markets due to their inability to control emotions, particularly fear and greed. In a bull market, the lure of quick wealth is difficult to resist. Greed augments when investors hear stories of fabulous returns being made in the stock market in a short period of time. ‘This leads them to speculate, buy shares of unknown companies or create heavy positions in the futures segment without really understanding the risks involved,’ says Kapur.

Instead of creating wealth, these investors thus burn their fingers very badly the moment the sentiment in the market reverses. In a bear market, on the other hand, investors panic and sell their shares at rock-bottom prices. Thus, fear and greed are the worst emotions to feel when investing, and it is better not to be guided by them.

7. Create a broad portfolio
Diversification of portfolio across asset classes and instruments is the key factor to earn optimum returns on investments with minimum risk. The reason for the relatively poor performance of portfolios of individual investors even in greatest of bull runs has been lots of variation in market breadth. Different industries have participated at different points of time in taking the markets up.

There have been periods running into several months when the entire rally has been led by a handful of large, front-line stocks. On other occasions, mid caps have generated remarkable returns and made large caps look pale in comparison. So, it becomes imperative to diversify your portfolio across sectors and market capitalization.

8. Have realistic expectations
There’s nothing wrong with hoping for the ‘best’ from your investments, but you could be heading for trouble if your financial goals are based on unrealistic assumptions. For instance, lots of stocks have generated more than 50 per cent returns during the great bull run of recent years.

However, it doesn't mean that you should always expect the same kind of return from the stock markets. Therefore, when Warren Buffett says that earning more than 12 per cent in stock is pure dumb luck and you laugh at it, you’re surely inviting trouble for yourself.

9. Invest only your surplus funds
If you want to take risk in a volatile market like this, then see whether you have surplus funds which you can afford to lose. It is not necessary that you will lose money in the present scenario. You investments can give you huge gains too in the months to come.

But no one can be hundred percent sure. That is why you will have to take risk. No need to say that invest only if you are flush with surplus funds.

10. Monitor rigorously
We are living in a global village. Any important event happening in any part of the world has an impact on our financial markets. Hence we need to constantly monitor our portfolio and keep affecting the desired changes in it.

If you can’t review your portfolio due to time constraint or lack of knowledge, then you should take the help of a good financial planner or someone who is capable of doing that. ‘If you can’t even do that, then stock investing is not for you. Better put your money in safe or less-risky instruments,’ advises Kapur.

Source: http://economictimes.indiatimes.com/

Quote for the day

“Success is nothing more than a few simple disciplines, practiced every day.” - Jim Rohn

Speculation Defined

Graham and Dodd's Definition of Speculation

In their 1934 classic text, Security Analysis, Benjamin Graham and David Dodd provided a general definition of speculation: "An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory return. Operations not meeting these requirements are speculative."

By this definition, most people who buy stocks are speculators. We can attempt to sharpen Graham and Dodd's definition by including time-scale. Speculators are not interested in putting their money into a stock or commodity for a long time. They want to see a good profit quickly - on a time scale of minutes to months. If their money does not quickly perform well in a situation, they move it into another situation.

In pursuit of greater gain, speculators take greater risks with their capital than people who put their money into Savings & CD Accounts.

Jesse Livermore's Definition of Speculation

Jesse Livermore, the 20th century's most (in)famous speculator provided his own definition of speculation - preceding Graham and Dodd's by several years. In Reminiscences of a Stock Operator, under his pseudonym of Lawrence Livingston, he said: "The speculator is not an investor. His object is not to secure a steady return on his money at a good rate of interest, but to profit by either a rise or a fall in the price of whatever he may be speculating in."

Intelligent Speculation

Benjamin Graham and Jesse Livermore both had more to say about speculation: Benjamin Graham continued - this time in The Intelligent Investor:

Outright speculation is neither illegal, immoral, nor (for most people) fattening to the pocketbook. More than that, some speculation is necessary and unavoidable, for in many common-stock situations there are substantial possibilities of both profit and loss and the risks therein must be assumed by someone.

There is intelligent speculation as there is intelligent investing. But there are many ways in which speculation may be unintelligent. Of these the foremost are:

* speculating when you think you are investing

* speculating seriously when you lack proper knowledge and skill for it

* risking more money in speculation than you can afford to lose

Livermore said:

* The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the person of inferior emotional balance, or the get-rich-quick adventurer. They will die poor.

* Speculation is a hard and trying business, and a speculator must be on the job all the time or he'll soon have no job to be on.

Source: http://www.jesse-livermore.com/

Quote for the day

"Vision without integrity is not mission - it's manipulation." - Howard G. Hendricks

The Deadly Art of Stock Manipulation

In every profession, there are probably a dozen or two major rules. Knowing them is what separates the professional from the amateur. Not knowing them at all? Well, let’s put it this way: How safe would you feel if you suddenly found yourself piloting (solo) a Boeing 747 as it were landing on an airstrip? Unless you are a professional pilot, you would probably be frightened out of your wits and would spoil your underwear. Hold that thought as you read this essay because I will explain to you how market manipulation works. What the professionals and the securities regulators know and understand, which the rest of us do not, is this.

RULE NUMBER ONE:
ALL SHARP PRICE MOVEMENTS -- WHETHER UP OR DOWN --ARE THE RESULT OF ONE OR MORE (USUALLY A GROUP OF) PROFESSIONALS MANIPULATING THE SHARE PRICE.

This should explain why a mining company finds something good and" nothing happens" or the stock goes down. At the same time, for NO apparent reason, a stock suddenly takes off for the sky! On little volume! Someone is manipulating that stock, often with an unfounded rumour. 

In order to make these market manipulations work, the professionals assume: 

(a) The Public is STUPID and (b) The Public will mainly buy at the HIGH and (c) The Public will sell at the LOW. Therefore, as long as the market manipulator can run crowd control, he can be successful. 

Let's face it: The reason you speculate in such markets is that you are greedy AND optimistic. You believe in a better tomorrow and NEED to make money quickly. It is this sentiment which is exploited by the market manipulator. He controls YOUR greed and fear about a particular stock. If he wants you to buy, the company's prospects look like the next Microsoft. If the manipulator wants you to desert the sinking ship, he suddenly becomes very guarded in his remarks about the company, isn't around to glowingly answer questions about the company and/or GETS issued very bad news about the company. Which brings us to the next important rule?

RULE NUMBER TWO:
IF THE MARKET MANIPULATOR WANTS TO DISTRIBUTE (DUMP) HIS SHARES, HE WILL START A GOOD NEWS PROMOTIONAL CAMPAIGN.

Ever wonder why a particular company is made to look like the greatest thing since sliced bread? That sentiment is manufactured. Newsletter writers are hired -- either secretly or not -- to cheerlead a stock. PR firms are hired and let loose upon an unsuspecting public. Contracts to appear on radio talk shows are signed and implemented. Stockbrokers get "cheap" stock to recommend the company to their "book" (that means YOU, the client in his book). An advertising campaign is rolled out (television ads, newspaper ads, card deck mailings). The company signs up to exhibit at "investment conferences" and "gold shows" (mainly so they can get a little "podium time" to hype you on their stock and tell you how "their company is really different" and" not a stock promotion.") Funny little "hype" messages are posted on Internet newsgroups by the same cast of usual suspects. The more, the merrier. And a little "juice" can go a long way toward running up the stock price. The HYPE is on. The more clever a stock promoter, the better his knowledge of the advertising business. Little gimmicks like "positioning" are used. 

Example: Make a completely unknown company look warm and fuzzy and appealing to you by comparing it to a recent success story. The only reason you have been invited to this seemingly incredible banquet is that YOU are the main course. After the market manipulator has suckered you into "his investment," exchanging HIS paper for YOUR cash, the walls begin to close in on you. Why is that?

RULE NUMBER THREE:
AS SOON AS THE MARKET MANIPULATOR HAS COMPLETED HIS DISTRIBUTION (DUMPING) OF SHARES, HE WILL START A BAD NEWS OR NO NEWS CAMPAIGN.

Your favorite home-run stock has just stalled or retreated a bit formats high. Suddenly, there is a news VACUUM. Either NO news or BAD rumors. I discovered this with quite a few stocks. I would get LOADS of information and "hot tips." All of a sudden, my pipeline was shut-off. Some companies would even issue a news release CONDEMNING me ("We don't need 'that kind of hype’ referring to me!). Cute, huh? When the company wanted fantastic hype circulated hither and yon, there would be someone there to spoon-feed me. The second the distribution phase was DONE.... oops! Sorry, no more news. Or, "I'm sorry. He's not in the office." Or, "He won't be back until Monday." The really slick market manipulators would even seed the Internet newsgroups or other journalists to plant negative stories about that company. Or start a propaganda campaign of negative rumors on all available communication vehicles. Even hiring a "contraire" or" special PR firm" to drive down the price. Even hiring someone to attack the guy who had earlier written low about the company. (This is not a game for the faint-hearted!) You'll also see the stock drifting endlessly. You may even experience a helpless feeling, as if you were floating in outer space without a lifeline. That is exactly HOW the market manipulator wants you to feel. See Rule Number Five below. He may also be doing this to avoid the severe disappointment of a "dry hole" or a "failed deal." You'll hear that oft-cried refrain, "Oh well, that's the junior minerals exploration business... very risky!" Or the oft-quoted statistic, "Nine out of 10 businesses fail each year and this IS a Venture Capital Start-up stock exchange." Don't think it wasn't contrived. If a geologist at a junior mining company wasn't optimistic and rosy in his promise of exploration success, he would be replaced by someone who was! Ditto for the high-tech deal, in a world awash with PhD's. So, how do you know when you are being taken? Look again at Rule #1.Inside that rule, a few other rules unfold which explain how a stock price is manipulated.

RULE NUMBER FOUR:
ANY STOCK THAT TRADES HUGE VOLUME AT HIGHER PRICES SIGNALS THE DISTRIBUTION PHASE.

When there was less volume, the price was lower. Professionals were accumulating. After the price runs, the volume increases. The professionals bought low and sold high. The amateurs bought high (and will soon enough sell low). In older books about market manipulation and stock promotion, which I've recently studied, the mark-up price referred to THREE times higher than the floor. The floor is the launch pad for the stock. For example, if one looks at the stock price and finds a steady flat line on the stock's chart of around 10p , then that range is the FLOOR. Basically, the mark-up phase can go as high as the market manipulator is capable of taking it. From my observations, a good mark-up should be able to run about five to ten times higher than the floor, with six to seven being common. The market manipulator will do everything in his power to keep you OUT OF THE STOCK until the share price has been marked up by at least two-three times, sometimes resorting to "shaking you out" until after he has accumulated enough shares. Once the mark-up has begun, the stock chart will show you one or more spikes in the volume -- all at much higher prices (marked up by the manipulator, of course).

RULE NUMBER FIVE:
THE MARKET MANIPULATOR WILL ALWAYS TRY TO GET YOU TO BUY AT THE HIGHEST, AND SELL AT THE LOWEST PRICE POSSIBLE.

Just as the manipulator will use every available means to invite you to "the party," he will savagely and brutally drive you away from "his stock" when he has fleeced you. The first falsehood you assume is that the stock promoter WANTS you to make a bundle by investing in his company. So begins a string of lies that run for as long as your stomach can take it. You will get the first clue that "you have been had" when the stock stalls at the higher level. Somehow, it ran out of steam and you are not sure why. Well, it ran out of steam because the market manipulator stopped running it up. It's over inflated and he can't convince more people to buy. The volume dries up while the share price seems to stall. LOOK AT THE TRADING VOLUME, NOT THE SHARE PRICE! When earlier, there may have been X amounts of shares trading each day for eight out of 12 trading days (as in the case of CONROY), now the volume has slipped to X amount shares (or so) daily. There are some buyers there, enough for the manipulator to continue dumping his paper, but only so long as he can enlist one or more individuals/services to bang his drum. He may continue feeding the promo guys a string of "promises" and" good news down the road." (Believe me, this HAS happened to me!) But, when the news finally arrives, the stock price goes THUD! This is entirely orchestrated.

RULE NUMBER SIX:
IF THIS IS A REAL DEAL, THEN YOU ARE LIKELY TO BE THE LAST PERSON TO BE NOTIFIED OR WILL BE DRIVEN OUT AT THE LOWER PRICES.

Like Jesse Livermore wrote, "If there's some easy money lying around, no one is going to force it into your pocket." The same concept can be more clearly understood by watching the trades. When a market manipulator wants you into his stock, you will hear LOUD noises of stock promotion and hype. If you are "in the loop," you will be bombarded from many directions. Similarly, if he wants you out of the stock, then there will be orchestrated rumours being circulated, rapid-fired at you again from many directions. Just as good news may come to you in waves, so will bad news. You will see evidence of a VERY sharp drop in the share price with HUGE volume. That is you and your buddies running for the exits. If the deal is really for real, the market manipulator wants to get ALL OF YOUR SHARES or as many as he can... and at the lowest price he can. Where as before, he wanted you IN his market, so he could dump his shares to you at a higher price, NOW when he sees that this deal IS for real, he wants to pay as little as possible for those same shares... YOUR shares which he wants you to part with, as quickly as possible. The market manipulator will shake you out by DRIVING the price as lows he can. Just as in the "accumulation" stage, he wants to keep everything as quiet as possible so he can snap up as many of the shares for himself, he will NOW turn down, or even turn off, the volume so he can repeat the accumulation phase. The accumulation phase was TOP SECRET. The noise level was deafeningly silent. As soon as the insiders accumulated all their shares, they let YOU in on the secret.

RULE NUMBER SEVEN:
CONVERSELY, YOU WILL OFTEN BE THE LAST TO KNOW WHEN THIS DEAL SHOWS SIGNS OF FAILURE.

Twenty-twenty hindsight will often show you that there was a "little stumble" in the share price, just as the "assays were delayed" or the" deal didn't go through." Manipulators were peeling off their paper to START the downslide. And ACCELERATE it. The quick slide down makes it improbable for your getting out at more than what you originally paid for the stock... and gives you a better reason for holding onto it "a little longer" in case the price rebounds. Then, the drifting stage begins and fear takes over. And unless you have nerves of steel and can afford to wait out the manipulator, you will more than likely end up selling out at a cheap price. For the insider, market maker or underwriter is obliged to buy back all of your paper in order to keep his company alive and maintain control of it. The less he has to pay for your paper, the lower his cost will be to commence his stock promotion again... at some future date. Even if his company has no prospects AT ALL, his "shell" of a company has some value (only in that others might want to use that structure so they can run their own stock promotion). So, the manipulator WILL buy back his paper. He just wants to make sure that he pays as little for those shares as possible.

RULE NUMBER EIGHT:
THE MARKET MANIPULATOR WILL COMPEL YOU INTO THE STOCK SO THAT YOU DRIVE UP ITS PRICE SHARES.

Placing a Market Order or Pre-Market Order is an amateur's mistake, A market manipulator (traders included here) can jack up the share price during your market order and bring you back a confirmation at some preposterous level. The Market Manipulator will use the "tape" against you. He will keep buying up his own paper to keep you reaching for a higher price. He will get in line ahead of you to buy all the shares at the current price and force you to pay MORE for those shares. He will tease you and MAKE you reach for the higher price so you "won't miss out." Miss out on what? Getting your head chopped off, that's what! One can avoid market manipulation by not buying during the huge price spikes and abnormal trading volumes, also known as chasing the stock to a higher price.

RULE NUMBER NINE:
THE MARKET MANIPULATOR IS WELL AWARE OF THE MOTIONS YOU ARE EXPERIENCING DURING A RUN UP AND A COLLAPSE AND WILL PLAY YOUR EMOTIONS LIKE A PIANO.

During the run up, you WILL have a rush of greed which compels you to run into the stock. During the collapse, you WILL have a fear that you will lose everything... so you will rush to exit. See how simple it is and how clear a bell it strikes? Don't think this formula isn’t tattooed inside the mind of every manipulator. The market manipulator will play you on the way up and play you on the way down. If he does it very well, he will make it look like someone else's fault that you lost money! Promise to fill up your wallet? You'll rush into the stock. Scare you into losing every penny you have in that stock? You'll run away screaming with horror! And vow to NEVER, ever speculate in such stocks again. But many of you still do.... The manipulator even knows how to bring you back for yet another play. What actors! No wonder Vancouver is sometimes called "Hollywood North."

FINAL RULE:
A NEW BATCH OF SUCKERS ARE BORN WITH EVERY NEW PLAY.

The Financial Markets are a Cruel, Unkind and Dangerous Playing Field, one place where the newest amateurs are generally fleeced the most brutally.... usually by those who KNOW the above rules. Just as I have a duty to ensure that each of you understand how this game is played, YOU now have that same duty to guarantee that your fellow speculator understands these rules. Just as I would be a criminal for not making this data known to you, YOU would be just as criminal to keep it a secret. There will always be an unsuspecting, trusting fool whom the rabid dogs will tear to shreds, but it does NOT have to be this way. IF every subscriber made this essay broadly known to his friends, acquaintances and family, and they passed it on to their friends, word of mouth could cause many of these market manipulators to pause. IF this effort were done strenuously by many, then perhaps the financial markets could weed out the crooked manipulators and the promoters could bring us more legitimate plays. The stock markets are a financing tool. The companies BORROW money from you, when you invest or speculate in their companies. They want their share price going higher so they can finance their deal with less dilution of their shares... if they are good guys. But, how would you feel about a friend or family member who kept borrowing money from you and never repaid it? That would be theft, plain and simple. So, a market manipulator is STEALING your money.

Source: http://timelesswealth.net/articles/deadly_art_of_stock_manipulation.html

Quote for the day

"A good trader loves an active market, you don't make money when the market is static." - Kevin Kinsella

7 Reasons Why Those 90% Of New Traders Never Made It

1. They could not handle the losses. Some could not handle losing money at all, others chose to not manage risk and the big losses ruined them financially and they had to stop trading. Or the big losses ruined them mentally or emotionally for trading and they could not get back in the game after the damage was done.

2. They had a overwhelming desire to be right all time and could not handle being wrong. They could never grasp that trading is not about being right personally but instead simply being on the right side of the market price action.

3. They thought they were smarter than the market and all the other traders even though they were just newbies. The market showed them how counter-intuitive and irrational it can be.

4. They did not do their homework before they started trading money. Their education was in the moment and they were doomed from the start. If new traders are too lazy to read numerous trading books, study charts, study legendary traders, understand the risk of ruin, trader psychology, and test systems they will never make it. The hardest part of being a new trader is to even discover what you do not know and find out where to start.

5. If you enjoy the game of trading and the markets you may make it because you may not quit when you understand the work ahead. If you are doing this 100% for the money and think you will go take some quick easy money from all the professional traders with little effort, you are going to have a bad time. Passion for trading is the you must have to take you over the learning curve to profitability.

6. The new trader has to first focus on finding out what the right questions are then they have to go find the right answers from the right places.

7. Many new traders come from other professional fields and just can not get back to the beginners mind required to learn a new field of expertise. They want to be instantly knowledgeable and respected as experts and that is a long process that takes years of study and real time trading success.

Source: newtraderu.com

Quote for the day

"The people when rightly and fully trusted will return the trust." - Abraham Lincoln

The 4 Types of Decisions, and How to Approach Each One

By Doug and Polly White 

Making good decisions is critical to business success. The first step in good decision-making is to understand that not all decisions are created equal.

We like to differentiate decisions along two dimensions: importance and urgency. An important decision is one that has the potential to have a significant impact on your business or on a person’s life. An urgent decision is one that you must make immediately -- there is no time for further consideration.

If you consider these two dimensions together, the results are these four types of decisions, and how to approach them:

1. Neither urgent, nor important

• Consider taking no action. If a decision is neither urgent nor important, you may not need to make it at all.
• Delegate to others. Such decisions provide an opportunity for a manager to coach subordinates on how to think about decision-making.
• Delay to less hectic times. Resist the temptation to focus on items that you can check off your “to-do” list quickly when there are other more important and urgent decisions that need attention.
• Beware of morphing. Don’t delay the decision until it becomes urgent.

2. Urgent, but not important

• Don’t overanalyze. Because these decisions are not important, going through a lengthy process to make the decision simply doesn’t make any sense. In some outrageous cases the cost of the time spent analysing a decision can exceed the cost of making a wrong decision.
• Use principles. Rules of thumb, guidelines and principles can provide a great way to make decisions quickly and efficiently. This will also ensure that decisions align with the values of the organization.
• Listen to your gut. As an experienced businessperson, you have good judgement -- don’t be afraid to use it.

3. Both urgent and important

• Prevent morphing. Left unaddressed, many decisions will morph into this category. Don’t let it happen.
• Beware of false urgency. Many decisions that are portrayed as urgent, aren’t. Don’t be pressed into making an important decision without careful consideration when you don’t have to.
• Reduce urgency. Consider whether you can take steps to buy yourself time to make this important decision.
• Keep options open. Consider options that will allow you the most flexibility later. If you can avoid it, don’t get locked in.
• Consult experts. These are the people that are the most likely to have immediate insight into the right direction to proceed.

4. Important but not urgent

• Identify and address the right problem. Solving complex problems requires asking a series of questions that are relatively easy to answer. The answers to these more straightforward questions then lead you to the solution of the more complicated issue.
• Have the right mindset. When you face a big decision, don’t be overcome by emotions. Ask two questions: What do I want to happen next? What do I have to do to maximize the probability that that occurs?
• Utilize appropriate analytical tools. For decisions that are important but not urgent, it is sometimes helpful to use decision-making tools. There is time to apply the tools and the cost of doing so is justified by the magnitude of the decision.
• Seek the counsel of experts. Any time you face an important decision, seeking help from experts is a good idea.
• Live with your decision before executing. Make a decision and sleep on it before implementing.

Good decision-making is critical. Understanding the type of decision you are facing and responding appropriately will help you to increase your effectiveness.

Source: www.entrepreneur.com

Quote for the day

"Investing is for wealth preservation, not wealth creation, so first you have to make wealth." - James Altucher

44 Wealth Principles

44 Wealth Principles from T. Harv Eker's best-selling book ‘Secrets of the Millionaire Mind; Mastering the Inner Game of Wealth':

WEALTH PRINCIPLE 1:
Your income can grow only to the extent you do!

WEALTH PRINCIPLE 2:
If you want to change the fruits, you will first have to change the roots. If you want to change the visible, you must first change the invisible.

WEALTH PRINCIPLE 3:
Money is a result, wealth is a result, health is a result, illness is a result, your weight is a result. We live in a world of cause and effect.

WEALTH PRINCIPLE 4:
Give me five minutes, and I can predict your financial future for the rest of your life.

WEALTH PRINCIPLE 5:
Thoughts lead to feelings. Feelings lead to actions. Actions lead to results.

WEALTH PRINCIPLE 6:
When the subconscious mind must choose between deeply rooted emotions and logic, emotions will almost always win.

WEALTH PRINCIPLE 7:
If your motivation for acquiring money or success comes from a non supportive root such as fear, anger, or the need to “prove” yourself, your money will never bring you happiness.

WEALTH PRINCIPLE 8:
The only way to permanently change the temperature in the room is to reset the thermostat. In the same way, the only way to change your level of financial success “permanently” is to reset your financial thermostat.

WEALTH PRINCIPLE 9:
Consciousness is observing your thoughts and actions so that you can live from true choice in the present moment rather than being run by programming from the past.

WEALTH PRINCIPLE 10:
You can choose to think in ways that will support you in your happiness and success instead of ways that don’t.

WEALTH PRINCIPLE 11:
Money is extremely important in the areas in which it works, and extremely unimportant in the areas in which it doesn’t.

WEALTH PRINCIPLE 12:
When you are complaining, you become a living, breathing “crap magnet.”

WEALTH PRINCIPLE 13:
There is no such thing as a really rich victim!

WEALTH PRINCIPLE 14:
If your goal is to be comfortable, chances are you’ll never get rich. But if your goal is to be rich, chances are you’ll end up mighty comfortable.

WEALTH PRINCIPLE 15:
The number one reason most people don’t get what they want is that they don’t know what they want.

WEALTH PRINCIPLE 16:
If you are not fully, totally, and truly committed to creating wealth, chances are you won’t.

WEALTH PRINCIPLE 17:
The Law of Income: You will be paid in direct proportion to the value you deliver according to the marketplace.

WEALTH PRINCIPLE 18:
“Bless that which you want.” —Huna philosophy

WEALTH PRINCIPLE 19:
Leaders earn a heck of a lot more money than followers!

WEALTH PRINCIPLE 20:
The secret to success is not to try to avoid or get rid of or shrink from your problems; the secret is to grow yourself so that you are bigger than any problem.

WEALTH PRINCIPLE 21:
If you have a big problem in your life, all that means is that you are being a small person!

WEALTH PRINCIPLE 22:
If you say you’re worthy, you are. If you say you’re not worthy, you’re not. Either way you will live into your story.

WEALTH PRINCIPLE 23:
If a hundred-foot oak tree had the mind of a human, it would only grow to be ten feet tall!

WEALTH PRINCIPLE 24:
For every giver there must be a receiver, and for every receiver there must be a giver.

WEALTH PRINCIPLE 25:
Money will only make you more of what you already are.

WEALTH PRINCIPLE 26:
How you do anything is how you do everything.

WEALTH PRINCIPLE 27:
There’s nothing wrong with getting a steady paycheck, unless it interferes with your ability to earn what you’re worth. There’s the rub. It usually does.

WEALTH PRINCIPLE 28:
Never have a ceiling on your income.

WEALTH PRINCIPLE 29:
Rich people believe “You can have your cake and eat it too.” Middle-class people believe “Cake is too rich, so I’ll only have a little piece.” Poor people don’t believe they deserve cake, so they order a doughnut, focus on the hole, and wonder why they have “nothing.”

WEALTH PRINCIPLE 30:
The true measure of wealth is net worth, not working income.

WEALTH PRINCIPLE 31:
Where attention goes, energy flows and results show.

WEALTH PRINCIPLE 32:
Until you show you can handle what you’ve got, you won’t get any more!

WEALTH PRINCIPLE 33:
The habit of managing your money is more important than the amount.

WEALTH PRINCIPLE 34:
Either you control money, or it will control you.

WEALTH PRINCIPLE 35:
Rich people see every dollar as a “seed” that can be planted to earn a hundred more dollars, which can then be replanted to earn a thousand more dollars.

WEALTH PRINCIPLE 36:
Action is the “bridge” between the inner world and the outer world.

WEALTH PRINCIPLE 37:
A true warrior can “tame the cobra of fear.”

WEALTH PRINCIPLE 38:
It is not necessary to try to get rid of fear in order to succeed.

WEALTH PRINCIPLE 39:
If you are willing to do only what’s easy, life will be hard. But if you are willing to do what’s hard, life will be easy.

WEALTH PRINCIPLE 40:
The only time you are actually growing is when you are uncomfortable.

WEALTH PRINCIPLE 41:
Training and managing your own mind is the most important skill you could ever own, in terms of both happiness and success.

WEALTH PRINCIPLE 42:
You can be right or you can be rich, but you can’t be both.

WEALTH PRINCIPLE 43:
Every master was once a disaster.

WEALTH PRINCIPLE 44:
To get paid the best, you must be the best.

Source: Secrets of the Millionaire Mind, © 2003