Quote for the day

"Trade What’s Happening… Not What You Think Is Gonna Happen." - Doug Gregory

Quote for the day

"You get paid in direct proportion to the difficulty of problems you solve" - Elon Musk

Quote for the day

"When something is important enough, you do it even if the odds are not in your favor." - Elon Musk

Quote for the day

"With a good perspective on history, we can have a better understanding of the past and present, and thus a clear vision of the future." - Carlos Slim Helu

Quote for the day

"Before you can become a millionaire, you must learn to think like one. You must learn how to motivate yourself to counter fear with courage." - Thomas J. Stanley

Quote for the day

"Financial freedom is available to those who learn about it and work for it." - Robert Kiyosaki

Quote for the day

"Being rich is having money; being wealthy is having time." - Margaret Bonanno

Quote for the day

"If a man is proud of his wealth, he should not be praised until it is known how he employs it." - Socrates

Quote for the day

"If we command our wealth, we shall be rich and free. If our wealth commands us, we are poor indeed." - Edmund Burke

Quote for the day

"When prosperity comes, do not use all of it." - Confucius

Quote for the day

"Try to save something while your salary is small; it’s impossible to save after you begin to earn more." - Jack Benny

Quote for the day

"Buy when everyone else is selling and hold until everyone else is buying. That’s not just a catchy slogan. It’s the very essence of successful investing." - J. Paul Getty

Quote for the day

"You must gain control over your money or the lack of it will forever control you." - Dave Ramsey

Quote for the day

"Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver." - Ayn Rand

Quote for the day

"He who loses money, loses much; He who loses a friend, loses much more; He who loses faith, loses all." - Eleanor Roosevelt

Quote for the day

"Many people take no care of their money till they come nearly to the end of it, and others do just the same with their time." - Johann Wolfgang von Goethe

Quote for the day

"It's how you deal with failure that determines how you achieve success." - David Feherty

Quote for the day

"Too many people spend money they earned..to buy things they don't want..to impress people that they don't like." - Will Rogers

What Trading Teaches Us About Life

Trading is a crucible of life: it distils, in a matter of minutes, the basic human challenge: the need to judge, plan, and seek values under conditions of risk and uncertainty. In mastering trading, we necessarily face and master ourselves. Very few arenas of life so immediately reward self-development--and punish its absence.

So many life lessons can be culled from trading and the markets:

1) Have a firm stop-loss point for all activities: jobs, relationships, and personal involvements. Successful people are successful because they cut their losing experiences short and ride winning experiences.

2) Diversification works well in life and markets. Multiple, non-correlated sources of fulfilment make it easier to take risks in any one facet of life.

3) In life as in markets, chance truly favours those who are prepared to benefit. Failing to plan truly is planning to fail.

4) Success in trading and life comes from knowing your edge, pressing it when you have the opportunity, and sitting back when that edge is no longer present.

5) Risks and rewards are always proportional. The latter, in life as in markets, requires prudent management of the former.

6) Happiness is the profit we harvest from life. All life's activities should be periodically reviewed for their return on investment.

7) Embrace change: With volatility comes opportunity, as well as danger.

8) All trends and cycles come to an end. Who anticipates the future, profits.

9) The worst decisions, in life and markets, come from extremes: overconfidence and a lack of confidence.

10) A formula for success in life and finance: never hold an investment that you would not be willing to purchase afresh today.

Source:http://traderfeed.blogspot.co.uk/

Quote for the day

"Treat yourself as you are, and you will remain as you are. Treat yourself as you could be, and you will become what you should be." - Ralph Waldo Emerson

Your Greatest Enemy is Yourself

“Your greatest enemy is yourself” is an ancient Chinese piece of wisdom. The only person you need to beat and conquer is yourself. How many entrepreneurs have proclaimed that they plan on creating the next Wal-Mart, only to work a few hours a week on their “epic” business idea? How many times have you said that you won’t give up, but in reality, run away at the first sign of trouble?

Investing is no different. Without discipline (let me say this as harsh as possible), you are A NOBODY. You can subscribe to the greatest investment newsletters. You can buy a library full of investment books. You can attend every single investment seminar in town. You can probably even buy a $3 million investment system, but in the end, you’ll find that you’re no better than the average Joe Schmoe if you don’t have the courage to discipline yourself. You may have immense amounts of knowledge about “how to” invest, but without that discipline, good luck with your futile attempts to apply that knowledge into decent investment returns.

Thus, your greatest enemy is yourself. Your greatest enemy is the weakness, laziness, and emotions inside you. In order to instill discipline in yourself and fight the “Satan” in you, here’s what you need to realize.

“Be greedy when others are fearful and fearful when others are greedy” is hard. Most investors are the “do as I say, not as I do” kind of preachers.

You’ve probably heard of this from the Buffett PR machine. In fact, almost every single investor preaches this line. But how many are able to talk the talk and walk the walk? The truth is, being greedy when others are fearful is hard.

Most people that preach “buy when others are fearful” end up selling with the crowd when a stock market crash comes along. It is only normal for one to feel fearful during times of market distress, as you are afterall human. But the successful investor conquers his/her’s fearful emotions, and buys into such a great opportunity.

Many also preach that one should “sell when others are greedy”. This is true, as you don’t want to follow the proverbal herd over the cliff and lose your shirt in the ensuing bursting of the bubble. But how many Americans are actually capable of doing what is preached? 99% of investors who preach the “sell when others are greedy” can’t control their own greed, and buy into the bubble, only to get killed in the ensuing bloodbath. It’s natural to feel extreme optimism and greed when the financial markets are rising day after day. But the successful investor controls his/her’s greedy emotions, and sells into the panic.

So instead of spending time preaching  "buy when others are fearful and sell when others are greedy", make sure you walk the walk.

Fight your “I don’t want to learn new things.’

Humans have a tendency to be lazy. We dislike learning new things, and prefer to use old methods that we already know to tackle new problems. The problem with is, often times we've lost a good chunk of our investment portfolio by the time we've realized that our old investment strategy doesn't work. A good investor always keeps an open mind, and is constantly on the lookout for an investment strategy that better suits the times than the strategy that they're currently using.

Fight your “I’m not wrong” attitude.

Nobody likes to admit that they're wrong. The reason why George Soros is such a successful investor is because he’s 100% willing to accept the fact that his investment judgement was wrong. 99% of people refuse to admit they're wrong. For example, most people refuse to sell after the bubble has burst, hoping that they're not wrong.

A successful investor is always ready to fight his own stubbornness and “I’m not wrong” attitude.

Fight your “This is too hard. I give up.” attitude.

Yes, we've all been taught since kindergarten that perseverance and persistence is the key to success. Far easier said than done.

This list can go on and on and on……. I think you get the point.

Source:http://investorzblog.com

Quote for the day

"Definiteness of purpose is the starting point of all achievement." - W. Clement Stone

Quote for the day

"Good people do not need laws to tell them to act responsibly, while bad people will find a way around the laws." - Plato

Quote for the day

"We are all self-made, but only the successful will admit it." - Earl Nightingale

Quote for the day

"In order to be knowledgeable in these changing times, we must pursue a constant program of self-improvement, a never-ending journey into new fields of knowledge and learning." - Og Mandino

Quote for the day

"Develop a passion for learning. If you do, you will never cease to grow." - Anthony J. D'Angelo

Quote for the day

"The goal of an emergency fund is to bail you from going to jail while your savings account is about buying you more options. The role of investing is to give you more time freedom." -  David Angway

Quote for the day

"Education is the passport to the future, for tomorrow belongs to those who prepare for it today." - Malcolm X

Why most Traders Fail

1.) Most traders never took the time to decide how they should trade

Most traders I know skipped the parts on learning about their own temperaments, their discipline issues, their execution performance levels and just go straight to learning about charts and fundamental research reports, without realizing they skipped the most important part- their own ability to psychologically execute the right market timing, and the discipline to cut when they’re proven wrong by the market, no matter the fundamental value of the company they’re trading upon.

While it may seem trivial to answer psychology questions to yourself, the reason why I find this most important is because knowing yourself determines your ability to follow your own system.

All traders echo that successful traders need to have a system, but how can you create a system for yourself that you can follow, no questions asked, without understanding your own personal capacity to follow rules? As a child, did you normally try to constantly challenge the status quo? How can you accept trading rules, when you’re told to follow only the price, and nothing more? How can one trade a system meant for day traders, when one’s inclinations are more rooted to analysis of companies, where position trading is more apt? How can you integrate your personal strengths and weaknesses in order to create a system which is successful, with a trading edge that can combat the markets, whether bull or bear?

Jeff Cooper once wrote this trading reality: "Hundreds if not thousands of books have been written about trade entry, but the important thing to understand is the personal psychology required to honour a protective stop and the discipline required to get out."

In truth, traders never really can skip this lesson. Whenever one trades without any system, and not according to the right precepts of good market timing suited to one’s temperament and ability to execute that system, one has to pay for the education.

2.) Most traders fail because money as a motivation isn't enough

Be honest with yourself and think about whether you are intrinsically motivated, or whether you are really only in it for the money.

Money is and remains a so-called extrinsic motivation, the level of which – in contrast to a person’s inner drive, their intrinsic motivation, cannot just continue to rise.

Implementing your strategies requires character traits such as iron discipline, indomitable will power and the patience of a saint.

It’s easy to think and say that you love trading and believe in your trading skills in order to achieve that great success, but making this vision a reality is a long and uphill struggle, as many of you well know.

Everyday you have to fight against being your own worst enemy. Everyday you put your wallet on the table and need to be mentally able to deal with the changes to its weight. You will experience a roller coaster ride of emotions ranging from shouting in triumph at having achieved extraordinary profits to the feeling of being sunk in despair during severe draw downs and long series of consecutive losses. The one thing you can depend on is that your love of trading will be severely tested by the markets. If money is the only reason why you’re in the markets, consider a different business. If you think it’s not a business, you’ll be closing your shop soon anyway.

3.) Most traders fail because of the lack of patience

Every time you have the urge to make an aggressive trade, especially out of emotion, take a step back and re-evaluate. The moment you get impatient, bad things tend to follow. In tough markets, stay patient and let others beat themselves in order to be ready and fully prepared to pick up the low lying fruit from the sheer destruction and capitulation from others.

The willingness to wait for the right pitch will make all the difference between a successful trader, and a trader wannabe. If you are patient, the market has a way of painting its picture for you. The essence of a good trader is to wait for your pitch, your ball.

4.) Most traders fail to keep and study their journals

You can tell me that trading is a numbers game, but lip service is never going to be enough in the markets. Your journals and your trades are the only basis to see whether you have understood the concepts right. If you don’t even keep a journal, that’s even worse, because you cannot measure how you’re doing in your trading. That’s similar to opening a business, without even reporting how much sales and operating expenses went throughout the day.

If you think this is minor, so be it. The devil is always in the small details. Simple advice: Have a journal, study your hit ratios, your profits and your losses. Bottom line is, if you can’t study your mistakes, you will never see yourself,and will have a false sense of trading “eminence” which will be quickly disproved by your account performance. Don’t be surprised if perception is not the same as reality. You've been warned.

5.) Most traders fail because they still blame the markets

You may think I'm exaggerating but I've heard a lot of traders crucify the Dow for being down again for the eight or ninth week. Failing traders blame their losses for most anyone except themselves. Traders who never look at themselves are a hopeless basket case.

6.) Most traders fail because they believe the market is rigged and that they need inside information to benefit from it

I believe in saying that these are the same types of people who blame the world why their marriages have failed, why the prices of good keep on rising, why everything else is moving out, except themselves. These people aren't going to get any better. If you’re one of these kinds of people, consider assessing why you complain so much about the world, but not do anything as simple as looking at your own self.

7.) Most traders fail because of their inability to understand the true concept of taking risks

There’s a difference as big as day and night between trading and gambling, but then again, even long time traders can’t distinguish both things. You’d understand what I mean, whenever I see a trader take a risk, whenever the reward’s measly. Whenever a trader chases a price point, and gets rewarded, one believes that one has made a good trade. The truth is, profits alone do not guarantee trading success for consistently long periods of time. Process trumps everything else in the long run.

Also, risk management isn't just about keeping losses down; it also means taking maximum prudent advantage of opportunities that present themselves. Many traders fail because they can’t limit their risk. Many others fall short because they lack the courage of their convictions. Somewhere between confidence and overconfidence lies the sweet spot for successful traders.

8.) Traders fail because they confuse their cojones into their trading

In the business of trading, you've got to decide if you want to make money or if you want to be right. To trade what is and not what we think should be, requires us to experience the market as it really is. Successful traders know when to cut losses if necessary. Don’t let your own desire to succeed be the enemy of good judgement.

There is no harm in guessing wrong, the sin is in staying wrong.

9.) Traders fail when they think they need to be right all the time

As a trader, you can make a great living if only half of the set ups you take are winners, sometimes even less than half. Dr Van Tharp once wrote that most of us grow up in an educational system that brainwashes us to think we have to get 94-100% correct to be excellent. If you can’t get at least 70% correct, you’re a failure. Mistakes are punished in school by ridicule and poor grades, yet its only through mistakes that we learn.

Indeed in the everyday real world, people have made millions on trading systems each with a reliability of only around 30-40%. This means that great traders have the resilience needed, and emotional maturity to weather the draw downs, and tough times when their systems yield consecutive cut losses. I'm sure you've heard this before but I’ll repeat the trader cliches. Yes. Trading truly is a numbers game.

10.) Traders fail when they forget there’s plenty of opportunities other than trading

Perhaps this is ironic, but I'm sure you've heard the trading mantras “Scared money never wins”. Every bet a trader does, once confused with many things such as tying up one’s own confidence capital, cojones other than the money involved normally loses. When you trade thinking that trading is the only avenue for your income, that’s when you will normally fail. Successful traders approach the markets without much emotional capital in every trade. Sometimes, successful traders do not even watch the screens. Less is more. You can just place your stops, put your position size and do anything you want such as exploring other markets (learning about private equity, venture capitalism, foreign markets, currencies, commodities or some other entrepreneurial endeavour that piques your interests). This may be counter intuitive, but trading while requiring hard work when it comes to preparation, is effortless when it comes to execution. Once you've entered the trade, the stops and the sizes, everything else is automated. You don’t have to worry about the intra day up ticks and the down ticks unless you are an intra day trader.

11.) Traders fail when have a false recognition that trading is a walk in the park, and is static

The market is constantly evolving and you need to be able to change with it. A good student of the markets studies continuously. Nicholas Darvas read hundreds of books before finding the system that best fit him, and he still continues to read even after trading millions successfully. He traded his box theory during the momentum markets very well, and kept on dancing during the market cycles he did'’t have a trading edge upon.

Successful traders know that no strategy works forever. At least no static strategy. You need to adapt your approach as the market changes. Some people think they can learn a couple of easy patterns and just trade using them the rest of their lives and they’ll be fine. If those patterns are adaptive somehow, then maybe. If they can work in calm markets and choppy markets and trendy markets and panicky markets then great. Perhaps you can use them forever.

People are easily attracted to fantasies, instead of realities. But no evil would be justified on the ground of expediency. It takes years to become a successful trader. There’s not much short cuts in most every field, and trading is the same.

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I'm sure I can list many other reasons why so many traders fail, but I'd leave the readers to simply write their own reasons why. What’s most important is that one recognizes why one fails, and actively tries to address and fix the reasons, in order not to fall in the same debilitating failures every single time.

Hope the outline above helps.

Extracted article from http://facelesstrader.wordpress.com/

Quote for the day

"We know that advanced economies with stable governments that borrow in their own currency are capable of running up very high levels of debt without crisis." - Paul Krugman

Quote for the day

"Definiteness of purpose is the starting point of all achievement." - W. Clement Stone

Quote for the day

"Success seems to be connected with action. Successful people keep moving forward. They make mistakes, but they don’t quit." - Conrad Hilton

Quote for the day

"The swiftest way to triple your success is to double your investment in personal development." - Robin Sharma