"The ability to discipline yourself to delay gratification in the short term in order to enjoy greater rewards in the long term, is the indispensable prerequisite for success." - Brian Tracy
Friday, 22 May 2020
Thursday, 21 May 2020
Quote for the day
"Risks must be taken because the greatest hazard in life is to risk nothing." - Leo Buscaglia
The Four Pillars To Trading Success
The four pillars of success:
Know yourself
Traders need to know what type of trading will fit their personality and risk tolerance. Some traders are patient and make excellent trend followers others enjoy the action of day trading. Some want to spend all day in front of the screen others do better to simply trade the open and close. One trader may be able to handle a 20% drawdown in pursuit of out sized returns while others may quit trading at the first 10% drawdown. It is crucial that we know or strengths and weaknesses as traders and do more of what we are good at and less of what we are bad at. We need to find that trading method that we have complete confidence in for robustness and faith in ourselves for following its trading plan.
Know your market
We need to do our homework on the market we are trading. We need to know its historically price patterns and volatility. We need to have understanding of whether it tends to trend or stay range bound. What our markets recent daily trading range is and the long term historical high resistance and support levels along with the recent support and resistance levels on the chart. We need to be a historian of our markets price action.
Know your strategy
Being a master of our specific trading strategy and time frame can be an edge over other traders. It is much more profitable to focus our time, research and energy on one strategy. Successful traders usually are not a ‘Jack of all Trades’ but instead the master of one. It is dangerous to drift from one strategy to another, a day trader holding overnight or a trend follower to start day trading usually leads to losses. It is better to follow our trading plan through all market environments which may involve doing nothing and waiting through some of them.
“I fear not the man who has practiced 10,000 kicks once, but I fear the man who has practiced one kick 10,000 times.” – Bruce Lee
Know your limits
We have to know how much ‘heat’ in trading we can handle before our stress overtakes our trading plan. Traders have to build up to larger and larger position sizes, sizing up too quickly can lead to uncontrollable fear and greed that clouds good judgement. We can not put ourselves in situations where our ego has to prove we are right to an audience of other traders, family, or friends. There is more to life than trading it is important that traders diversify their lives and not forget why we do this. Health, family, friends, and recreation are just as important to a trader as the work. If we know why we are trading the ‘why’ can generate the passion we need to get to the ‘how’ and keep us going through setbacks.
Know yourself
Traders need to know what type of trading will fit their personality and risk tolerance. Some traders are patient and make excellent trend followers others enjoy the action of day trading. Some want to spend all day in front of the screen others do better to simply trade the open and close. One trader may be able to handle a 20% drawdown in pursuit of out sized returns while others may quit trading at the first 10% drawdown. It is crucial that we know or strengths and weaknesses as traders and do more of what we are good at and less of what we are bad at. We need to find that trading method that we have complete confidence in for robustness and faith in ourselves for following its trading plan.
Know your market
We need to do our homework on the market we are trading. We need to know its historically price patterns and volatility. We need to have understanding of whether it tends to trend or stay range bound. What our markets recent daily trading range is and the long term historical high resistance and support levels along with the recent support and resistance levels on the chart. We need to be a historian of our markets price action.
Know your strategy
Being a master of our specific trading strategy and time frame can be an edge over other traders. It is much more profitable to focus our time, research and energy on one strategy. Successful traders usually are not a ‘Jack of all Trades’ but instead the master of one. It is dangerous to drift from one strategy to another, a day trader holding overnight or a trend follower to start day trading usually leads to losses. It is better to follow our trading plan through all market environments which may involve doing nothing and waiting through some of them.
“I fear not the man who has practiced 10,000 kicks once, but I fear the man who has practiced one kick 10,000 times.” – Bruce Lee
Know your limits
We have to know how much ‘heat’ in trading we can handle before our stress overtakes our trading plan. Traders have to build up to larger and larger position sizes, sizing up too quickly can lead to uncontrollable fear and greed that clouds good judgement. We can not put ourselves in situations where our ego has to prove we are right to an audience of other traders, family, or friends. There is more to life than trading it is important that traders diversify their lives and not forget why we do this. Health, family, friends, and recreation are just as important to a trader as the work. If we know why we are trading the ‘why’ can generate the passion we need to get to the ‘how’ and keep us going through setbacks.
www.newtraderu.com
Wednesday, 20 May 2020
Quote for the day
"Risk management is a more realistic term than safety. It implies that hazards are ever-present, that they must be identified, analyzed, evaluated and controlled or rationally accepted." - Jerome F. Lederer
Linda Bradford Raschke – 50 Time Tested Classic Stock Trading Rules
1. Plan your trades. Trade your plan.
2. Keep records of your trading results.
3. Keep a positive attitude, no matter how much you lose.
4. Don't take the market home.
5. Continually set higher trading goals.
6. Successful traders buy into bad news and sell into good news.
7. Successful traders are not afraid to buy high and sell low.
8. Successful traders have a well-scheduled planned time for studying the markets.
9. Successful traders isolate themselves from the opinions of others.
10. Continually strive for patience, perseverance, determination, and rational action.
11. Limit your losses – use stops!
12. Never cancel a stop loss order after you have placed it!
13. Place the stop at the time you make your trade.
14. Never get into the market because you are anxious because of waiting.
15. Avoid getting in or out of the market too often.
16. Losses make the trader studious – not profits. Take advantage of every loss to improve your knowledge of market action.
17. The most difficult task in speculation is not prediction but self-control. Successful trading is difficult and frustrating. You are the most important element in the equation for success.
18. Always discipline yourself by following a pre-determined set of rules.
19. Remember that a bear market will give back in one month what a bull market has taken three months to build.
20. Don’t ever allow a big winning trade to turn into a loser. Stop yourself out if the market moves against you 20% from your peak profit point.
21. You must have a program, you must know your program, and you must follow your program.
22. Expect and accept losses gracefully. Those who brood over losses always miss the next opportunity, which more than likely will be profitable.
23. Split your profits right down the middle and never risk more than 50% of them again in the market.
24. The key to successful trading is knowing yourself and your stress point.
25. The difference between winners and losers isn't so much native ability as it is discipline exercised in avoiding mistakes.
26. In trading as in fencing there are the quick and the dead.
27. Speech may be silver but silence is golden. Traders with the golden touch do not talk about their success.
28. Dream big dreams and think tall. Very few people set goals too high. A man becomes what he thinks about all day long.
29. Accept failure as a step towards victory.
30. Have you taken a loss? Forget it quickly. Have you taken a profit? Forget it even quicker! Don't let ego and greed inhibit clear thinking and hard work.
31. One cannot do anything about yesterday. When one door closes, another door opens. The greater opportunity always lies through the open door.
32. The deepest secret for the trader is to subordinate his will to the will of the market. The market is truth as it reflects all forces that bear upon it. As long as he recognizes this he is safe. When he ignores this, he is lost and doomed.
33. It’s much easier to put on a trade than to take it off.
34. If a market doesn't do what you think it should do, get out.
35. Beware of large positions that can control your emotions. Don’t be overly aggressive with the market. Treat it gently by allowing your equity to grow steadily rather than in bursts.
36. Never add to a losing position.
37. Beware of trying to pick tops or bottoms.
38. You must believe in yourself and your judgement if you expect to make a living at this game.
39. In a narrow market there is no sense in trying to anticipate what the next big movement is going to be – up or down.
40. A loss never bothers me after I take it. I forget it overnight. But being wrong and not taking the loss – that is what does the damage to the pocket book and to the soul.
41. Never volunteer advice and never brag of your winnings.
42. Of all speculative blunders, there are few greater than selling what shows a profit and keeping what shows a loss.
43. Standing aside is a position.
44. It is better to be more interested in the market’s reaction to new information than in the piece of news itself.
45. If you don't know who you are, the markets are an expensive place to find out.
46. In the world of money, which is a world shaped by human behavior, nobody has the foggiest notion of what will happen in the future. Mark that word – Nobody! Thus the successful trader does not base moves on what supposedly will happen but reacts instead to what does happen.
47. Except in unusual circumstances, get in the habit of taking your profit too soon. Don’t torment yourself if a trade continues winning without you. Chances are it won’t continue long. If it does, console yourself by thinking of all the times when liquidating early reserved gains that you would have otherwise lost.
48. When the ship starts to sink, don’t pray – jump!
49. Lose your opinion – not your money.
50. Assimilate into your very bones a set of trading rules that works for you.
Source: http://www.tischendorf.com
Tuesday, 19 May 2020
Quote for the day
"The men who have done big things are those who were not afraid to attempt big things, who were not afraid to risk failure in order to gain success." - B. C. Forbes
15 Fundamentals To Win Stock Market Battle
Gerald Loeb was a founding partner of E.F. Hutton, a renowned and successful Wall Street trader, and the author of the books 'The Battle For Investment Survival' and 'The Battle For Stock Market Profits'.
Mr. Loeb promoted a contrarian view of the market as too risky to hold stocks for the long term in direct contrast to many of his generation.
At the time, many considered Loeb’s comments heresy to the buy and hold doctrine so common among many in the industry. While Loeb never had the opportunity to trade in an environment now ruled by quants, algorithmic trading and massive government intervention, his wisdom and insight is still applicable in today’s environment. After all, the more things change, the more they always stay the same!
Based on his two books, here are 15 fundamentals Loeb argues that you need to understand to win the battle not only against yourself, but also against the market:
01. What everyone else knows is not worth knowing.
02. Stocks are always way overvalued in a bull market and way undervalued in a bear market.
03. The best stocks will always seem overpriced to the majority of investors.
04. Expectation, not the news itself, is what moves the market.
05. Three basis elements should be considered when evaluating a stock – 1) quality (fundamentals, liquidity, management), 2) price, and 3) trend (the most important).
06. Stocks act like human beings and go through the same stages and phases as people do, including infancy, growth, maturity, and decline. The key in trading is to be able to recognize which stage the stock is in and to take advantage of that opportunity.
07. Pyramid your buys – start with an initial position and then add to it only if the trade moves in your favor.
08. The more experienced and successful you become, the less you should diversify.
09. Traders must always resist the urge and temptation to change their strategies for each and every different market cycle.
10. To succeed in trading you must 1) aim high, 2) control the risks, 3) be unafraid to keep uninvested reserves and 4) be patient.
11. Successful traders are intelligent, they understand human psychology, they practice pure objectivity, and they have natural quickness.
12. You must always trade with the actions of the market and not simply by how you might think the market should trade.
13. Knowledge through experience is one trait that separates successful stock market speculators from everyone else.
14. The stock market is more an art than a science and far more complex than most people understand.
15. Always sell when you start patting yourself on the back for being smarter than the market.
In reflecting upon these 15 fundamentals, ask yourself the following question:
Mr. Loeb promoted a contrarian view of the market as too risky to hold stocks for the long term in direct contrast to many of his generation.
At the time, many considered Loeb’s comments heresy to the buy and hold doctrine so common among many in the industry. While Loeb never had the opportunity to trade in an environment now ruled by quants, algorithmic trading and massive government intervention, his wisdom and insight is still applicable in today’s environment. After all, the more things change, the more they always stay the same!
Based on his two books, here are 15 fundamentals Loeb argues that you need to understand to win the battle not only against yourself, but also against the market:
01. What everyone else knows is not worth knowing.
02. Stocks are always way overvalued in a bull market and way undervalued in a bear market.
03. The best stocks will always seem overpriced to the majority of investors.
04. Expectation, not the news itself, is what moves the market.
05. Three basis elements should be considered when evaluating a stock – 1) quality (fundamentals, liquidity, management), 2) price, and 3) trend (the most important).
06. Stocks act like human beings and go through the same stages and phases as people do, including infancy, growth, maturity, and decline. The key in trading is to be able to recognize which stage the stock is in and to take advantage of that opportunity.
07. Pyramid your buys – start with an initial position and then add to it only if the trade moves in your favor.
08. The more experienced and successful you become, the less you should diversify.
09. Traders must always resist the urge and temptation to change their strategies for each and every different market cycle.
10. To succeed in trading you must 1) aim high, 2) control the risks, 3) be unafraid to keep uninvested reserves and 4) be patient.
11. Successful traders are intelligent, they understand human psychology, they practice pure objectivity, and they have natural quickness.
12. You must always trade with the actions of the market and not simply by how you might think the market should trade.
13. Knowledge through experience is one trait that separates successful stock market speculators from everyone else.
14. The stock market is more an art than a science and far more complex than most people understand.
15. Always sell when you start patting yourself on the back for being smarter than the market.
In reflecting upon these 15 fundamentals, ask yourself the following question:
Among all of these fundamentals, which of these do you disagree with and/or do not reflect your personal experience so far?
In doing so, I want you to consider that not only could you be wrong in that view, but that knowledge of the difference may help you to explore a new path to improving your performance.
http://www.anirudhsethireport.com
http://www.anirudhsethireport.com
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