Saturday, 6 March 2021
Friday, 5 March 2021
10 Qualities That Successful Traders Have And You Need
In tough times like 2016, traders often feel as though things can never go their way. This feeling typifies how stock trading can be incredibly emotional. We all want to make money, and that can mean chasing a stock on its way up or calling a bottom on its way down. Everyone has bought a stock at one point or another because they felt like it “just can’t go any lower” or “this rally is just getting started.” But the traders who consistently beat the market are those who realise that emotion has nothing to do with the performance of a stock. These successful traders also obtain many other qualities; today’s article highlights 10 of their most lucrative traits and their implications on your portfolio.
1. Remove Emotion From The Equation
As I mentioned above, successful traders are those who have removed emotion from the equation. A stock does not increase in value because people think it will go higher; rather, it does so because traders and investors have made the conscious decision to allocate capital toward it. We all know this, but often forget it in the heat of the moment. Before you submit your order, reflect on why you’ve decided to enter the trade. Is it because you “just have a feeling that it will go higher” or that you conducted thorough technical or fundamental analysis?
2. Don’t Chase Anything, Ever
Seems simple, right? Buy low and sell high, they say. But this is much easier said than done due to the interference of emotions. Everyone wants to make money, but more experienced traders know that more often than not, chasing a stock will result in losses. In theory, this makes sense. Take the scenario of people sitting at their monitors, just like you, and watching the same stock spike right before their eyes. Before they can even enter the trade, thousands of share have traded hands and the stock spikes even more. By the time your trade goes through, it is likely that much of the air has deflated and the stock begins to rapidly descend from its high, as money managers are ripping the carpet out from under you before you can even realise it. Learning not to chase a stock higher (or lower, if you’re on the other side of the trade) comes with experience. If you’ve fallen victim to the scenario I just played out, use it as a learning experience.
3. Be Patient, Young Grasshopper
The previous two points go hand-in-hand with patience. It is advantageous to wait for a stock to show signs of a bottom before attempting to catch a falling knife. Likewise, it is smart to deal with the short-lived pain of seeing a stock spike before your eyes for the rewarding feeling of purchasing shares after its descent. Moreover, make sure you wait until your prospective trade has fully setup to your specifications, and don’t assume that any indicator will produce a buy/sell signal. Always confirm before you earn.
4. Bulls Make Money, Bears Make Money, And Pigs Get Slaughtered
So don’t get greedy. If you’ve used technical analysis to project a price target and the stock is currently trading at that level, place the sell order and do not change it. This applies to both long and short positions. He who believes that they can squeeze more return out of their trade — the inexperienced trader — is often compelled to sell at a smaller gain. Remember that any profit is a good profit.
5. A Penny Saved Is A Penny Earned
Losing money sucks. No trader is in the industry of losing money. If you’re looking at a lacklustre trade setup for the hope of making up for yesterday’s bad day, you’re breaking rule number 3 and not realising that money saved is money earned. It hurts more to lose money than it feels good to make money. Remember to be diligent and be content with earning and losing no money.
6. Know Your Risk Tolerance
Every trader is different, and only you know your risk tolerance. Are you the type of trader who can risk 20% to make 20%, or do you feel the need to have a much higher risk/reward payout in order to enter a trade? Be sure to define your risk before placing any trade orders. Doing so helps ensure that you have an exit strategy, which is arguably just as important as your entrance strategy. A little extra work in the beginning can make all the difference in the end.
7. You Won’t Be Right All The Time
Even the best traders aren’t right 100% of the time. But to be a good trader, you just have to be right more often than you’re wrong. Think of it like baseball: the Hall of Fame hitters are those who got out 7 out of 10 times. While this would correlate to a lot of red in a stock portfolio, the idea remains the same. You won’t, and don’t have to be perfect. If you follow in the footsteps of the successful Wall Street traders, then being right more than you’re wrong will come easily.
8. Learn From And Cut Your Losses
Because you won’t always be right, you’ll undoubtedly experience some losses. The stock market is incredibly humbling, and a long stretch of winning trades can instantly be cut short by devastating losses. But losing trades are healthy in the long run of your trading career, so long as you learn from them. Ask yourself why the trade went awry, and learn how to minimise similar mistakes in the future. Also, make sure that you exit a position as soon as your risk is fulfilled or a technical barrier — such as support, resistance, volume, etc — has been broken.
9. Don’t Turn A Trade Into An Investment
If you’ve entered a trade, it’s most likely due to a technical or fundamental catalyst that caught your eye. For example, you may have bough-ten a stock because you thought its earnings would beat estimates. Even more, let’s say the technical setup is incredibly bullish and signals that the stock will exhibit upward moment. Unfortunately for you, though, the company’s earnings are lacklustre and the stock falls sharply. What do you do now? Do you hope that the stock rebounds in the near future, giving you a better exit point? Hopefully not, because once a trade goes the opposite direction and you decide to hold onto it, you’ve turned that position into an investment. If you created a position with one intention, make sure you exit it with the same and don’t change your thesis to justify the price movement.
10. Take Technical Analysis With A Grain Of Salt
The thing about technical analysis is that it works until it doesn’t. As illustrated by the example above, a stock may have a bullish technical setup that isn’t supported by its fundamentals. Even though traders can cross out the name of a stock, conduct technical analysis, and make a decision regarding its future price movement, the best traders recognise that a fundamental hiccup can trump even the best technical story. Make sure you take the time to research the sector and industry of prospective stock, and make note of any sector-, industry-, or stock-specific catalysts before outlaying any capital.
Source: www.stockethos.com/
1. Remove Emotion From The Equation
As I mentioned above, successful traders are those who have removed emotion from the equation. A stock does not increase in value because people think it will go higher; rather, it does so because traders and investors have made the conscious decision to allocate capital toward it. We all know this, but often forget it in the heat of the moment. Before you submit your order, reflect on why you’ve decided to enter the trade. Is it because you “just have a feeling that it will go higher” or that you conducted thorough technical or fundamental analysis?
2. Don’t Chase Anything, Ever
Seems simple, right? Buy low and sell high, they say. But this is much easier said than done due to the interference of emotions. Everyone wants to make money, but more experienced traders know that more often than not, chasing a stock will result in losses. In theory, this makes sense. Take the scenario of people sitting at their monitors, just like you, and watching the same stock spike right before their eyes. Before they can even enter the trade, thousands of share have traded hands and the stock spikes even more. By the time your trade goes through, it is likely that much of the air has deflated and the stock begins to rapidly descend from its high, as money managers are ripping the carpet out from under you before you can even realise it. Learning not to chase a stock higher (or lower, if you’re on the other side of the trade) comes with experience. If you’ve fallen victim to the scenario I just played out, use it as a learning experience.
3. Be Patient, Young Grasshopper
The previous two points go hand-in-hand with patience. It is advantageous to wait for a stock to show signs of a bottom before attempting to catch a falling knife. Likewise, it is smart to deal with the short-lived pain of seeing a stock spike before your eyes for the rewarding feeling of purchasing shares after its descent. Moreover, make sure you wait until your prospective trade has fully setup to your specifications, and don’t assume that any indicator will produce a buy/sell signal. Always confirm before you earn.
4. Bulls Make Money, Bears Make Money, And Pigs Get Slaughtered
So don’t get greedy. If you’ve used technical analysis to project a price target and the stock is currently trading at that level, place the sell order and do not change it. This applies to both long and short positions. He who believes that they can squeeze more return out of their trade — the inexperienced trader — is often compelled to sell at a smaller gain. Remember that any profit is a good profit.
5. A Penny Saved Is A Penny Earned
Losing money sucks. No trader is in the industry of losing money. If you’re looking at a lacklustre trade setup for the hope of making up for yesterday’s bad day, you’re breaking rule number 3 and not realising that money saved is money earned. It hurts more to lose money than it feels good to make money. Remember to be diligent and be content with earning and losing no money.
6. Know Your Risk Tolerance
Every trader is different, and only you know your risk tolerance. Are you the type of trader who can risk 20% to make 20%, or do you feel the need to have a much higher risk/reward payout in order to enter a trade? Be sure to define your risk before placing any trade orders. Doing so helps ensure that you have an exit strategy, which is arguably just as important as your entrance strategy. A little extra work in the beginning can make all the difference in the end.
7. You Won’t Be Right All The Time
Even the best traders aren’t right 100% of the time. But to be a good trader, you just have to be right more often than you’re wrong. Think of it like baseball: the Hall of Fame hitters are those who got out 7 out of 10 times. While this would correlate to a lot of red in a stock portfolio, the idea remains the same. You won’t, and don’t have to be perfect. If you follow in the footsteps of the successful Wall Street traders, then being right more than you’re wrong will come easily.
8. Learn From And Cut Your Losses
Because you won’t always be right, you’ll undoubtedly experience some losses. The stock market is incredibly humbling, and a long stretch of winning trades can instantly be cut short by devastating losses. But losing trades are healthy in the long run of your trading career, so long as you learn from them. Ask yourself why the trade went awry, and learn how to minimise similar mistakes in the future. Also, make sure that you exit a position as soon as your risk is fulfilled or a technical barrier — such as support, resistance, volume, etc — has been broken.
9. Don’t Turn A Trade Into An Investment
If you’ve entered a trade, it’s most likely due to a technical or fundamental catalyst that caught your eye. For example, you may have bough-ten a stock because you thought its earnings would beat estimates. Even more, let’s say the technical setup is incredibly bullish and signals that the stock will exhibit upward moment. Unfortunately for you, though, the company’s earnings are lacklustre and the stock falls sharply. What do you do now? Do you hope that the stock rebounds in the near future, giving you a better exit point? Hopefully not, because once a trade goes the opposite direction and you decide to hold onto it, you’ve turned that position into an investment. If you created a position with one intention, make sure you exit it with the same and don’t change your thesis to justify the price movement.
10. Take Technical Analysis With A Grain Of Salt
The thing about technical analysis is that it works until it doesn’t. As illustrated by the example above, a stock may have a bullish technical setup that isn’t supported by its fundamentals. Even though traders can cross out the name of a stock, conduct technical analysis, and make a decision regarding its future price movement, the best traders recognise that a fundamental hiccup can trump even the best technical story. Make sure you take the time to research the sector and industry of prospective stock, and make note of any sector-, industry-, or stock-specific catalysts before outlaying any capital.
Source: www.stockethos.com/
Quote for the day
"The world is full of foolish gamblers and they will not do as well as the patient investors." - Charlie Munger
Thursday, 4 March 2021
Quote for the day
"It is possible to make money — and a great deal of money — in the stock market. But it can't be done overnight or by haphazard buying and selling. The big profits go to the intelligent, careful and patient investor, not to the reckless and overeager speculator." - J Paul Getty
Wednesday, 3 March 2021
Quote for the day
"We urge the beginner in security buying not to waste his efforts and his money in trying to beat the market. Let him study security values and initially test out his judgment on price versus value with the smallest possible sums." - Benjamin Graham
Tuesday, 2 March 2021
Traits of Top Traders/Investors
Top Traders/Investors -- Putting It All Together -- Developing Excellent Skills!
By Ian Harvey
Introduction
It is important to understand, and if possible, emulate the qualities that most top traders/investors have, to profit from the stock market! Many of these qualities can be developed if there is a willingness to succeed. With a commitment to improvement in oneself, and adhering to certain business stratagems, profiting from the stock market, in which ever form you feel comfortable in, is feasible.
While there are many, many traits that are noticeable in top traders, this article concentrates on only four of major importance.
1: Personal Responsibility
This is probably the most important trait that all top traders have (or top people in any field) is the ability to assume total responsibility for what happens to them. And for top traders and investors, this means that they assume total responsibility for their investments results.
This means that if you lose money it’s not the market’s fault, it’s not your advisor’s fault, it’s not your system’s fault, or the fault of anything else. Instead, it is a direct result of what you did. When you assume this attitude, you can learn directly from your mistakes and trading becomes a major learning curve, setting a scenario which allows for constant improvement. When you don’t assume this attitude, then you get to repeat your mistakes over and over again because you believe that you were a victim of some external forces.
Trait 2: Commitment
Becoming a successful investor/trader requires hard work. You must get to know yourself intimately because you are the source of your trading performance. You must develop a business plan to guide your trading. You must develop and test three or four strategies that fit within the big picture (as you see it) and then become part of your business plan. You must do your homework constantly. You must set routines and follow certain disciplines during the day on a constant basis. And all of this requires a lot of time and energy -- and it is only the people who are really committed who will put in the work necessary to become successful.
Trait 3: Mental State Control
There are many tasks to be adhered to when trading but the key to following those tasks is mental state control.
Each task requires a particular mental state in order to execute it properly and you must have the skill to step into that state and perform the task.
There are many required some of which are -- daily self-analysis, daily mental rehearsal, developing a low-risk idea, following the lead, taking action, monitoring, terminate bad positions, taking profits, daily debriefing, periodic review, etc.
For example -- one of the tasks of trading is the action step of terminating or taking profits. The mental state required is 100% commitment to action. There is no thinking involved, just 100% action. You should already know what to do when you get this signal because you’ve already developed a system that works. Thus, your job is simply to act. Think about when the tiger starts to leap on the antelope. He doesn’t suddenly think to himself, “Is this a good idea?” If he did that, he’d probably miss the antelope and break his back. No, his mental state is 100% commitment. Well, each essential task of trading requires a particular mental state and you must have the ability to step into that state.
Trait 4: Top-Down Discipline
In developing this sort of discipline, you must go through the following steps:
• Write out your dream life. What would you like to be, do, see, experience, and have in your lifetime in order for it to be ideal? Write this out completely.
• Write down the purpose behind that dream life. Write down your mission, your purpose and all of the whys behind that dream life. This step helps you get excited about achieving it.
• Write down your goals for the next year.
• Write down the purpose for each goal.
• Write down a series of action steps for each goal.
• And each action step (if it takes longer than a week for you to finish) could be considered another goal with a purpose behind it and a series of action steps behind that.
The net result of following these steps is that you develop a top-down discipline that helps you develop commitment and achieve almost anything you set your mind to achieving.
Conclusion
Now let’s look at what we have in these four qualities: -
• First you have a top down discipline that really helps you achieve almost anything you set your mind to achieving.
• Next you have the ability to get yourself into the appropriate mental state to do whatever you need to do with excellence.
• Third, you have the commitment to see your goals through to the finish.
• And lastly, but remember this was mentioned first -- you believe that you are personally responsible for what happens to you – which means that you can learn from your mistakes.
Therefore, with the right type of mind-set and with these four traits, you could achieve peak performance as a trader/investor or almost anything else you set your mind to doing!
By Ian Harvey
Introduction
It is important to understand, and if possible, emulate the qualities that most top traders/investors have, to profit from the stock market! Many of these qualities can be developed if there is a willingness to succeed. With a commitment to improvement in oneself, and adhering to certain business stratagems, profiting from the stock market, in which ever form you feel comfortable in, is feasible.
While there are many, many traits that are noticeable in top traders, this article concentrates on only four of major importance.
1: Personal Responsibility
This is probably the most important trait that all top traders have (or top people in any field) is the ability to assume total responsibility for what happens to them. And for top traders and investors, this means that they assume total responsibility for their investments results.
This means that if you lose money it’s not the market’s fault, it’s not your advisor’s fault, it’s not your system’s fault, or the fault of anything else. Instead, it is a direct result of what you did. When you assume this attitude, you can learn directly from your mistakes and trading becomes a major learning curve, setting a scenario which allows for constant improvement. When you don’t assume this attitude, then you get to repeat your mistakes over and over again because you believe that you were a victim of some external forces.
Therefore, it becomes quite obvious that the ability to learn from your mistakes is much more sensible and profitable then the tendency to repeat mistakes over and over again.
Trait 2: Commitment
Becoming a successful investor/trader requires hard work. You must get to know yourself intimately because you are the source of your trading performance. You must develop a business plan to guide your trading. You must develop and test three or four strategies that fit within the big picture (as you see it) and then become part of your business plan. You must do your homework constantly. You must set routines and follow certain disciplines during the day on a constant basis. And all of this requires a lot of time and energy -- and it is only the people who are really committed who will put in the work necessary to become successful.
Trait 3: Mental State Control
There are many tasks to be adhered to when trading but the key to following those tasks is mental state control.
Each task requires a particular mental state in order to execute it properly and you must have the skill to step into that state and perform the task.
There are many required some of which are -- daily self-analysis, daily mental rehearsal, developing a low-risk idea, following the lead, taking action, monitoring, terminate bad positions, taking profits, daily debriefing, periodic review, etc.
For example -- one of the tasks of trading is the action step of terminating or taking profits. The mental state required is 100% commitment to action. There is no thinking involved, just 100% action. You should already know what to do when you get this signal because you’ve already developed a system that works. Thus, your job is simply to act. Think about when the tiger starts to leap on the antelope. He doesn’t suddenly think to himself, “Is this a good idea?” If he did that, he’d probably miss the antelope and break his back. No, his mental state is 100% commitment. Well, each essential task of trading requires a particular mental state and you must have the ability to step into that state.
Trait 4: Top-Down Discipline
In developing this sort of discipline, you must go through the following steps:
• Write out your dream life. What would you like to be, do, see, experience, and have in your lifetime in order for it to be ideal? Write this out completely.
• Write down the purpose behind that dream life. Write down your mission, your purpose and all of the whys behind that dream life. This step helps you get excited about achieving it.
• Write down your goals for the next year.
• Write down the purpose for each goal.
• Write down a series of action steps for each goal.
• And each action step (if it takes longer than a week for you to finish) could be considered another goal with a purpose behind it and a series of action steps behind that.
The net result of following these steps is that you develop a top-down discipline that helps you develop commitment and achieve almost anything you set your mind to achieving.
Conclusion
Now let’s look at what we have in these four qualities: -
• First you have a top down discipline that really helps you achieve almost anything you set your mind to achieving.
• Next you have the ability to get yourself into the appropriate mental state to do whatever you need to do with excellence.
• Third, you have the commitment to see your goals through to the finish.
• And lastly, but remember this was mentioned first -- you believe that you are personally responsible for what happens to you – which means that you can learn from your mistakes.
Therefore, with the right type of mind-set and with these four traits, you could achieve peak performance as a trader/investor or almost anything else you set your mind to doing!
"Success is simple. Do what's right, the right way, at the right time." - Arnold.H.Glasow
Source: www.stock-options-made-easy.com
Quote for the day
"It is always easiest to run with the herd; at times, it can take a deep reservoir of courage and conviction to stand apart from it. Yet distancing yourself from the crowd is an essential component of long-term investment success." - Seth Klarman
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