Friday, 25 December 2020

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

Thursday, 24 December 2020

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

Wednesday, 23 December 2020

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

Tuesday, 22 December 2020

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