10 Thoughts for traders, 10 Points for traders

10 Thoughts for traders

10 Points for traders

1. OPPORTUNITY. There are dozens of these every day, unfortunately you can’t buy them all, so only pick the top 10 and then narrow them down to 2 to 3.
 This is done by using your buying criteria which is part of your trading plan which you already have written down. (Hopefully you have one?)

2. BUYING and SELLING. I have a pre planned strategy which I have developed by trial and error; this was achieved by learning by my trading mistakes  and the mistakes of others.
 3. PATIENCE.This is definitely a virtue worth developing. Sometimes the market is going up in the right direction, but is not going as fast upwards as you  would like.  Be patient and use a “stop loss” to lock in those profits. However small they may be.  Also don’t always be in a hurry to “buy that next share” just because you have that money burning a hole in your pocket.  Do your homework and then you have chosen the right share for the right reasons and not just because it looked good 

4. STRESS.If it is hurting! Don’t do it, cut your losses or be content with a small profit and get out.

5. THINK and PLAN AHEAD. After I have bought a stock and once it has been cleared. I immediately put a sell order in at the price/ percentage that I had  previously worked out using my trading plan.

This trading plan is not set in concrete as it is revised usually on a monthly basis. And always be prepared to improve on it where necessary.

Depending on the volume and the stock’s volatility I occasionally vary my profit margin upwards. If I do this, I always keep a watchful eye on its movement  and put in a stop loss to lock in those precious profits.

6.HOPE.This has no place in a trader’s plan, as Hope leads to procrastination (putting thing off).And this will lead to losses which you can ill afford.

7. WORRYING. The same thing applies as above; if you are worrying about a stock then it is time to sell it.

8. FUN. You should enjoy trading for if isn’t fun then it’s time to put your money into managed funds and quit trading.

9. RESPONSIBILITY. Take responsibility for your trading mistakes and learn from them. No one else made you buy that stock.

10. CONFIDENCE.Have faith in your abilities. At all times be a “Student” for you never know it all. And the minute you become complacent, something  nasty comes along to bring you back to earth with a thump. I hope these tips will give you some assistance in finding you profitable shares and improves your trading skills.

11 concepts from behavioral psychology that could be impacting how you trade and invest

11 concepts from behavioral psychology that could be impacting how you trade and invest

Practical Lessons For Successful Stock Trading

How to Find Your Trading Tendency

* How you trade after you’ve made money versus after you’ve lost money:  Do you trade more?  Larger?  Do you trade differently based on recent P/L?  Do you become risk averse after recent losses?  Does that affect your future P/L?

*  How do you trade when you’re taking more risk versus less risk?  Does different size/risk exposure cause you to trade differently?  Are you actually making more money when you’re taking more risk? 

*  What kinds of markets and market patterns provide you with your greatest profits?  Losses?  Do you trade selectively to maximize your best opportunities?  Do you overtrade markets that are not ones providing you with opportunities?

*  What is your ratio of winning to losing trades?  What is the ratio of the size of average winners to the size of average losers?  How successful have you been in finding large winners?  In preventing large losers?

Many times, our greatest biases and psychological mistakes come through when we thoroughly review performance.  The decision to not review performance is perhaps traders’ greatest bias blind spot.

All above points are too much important for success in trading.

One must contemplate and get answers to all the questions above and find reasons as well and take necessary steps to improve.

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Mark Douglas: 7 Keys to Trading in the Zone

Mark Douglas: 7 Keys to Trading in the Zone

“I am a consistent winner because:

1. I objectively define my edges.

2. I predefine the risk of every trade.

3. I completely accept the risk or I am willing to let go of the trade.

4. I act on my edges without reservation or hesitation.

5. I pay myself as the market makes money available to me.

6. I continually monitor my susceptibility for making errors.

7. I understand the absolute necessity of these principles of consistent success and, therefore, I never violate them.”

Most Useful Rules For Trading, Must Follow Rules For Trading

MOST BASIC RULES FOR TRADING

RULES FOR SUCCESSFUL TRADING 

MOST IMPORTANT RULES FOR TRADING SUCCESS

1.     Always trade with an actual stoploss.

2.     Trade with adequate capital. Otherwise you can easily lose out early.

3.     Make a trading system of signals which determine your entry and exit. Don’t do it on your hunch or guesswork of market and stock moves. Test your trading system/rules until it proves itself wrong.

4.     Never trade on loan money.

5.     Never risk more than 5% of your trading margin on one single trade.

6.     Forget the result of your last trade; be it profit or loss. Every new trade is new game.

7.     Always keep your risk reward ratio above 1.5 or 2 or more.

8.     Never ever average your losing trades.

9.     Let your profitable trades run.

10. Stop trading/take break after consistent series of losses or profits.

11. Be completely clear why you are trading. Don’t trade for only money. Trading is a journey and not a destination. Trading is not a job, it is a business. Expect not to get paid for days, weeks, months and even for a full year as in business. Trade because you love it. Never trade for fun, excitement or kill the boredom.

12.If you are completely new, start with paper trading, but don’t remain in paper trading. If you are relatively old then start with smaller positions and increase your volume as you go ahead with development of your trading system and right trading mental attitude.

13.Remain emotionally detached and completely rational.

What is a trading edge? How to get a trading edge for success in trading ?

What is a trading edge? How to get a trading edge for success in trading ?

A trading edge is defined as a set of conditions which result in a net gain when used over a large number of trades.

Let us think of a casino. The gambler can win once , or can win many times. But, if he gambles for a long period of time, he is going to lose money because the Casino receives Rs 100 and pays out Rs 97. The Casino has an edge. In the long run, the edge will show itself resulting in a guaranteed loss for the gambler.

In trading, nothing is guaranteed. Yet, traders must have some idea that the trading strategies they use will have more gains than losses over a long period of time. That is the trading edge.

No single trade will provide you with information on your edge. A series of trades may be profitable or losing purely by chance. When you take a statistically significant number of trades then the trading edge should come in play.

If you have made just five trades in the  Nifty and all of them were profitable then that is probably by chance - a random event.

Suppose you trade a 100 times in the Nifty futures over one year. Now, 100 is a significant number of trades. If you make money after an year, then you probably have an edge.

All trading should start with an edge.

In the next post, we will examine how we can determine if we have an edge in trading. 

Dennis Gartman's Trading Rules

Dennis Gartman's Trading Rules

1. Never, under any circumstance add to a losing position.... ever! Nothing more need be said; to do otherwise will eventually and absolutely lead to ruin!

2. Trade like a mercenary guerrilla. We must fight on the winning side and be willing to change sides readily when one side has gained the upper hand.

3. Capital comes in two varieties: Mental and that which is in your pocket or account. Of the two types of capital, the mental is the more important and expensive of the two. Holding to losing positions costs measurable sums of actual capital, but it costs immeasurable sums of mental capital.

4. The objective is not to buy low and sell high, but to buy high and to sell higher. We can never know what price is "low." Nor can we know what price is "high." Always remember that sugar once fell from $1.25/lb to 2 cent/lb and seemed "cheap" many times along the way.

5. In bull markets we can only be long or neutral, and in bear markets we can only be short or neutral. That may seem self-evident; it is not, and it is a lesson learned too late by far too many.

6. "Markets can remain illogical longer than you or I can remain solvent," according to our good friend, Dr. A. Gary Shilling. Illogic often reigns and markets are enormously inefficient despite what the academics believe.

7. Sell markets that show the greatest weakness, and buy those that show the greatest strength. Metaphorically, when bearish, throw your rocks into the wettest paper sack, for they break most readily. In bull markets, we need to ride upon the strongest winds... they shall carry us higher than shall lesser ones.

8. Try to trade the first day of a gap, for gaps usually indicate violent new action. We have come to respect "gaps" in our nearly thirty years of watching markets; when they happen (especially in stocks) they are usually very important.

9. Trading runs in cycles: some good; most bad. Trade large and aggressively when trading well; trade small and modestly when trading poorly. In "good times," even errors are profitable; in "bad times" even the most well researched trades go awry. This is the nature of trading; accept it.

10. To trade successfully, think like a fundamentalist; trade like a technician. It is imperative that we understand the fundamentals driving a trade, but also that we understand the market's technicals. When we do, then, and only then, can we or should we, trade.

11. Respect "outside reversals" after extended bull or bear runs. Reversal days on the charts signal the final exhaustion of the bullish or bearish forces that drove the market previously. Respect them, and respect even more "weekly" and "monthly," reversals.

12. Keep your technical systems simple. Complicated systems breed confusion; simplicity breeds elegance.

13. Respect and embrace the very normal 50-62% retracements that take prices back to major trends. If a trade is missed, wait patiently for the market to retrace. Far more often than not, retracements happen... just as we are about to give up hope that they shall not.

14. An understanding of mass psychology is often more important than an understanding of economics. Markets are driven by human beings making human errors and also making super-human insights.

15. Establish initial positions on strength in bull markets and on weakness in bear markets. The first "addition" should also be added on strength as the market shows the trend to be working. Henceforth, subsequent additions are to be added on retracements.

16. Bear markets are more violent than are bull markets and so also are their retracements.

17. Be patient with winning trades; be enormously impatient with losing trades. Remember it is quite possible to make large sums trading/investing if we are "right" only 30% of the time, as long as our losses are small and our profits are large.

18. The market is the sum total of the wisdom ... and the ignorance...of all of those who deal in it; and we dare not argue with the market's wisdom. If we learn nothing more than this we've learned much indeed.

19. Do more of that which is working and less of that which is not: If a market is strong, buy more; if a market is weak, sell more. New highs are to be bought; new lows sold.

20. The hard trade is the right trade: If it is easy to sell, don't; and if it is easy to buy, don't. Do the trade that is hard to do and that which the crowd finds objectionable. Peter Steidelmeyer taught us this twenty five years ago and it holds truer now than then.

21. There is never one cockroach! This is the "winning" new rule submitted by our friend, Tom Powell.

22. All rules are meant to be broken: The trick is knowing when... and how infrequently this rule may be invoked!

James P. Arthur Huprich's Market Trusms And Axioms

James P. Arthur Huprich's Market Trusms And Axioms

1. Commandment #1: "Thou Shall Not Trade Against the Trend."

2. Portfolios heavy with underperforming stocks rarely outperform the stock market!

3. There is nothing new on Wall Street. There can't be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again, mostly due to human nature.

4. Sell when you can, not when you have to.

5. Bulls make money, bears make money, and "pigs" get slaughtered.

6. We can't control the stock market. The very best we can do is to try to understand what the stock market is trying to tell us.

7. Understanding mass psychology is just as important as understanding fundamentals and economics.

8. Learn to take losses quickly, don't expect to be right all the time, and learn from your mistakes.

9. Don't think you can consistently buy at the bottom or sell at the top. This can rarely be consistently done.

10. When trading, remain objective. Don't have a preconceived idea or prejudice. Said another way, "the great names in Trading all have the same trait: An ability to shift on a dime when the shifting time comes."

11. Any dead fish can go with the flow. Yet, it takes a strong fish to swim against the flow. In other words, what seems "hard" at the time is usually, over time, right.

12. Even the best looking chart can fall apart for no apparent reason. Thus, never fall in love with a position but instead remain vigilant in managing risk and expectations. Use volume as a confirming guidepost.

13. When trading, if a stock doesn't perform as expected within a short time period, either close it out or tighten your stop-loss point.

14. As long as a stock is acting right and the market is "in-gear," don't be in a hurry to take a profit on the whole positions. Scale out instead.

15. Never let a profitable trade turn into a loss, and never let an initial trading position turn into a long-term one because it is at a loss.

16. Don't buy a stock simply because it has had a big decline from its high and is now a "better value;" wait for the market to recognize "value" first.

17. Don't average trading losses, meaning don't put "good" money after "bad." Adding to a losing position will lead to ruin. Ask the Nobel Laureates of Long-Term Capital Management.

18. Human emotion is a big enemy of the average investor and trader. Be patient and unemotional. There are periods where traders don't need to trade.

19. Wishful thinking can be detrimental to your financial wealth.

20. Don't make investment or trading decisions based on tips. Tips are something you leave for good service.

21. Where there is smoke, there is fire, or there is never just one cockroach: In other words, bad news is usually not a one-time event, more usually follows.

22. Realize that a loss in the stock market is part of the investment process. The key is not letting it turn into a big one as this could devastate a portfolio.

23. Said another way, "It's not the ones that you sell that keep going up that matter. It's the one that you don't sell that keeps going down that does."

24. Your odds of success improve when you buy stocks when the technical pattern confirms the fundamental opinion.

25. As many participants have come to realize from 1999 to 2010, during which the S&P 500 has made no upside progress, you can lose money even in the "best companies" if your timing is wrong. Yet, if the technical pattern dictates, you can make money on a short-term basis even in stocks that have a "mixed" fundamental opinion.

26. To the best of your ability, try to keep your priorities in line. Don't let the "greed factor" that Wall Street can generate outweigh other just as important areas of your life. Balance the physical, mental, spiritual, relational, and financial needs of life.

27. Technical analysis is a windsock, not a crystal ball. It is a skill that improves with experience and study. Always be a student, there is always someone smarter than you!

 

QUOTES FOR STOCK TRADING

QUOTES FOR STOCK TRADING INDIA
stock trading wisdom quotes
lessons in stock trading stock investing
trade less
trade with small SL
Trade with higher risk reward ratio.
Remain consistent in market.
Don't sit in front of screen whole time.
Have tremendous success in your system as far as it is not giving you losses.
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Seven characteristics of an objective Trader BY Mark Douglas, Author of The Disciplined Trader

Seven characteristics of an objective Trader BY Mark Douglas, Author of The Disciplined Trader

1.      You feel no pressure to do anything.

2.      You have no feeling of fear.

3.      You feel no sense of rejection.

4.      There is no right or wrong.

5.      You recognize that this is what the market is telling me, this is what I do.

6.      You can observe the market from the perspective as if you were not in a position,

7.      even where you are.

8.      You are not focused on money, but on the structure of the market.

SIGNS OF NEW TRADER

SIGNS OF NEW TRADER.

1      New Traders believe there is some magic trading method that always wins, they search for the Holy Grail of trading.

2      New Traders do not understand that the very best traders have strings of losses , losing months, and sometimes even losing years. They think rich traders always win.

3      New Traders want to know what is going up or down, they focus on tips instead of the mechanics of trading.

4      New Traders hand out advice freely to others, good traders realize that decisions are based on individual methods and do not give out tips.

5      New Traders are looking for that one big winning trade to go all in on, good traders are trading good systems that they risk 1% per trade on.

6      New Traders confuse bull markets for skill.

7      New Traders confuse luck for skill.

8      New Traders want advice, good traders want robust systems.

9      New Traders run from method to method and from mentor to mentor after every losing streak, good traders know exactly who they are and what methods they trade.

NIFTY FUT AS OF NOW. WILL IT FOLLOW TRENDLINE AND CONTINUE CORRECTION AFTER 7 DAYS OF SLUGGISHNESS AS RELIEF RALLY OR START JOURNEY TOWARDS 8000?

NIFTY FUT AS OF NOW. WILL IT FOLLOW TRENDLINE AND CONTINUE CORRECTION AFTER 7 DAYS OF SLUGGISHNESS AS RELIEF RALLY OR START JOURNEY TOWARDS 8000?
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Trading Wisdom From WILLIAM EKDHARDT

Trading Wisdom From WILLIAM EKHARDT

1. What is the state of the market?

2. What is the volatility of the market?

3. What is the equity being traded?

4. What is the system or the trading orientation?

5. What is the risk aversion of the trader or client?

Regardless of how you trade or invest … you better have those answers in advance of betting real money.

BELOW ARE SOME SELECTED INVALUABLE QUOTES:

•  “If a betting game among a certain number of participants is played long enough, eventually one player will have all the money. If there is any skill involved, it will accelerate the process of concentrating all the stakes in a few hands. Something like this happens in the market. There is a persistent overall tendency for equity to flow from the many to the few. In the long run, the majority loses. The implication for the trader is that to win you have to act like the minority. If you bring normal human habits and tendencies to trading, you’ll gravitate toward the majority and inevitably lose.”
• “One common adage on this subject that is completely wrongheaded is: you can’t go broke taking profits. That’s precisely how many traders do go broke. While amateurs go broke by taking large losses, professionals go broke by taking small profits. The problem in a nutshell is that human nature does not operate to maximize gain but rather to maximize the chance of gain. The desire to maximize the number of winning trades (or minimize the number of losing trades) works against the trader. The success rate of trades is the least important performance statistic and may even be inversely related to performance.” – William Eckhardt
• “The people who survive avoid snowball scenarios in which bad trades cause them to become emotionally destabilized and make more bad trades. They are also able to feel the pain of losing. If you don’t feel the pain of a loss, then you’re in the same position as those unfortunate people who have no pain sensors. If they leave their hand on a hot stove, it will burn off. There is no way to survive in the world without pain. Similarly, in the markets, if the losses don’t hurt, your financial survival is tenuous.” “I know of a few multimillionaires who started trading with inherited wealth. In each case, they lost it all because they didn’t feel the pain when they were losing. In those formative first few years of trading, they felt they could afford to lose. You’re much better off going into the market on a shoestring, feeling that you can’t afford to lose. I’d rather bet on somebody starting out with a few thousand dollars than on somebody who came in with millions.” – William Eckhardt-
• “In many ways, large profits are even more insidious than large losses in terms of emotional destabilization. I think it’s important not to be emotionally attached to large profits. I’ve certainly made some of my worst trades after long periods of winning. When you’re on a big winning streak, there’s a temptation to think that you’re doing something special, which will allow you to continue to propel yourself upward. You start to think that you can afford to make shoddy decisions. You can imagine what happens next. As a general rule, losses make you strong and profits make you weak.” – William Eckhardt -
• “If you’re playing for emotional satisfaction, you’re bound to lose, because what feels good is often the wrong thing to do. Richard Dennis used to say, somewhat facetiously, “If it feels good, don’t do it.” In fact, one rule we taught the Turtles was: When all the criteria are in balance, do the thing you least want to do. You have to decide early on whether you’re playing for the fun or for the success. Whether you measure it in money or in some other way, to win at trading you have to be playing for the success.” – William Eckhardt
• “Don’t think about what the market’s going to do; you have absolutely no control over that. Think about what you’re going to do if it gets there. In particular, you should spend no time at all thinking about those rosy scenarios in which the market goes your way, since in those situations, there’s nothing more for you to do. Focus instead on those things you want least to happen and on what your response will be.” 

24 RULES FOR SUCCESS IN TRADING

24 RULES FOR SUCCESS IN TRADING

1.    Plan your trades. Trade your plan.

2.    Keep a positive attitude, no matter how much you lose.

3.    Continually set higher trading goals.

4.    Successful traders have a well-scheduled planned time for studying the markets.

5.    Place the stop at the time you make your trade

6.    Avoid getting in or out of the market too often.

7.    Losses make the trader studious – not profits. Take advantage of every loss to improve your knowledge of market action.

8.    Always discipline yourself by following a pre-determined set of rules.

9.    Remember that a bear market will give back in one month what a bull market has taken three months to build

10. You must have a program, you must know your program, and you must follow your program.

11. Expect and accept losses gracefully. Those who brood over losses always miss the next opportunity, which more than likely will be profitable.

12. Split your profits right down the middle and never risk more than 50% of them again in the market.

13. The difference between winners and losers isn’t so much native ability as it is discipline exercised in avoiding mistakes.

14. In trading as in fencing there are the quick and the dead.

15. 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.

16. 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.

17. It’s much easier to put on a trade than to take it off.

18.You must believe in yourself and your judgement if you expect to make a living at this game.

19. In a narrow market there is no sense in trying to anticipate what the next big movement is going to be – up or down.

20. It is better to be more interested in the market’s reaction to new information than in the piece of news itself.

21. If you don’t know who you are, the markets are an expensive place to find out.

22. 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.

23. When the ship starts to sink, don’t pray – jump!

24. Lose your opinion – not your money.