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Secrets of Successful Traders

27 Apr

The Secrets of the Successful Trader…

The trading game is as much played psychologically as it is physically executing trades. After the markets are closed is where average traders turn into successful traders. To be a successful trader it takes a specific skill set, but more importantly the proper mindset. The techniques, strategies, and lingo can be readily learned, it’s the other side, the psychological aspect which turns an average trader into a successful trader.

Create a Business Plan – “Plan Your Trade, Trade Your Plan”

Treating trading as a business with the objectives, goals, and guidelines clearly laid out will not only help keep things organized, but allow for less emotional involvement during tough market conditions. Defined entry and exits need in place for when to take losses and profits. Protecting profits while limiting losses is the name of the game, remember the bottom line, we’re in this to make money.

Being diligent and thorough with your trading keeping detailed records will be a tremendous help and allow you to go back and really pick apart things the things that are working from the things that aren’t.

Finally decisive action is an important quality to have when developing as a trader. A good trader has trained his eye to spot potential forming trends. Often times when a clear trend is established it is already too late to enter in the trade. The business is trading and treating it as such will be the first step to becoming successful.

Exercise Discipline

  • Patience, the word traders live and die by.
  • Doesn’t over trade
  • Balancing trading with personal, family, and time with friends
  • Only blame themselves for bad mistakes
  • The only person who can be blamed for your trading actions and mistakes is YOU. Whether you heard the stock tip from a friend or on TV, it is you that pulled the trigger and only you who can take credit for the losses and conversely profits, you make.
  • Apply Money Management Skills Exclusively
  • Isn’t afraid of taking losses, but keeps them small (or win loss ratio etc. under control)
  • Knows there will always be another trade
  • Lets their winners run (takes bigger chunks out of the markets)
  • Having an arsenal of strategies is great, but knowing when and what type of market environment to use them is the key to having a successful trading career.

Never Stop Learning

Becoming a successful trader takes time, years and years of studying the markets day in and day out. Making mistakes, losing money, and learning from your mistakes. By reading and learning from the mistakes of others, we are able to ease some of those losses.

Understand that there is no Holy Grail

While many black box systems exist, they only work for a short period of time before failing or breaking down.
The simplest form of trading is price and volume and successful traders always come back to reading price and volume.

Must Have an Strong Desire to Succeed

This doesn’t mean extremely risky, it simply means open to recognizing and seizing opportunities. Passionate and resilient – People will say you can’t do it, and the markets may get you down, but if you are driven you will succeed.

Discipline in Trading is a 24-7-365 Job

28 Oct

Discipline is not something you do 9 out of 10 times or only when you feel like it, it’s something that must be enacted 24-7-365. In trading, breaking your rules “just this once” is a recipe for disaster. Don’t kid yourself, if you want to be consistent trading the markets you must remain disciplined every single day both in the trades you take and in your afterhour’s analysis.

The more diligent and thorough your attitude towards the markets, the faster you will progress. In the markets you are paid based on your level of discipline. Remain disciplined 100% of the time, all the time.

A Course in Technical Analysis

4 Mar

Here is a comprehensive course of Technical Analysis including Candlesticks, Elliot Waves, Market Profile and Capital Flow. Enjoy.

Why Price & Volume?

5 Feb

End of Year Homework

22 Dec

As the end of the year rolls around, volume tends to diminish as traders go on holiday. Now is a great time to look back across the year and reflect on things you have accomplished, set goals for 2010, and improve your trading as a whole.

Below are some things you can do as the New Year rolls around to improve your trading

Review your current year goals and evaluate your over/under.
Create new goals: Push your limits, get you out of your comfort zone.
Flip through your notebooks and highlight key points.
Review the years p/l and commission reports.
Make updates and changes to your current trading plan and system.
Analyze your performance.
  (see calculations page in Creating a Trading Plan presentation)
Revamp your notebooks, excel spreadsheets, and word documents.
Any and all of these tasks can be done anytime thought the year, but it is most important to complete them around this time as often times traders forget that reflection is a crucial part of a traders developing success.
Happy Holidays & Happy Trading!

Creating a Business Plan

26 Oct

Treating trading as a business with the objectives, goals, and guidelines clearly laid out will not only help keep things organized, but allow for less emotional involvement during tough market conditions. Defined entry and exits need in place for when to take losses and profits. Protecting profits while limiting losses is the name of the game, remember the bottom line, we’re in this to make money.

Being diligent and thorough with your trading, and keeping detailed records will be a tremendous help and allow you to go back and really pick apart things the things that are working from the things that are not.

Finally decisive action is an important quality to have when developing as a trader. A good trader has trained his eye to spot potential forming trends. Often times when a clear trend is established it is already too late to enter in the trade. The business is trading and treating it as such will be the first step to becoming successful.

First 15-Min. Rule

17 Feb

One of our rules we use is to NEVER trade the first 15-minutes of the market. This is because many times noise and false moves take place in this time.

For open positions, if a stock gaps down below the established stop, wait for the first 15-min bar to fully form, and then place a stop underneath the low of that bar. More often than not the stock will gap below your hard stop then rally in the first 15 minutes.

The only exception for this rule is when taking profits. Profits can be taken at ANY time during market hours and override any rule.

Welcome Traders!

5 Dec

To newer traders I can offer 3 things…

  • Get a journal and record everything.
  • Develop money management skills for both trading and the rest of your life.
  • Never stop learning, read anything and everything.

Great books:

  • Jesse Livermore’s Reminiscences of a Stock Operator
  • Jack D. Schwager’s Market Wizards and New Market Wizards
  • Japanese Candlestick Charting Techniques by Steve Nison
  • Trading For a Living by Alexander Elder

You have no control over the markets, you can only control yourself. The market will do what it wants to do regardless of your feelings. After all your time spent learning to make money, the markets will not hesitate to take it away from you at any split second. Good luck out there, and remember…

“Plan your Trade and Trade you Plan!”