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Friday, November 30, 2012

Trading Patience & How To Use It to Improve Trading Results

Overtrading doesn’t just apply to opening a position; it also applies to closing positions.
Once you have done your analysis, and decided that a trade meets your criteria, if you decide to go for it you have to be able to “see it through,” unless it becomes a losing trade.
That’s why it is important to have predetermined stops when you open a position.
Remember the market doesn’t always move in straight lines, which means a winning trade might initially show a loss of a few cents before it continues in your direction.

Trading Patience and Professional Traders
Professional traders know that their emotions are going to affect their trading whether they like it or not.
As a result, they develop personalities that allow them to overcome their emotions and trade profitably.
Two of the most important personality traits are trading patience and discipline, because they allow you to handle one of the most difficult aspects of trading.
Possibly the most emotional time for a trader is when their PnL is negative, and they are waiting for their next trade to come along.
During this time they will lose there trading patience and they will be desperate to take their next trade in order to make back the money that they have lost.
Most new traders (and also some experienced traders) will lose there trading patience start taking trades that are not part of their trading system (known as making up a trade).
As soon as this happens, their loss will increase, and will continue to do so until they realize what they are doing and correct their behavior.
Trading Patience and discipline are vital personality traits for professional traders.
Having trading patience allows you to wait for your next trade regardless of your current profit/loss, and being disciplined allows you to take only trades that are part of your trading system (not making up a trade).
For some traders, the thought of losing money is enough to make them instantly patient and disciplined, but for others, the emotions are too strong, and they need to cultivate their patience and discipline.
One method of learning how to build trading patience and discipline is to keep a detailed log of every trade that you take.
At the end of the day, replay every trade, and compare the replayed trades to your trading log.
If there are any differences, you should be able to determine what caused them, and hopefully know what you need to avoid the next time.Another method of building trading patience and discipline is to have absolute confidence in your trading system.
Knowing that your trading system will make money over the long-term can be enough to overcome the negative emotions that occur when you are experiencing a loss.

The only way to have confidence in your trading system is to test the system thoroughly.
If you have tested your trading system over a significant length of time, and it is consistently profitable, there is no reason to question that it will continue to be profitable
Trading patience and discipline facilitate the trader becoming acclimated with the markets, knowing risk tolerance and developing a successful daytrading strategy.

I strongly believe that every aspiring Forex trader can benefit from simple psychological exercises. These can positively affect one’s mindset, improve their level of enjoyment, and most importantly – their profit margin

First thing every Forex trader who is looking to strengthen and improve his mental state should do is to decide on what he’s hoping to get out of it – or set some goals. Some Forex traders will aim to become able to always follow their entry rules, while others want to be able to stay patient and wait for the next setup if they miss their entry. Others will want to limit their risk exposure, while others will try to manage their trades by their exit strategy, rather than by guessing. In any case, the Forex trader will want to limit the effect of his emotions – the irrational part of his brain – have on his decision making and logic.

Once your goal is set, the best way to move forward is to design a strict set of rules you will follow in all of your Forex trades – and stick with it. In practice, the best way to go about this is to design a trading system and practice it for as many times as possible – while taking note of every trade that takes place. If you are able to do this, you will soon start to notice that the fear of losing and anxiety will have less and less effect on you – until one day, they are only a distant memory.

“The market does not beat them. They beat themselves, because though they have brains they cannot sit tight.”
-  Jesse Livermore

One secret of success in life is for a man to be ready for his opportunity when it comes.  Benjamin Disraeli 

“You make money on Wall Street by being very selective and being patient, waiting for those opportunities that are irresistible, where the percentages are very heavily in your favor.”
- Seth Glickenhaus

Be Patient. Stay Disciplined.

It's a virtue...Especially in trading.
Arnold H. Glasgow, an American humorist, once said, "The key to everything is patience. You get the chicken by hatching the egg, not by smashing it."
Developing your trading plan will take time. Developing skills will take time.
Waiting for the right trades requires patience. Entering and exiting a trade at the right moment requires patience.
Discipline is also a virtue, and it means doing the things you need to do to progress and get better....even if you don't want do it.
This means preparing for each trading day or week with research and chart study.
If you're a mechanical or automated trader, this means back testing systems and constantly trying different settings and strategies as the environment changes.
And of course, don't forget about keeping a trade journal and reviewing every single day you trade.
Journaling is the one trading task that separates the wannabe traders from the real deal traders. Unfortunately, most newbies won't do it.

Trading concepts and techniques are simple and easy to learn. What's hard to learn is how to be patient and disciplined to do the right things and make good trading decisions. Truthfully, it will be one of the most difficult endeavors you will ever take on.
To a newbie, sitting on the sidelines and watching the markets move while you wait for your best setups means you're missing out on profits.
This way of thinking leads to a failure of patience and discipline and causes some of the most notorious trading mistakes in the book:
  • Impulse trades
  • Letting losers run too long
  • Cutting winners too quickly
  • Revenge trades
These actions will kill your account!
Remember that your job as a newbie is to learn how to make good trading decisions and SURVIVE!

The best thing you can do to stay patient and disciplined is to look at your career as a trader as a marathon and NOT a sprint.
This is not an overnight, get-rich-quick scheme.
This is a commitment to build skills that will allow you to profitably trade in any environment the market will throw at you at any time.
And essentially, free you from the chains of the "Man." Fight the Power!!
If you stay patient, maintain discipline, and commit to constant improvement, then your results today as a forex noob will probably be nothing compared to the results of the trader you will become after years grinding it out in the markets.
Another thing....
Always remember that opportunities for good trades occur ALMOST EVERY SINGLE DAY!
No need to rush into bad trades. They will only set you back from reaching your goals.
Stick to your best ideas and setups, and if they don't come that session, just wait for the next.
Unless the world stops trading currencies (knock on wood) then there will always be opportunities around the corner.

"He who is prudent and lies in wait for an enemy who is not, will be victorious.  
He who knows when he can fight and when he cannot, will be victorious."

Sun Tzu 

Thursday, November 29, 2012

7 Habit of High Successful Trader

1) They decided a long time ago to take responsibility and find out
what works

2) They have a system that fits them.

3) They plan every trade down to the finest detail

4) They have put the ground work into this system and continue to
do so.

5) They have complete confidence in both the system they follow and in
their own skill to flawlessly execute it.

6) They definitely view trading as a game in points and stopped
counting the money a long time ago. Most of the top traders are
very wealthy so if they aren't trading for enjoyment ( and winning)
they'd simply retire.

7) Finally they learned a long time ago that they alone can not control
the markets. Watching a quote machine and hanging on to "guru" advice
all day is a losing system. Most of the top traders have a life
out-side of trading. Realizing the importance of keeping it all in

Video 7 Habit of High Successful Trader

Have a System That fits You

Every successful trader, investor,money manager,etc.. has a system
that fits them. Some are long term, some mechanical, some intuitive,
day traders, scalpers, arbitrage, value, momentum.The system its self is
not the important factor. What is? Is that the system fits their unique personality.

Too many traders try to copy the latest hot fad in trading. Right
now that would be day trading. But that style of trading will not suite
every-one. To be a successful day trader you have to love the short term
up and downs of the market during the day. Being in contact with quotes
for hours at a time. Yes, there are a number of traders making very good
incomes from day trading, but there’s many more who lose their shirts
within a couple of months and don't even find out whether day trading
is suited to their temperament

It's a little like choosing a career. I remember reading a book some
time ago about the world's best managers. And one characteristic the author
emphasized with all these top achievers was their LOVE for their chosen
careers. Most of them said they couldn't believe they were getting paid
to do something they loved so much. It's no different in trading.
You will only be a top trader if you trade a system which you simply
love to trade. You wouldn't swap that way of trading for anything. And
the profits you make, well that's just icing on the cake.

How do you find a system you are happy with?

For many traders the basic secret is having a trading system in the first place. You already knew that? Then just think about how well your trading worked, how often you changed or tweaked your system, not to mention those times when confusion or even despair set in!
Many novices are not aware of the necessity of a trading system, but many seasoned traders won’t believe that they have either:
  • A trading system that has contradicting elements in it, which inevitably means it can’t work really, or
  • a trading system that works but tries to exploit something where not much is to gain, or
  • a trading system that doesn’t fit their trading mentality, which means they can’t execute it.
If you have a trading system that works, trust for this system is building and it gets easier to execute it. That is the first step.
All system trading is eventually discrete, simply because a trader has to choose a system, then configure it, adapt it, choose the right markets, watch for extreme situations where to change the rules and so on.
If the trading system works with trends and sometimes yields superior gains, strong optimism follows and finally a trader’s sync with the markets sets in.
Be at the right place at the right time, enter the market and exit it with the right stop loss system. If you don’t choose the outright wrong place, say a dull stock that clearly has no real upside potential, this system works even with a random entry.
This is the real secret: Be in sync with the market and foresee where the killer waves may show up. Having the right system that gets you on the forming trend is of course the other part of the equation.

Buy High - Sell Low

Probably the most interesting rule for successful trading is to “Buy High and Exit
Higher, and Sell Low and Exit Lower.” This is counter-intuitive to what we all
have a natural inclination to do, which is buy low, sell high. Most great trading
strategies are counter-intuitive. They are not based on our normal human nature
and the normal human reaction to the markets. 

They consistently make money
because they are designed with market sense not human common sense.
In the final analysis, any market is just a collection of individuals making decisions
and placing money in the market based on these decisions. Most of these individuals are doing what comes naturally to humans, buying low and selling high. 

Statistics show that 95% of these people lose money.
To be a successful trader, you have to do the opposite of what this 95% is doing.
It isn’t easy, because it goes against your human nature. But any strategy that is
successful over time will most likely follow the rule of “Buy High, Exit Long
Higher and Sell Low, Exit Short Lower.”

Wednesday, November 28, 2012

Don’t Trade for the Money

I have met many successful people, and the one thing that they have in common
is that they love what they do. Many have told me they can’t believe that they
actually get paid for doing what they do. They have so much fun they feel guilty
taking money for doing it. Many successful people will tell you that they would do
what they do even if they weren’t paid at all.

Work hard and love what you are doing and the money will follow. Successful
people work first and count the money later. Sometimes they don’t ever count it,
and some don’t even know (or care) how much they have. They just know that
they have enough to allow them to continue what they are doing; working hard
and having fun.

Successful and profitable is 

* Boring
* Effortless
* Easy
* Stress Free

If stock market experts were so expert, they would be buying stock, not selling advice.
Norman Augustine (1935 - )

Let Market Tell You What To Do and When

The correct attitude for successful trading is to let the market tell you what to do.
If the market says to go long, buy, and if it starts to go down, sell. This sounds
easy but it is much more difficult than you think. We always like to believe that we
can be in control. We want to be in control of our trading and of the market. If
you accept the notion right now that you cannot control the market, that all you
can control is your execution of trades, you will take a great step toward being a successful trader.

Instead of trying to control the market, let the market tell you what to do. Let the
market and your strategy take you long rather than you personally trying to predict
or decide when to go long. Let your strategy take you out or get you short. Once
you realize that you can’t understand the market, and that you can’t predict when
the market will move, you will move into that detached state of mind where you
let the market take you where it will when it wants to.

Be In Harmony with the Market

We make money trading when we are in harmony with the market. We are long
when the market is going up, and short (or out of) the market when it is going
down. If we bring an opinion with us while trading, we will end up fighting the
market. We keep trying to go long as the market is declining, or we keep shorting
a market that it is in a bull phase.

Fighting the market is not good for two reasons. First, we lose money. How much
we lose depends on how well we are managing our money and controlling our
risk. Second, fighting the market affects our judgment, and causes us to try to
confirm that our judgment is correct, or persist in fighting a trend so that we will
eventually prove to be correct. We figure that if we persist long enough, no matter
how long it takes, we will eventually be right.
The same can be said for being in a canoe in a river. There is a reason for leaving
your car downstream, launching your canoe upstream, and paddling downstream.
It is much easier and eminently more fun to go with flow and paddle downstream.

We could do the opposite and paddle upstream. Eventually we may even get to
our destination, but the cost would be substantial. It would take much more time,
more physical and emotional stamina, and we would be constantly fighting the
current. Reaching the goal would not be worth the cost.
Even if you ultimately make money fighting the market, it is not worth the price
you have to pay, both financially and with peace of mind.