Trading Educators Blog

Hey Joe! Has anyone that you know put together a compendium of what to look for when you first start out trading? Not that I know of. But consider the following: As a trader you are in a contest. Your strongest opponent has plenty of capital. He follows a program and he does it without emotion. He is totally aware of the fact that no one knows where the next tick will fall. Whereas he usually...

When traders are overconfident, they falsely believe that they can trade beyond their skill set. Overconfidence in trading usually reflects an exaggerated view of one's abilities, which can be fatal. Trading is an area in which accurate and realistic perceptions of one's skill levels are crucial. It's interesting to observe that traders can be especially overconfident when they feel uncertain abou...

What are your worst losing trades? Do they haunt you? It may be difficult at times, but you have to forget about the past and think only of tomorrow. Make sure you keep a trading log. It's important to learn from your mistakes, and to the extent that you can do that objectively and unemotionally, you don't need to worry much about past losing trades influencing your current trading decisions in ne...

I think you would agree that most traders are risk averse. We don't like losses, and we'll do almost anything to avoid taking them. Losses are painful, and there's a strong need to seek out pleasure and avoid pain. It is easier to avoid admitting a loss, and traders tend to come up with many ways of denying they have a loss, such as holding on to a losing trade and hoping it will turn around, or k...

You've done your homework. Countless hours of seeking out the right guru (or piecing together your own system). Weeks of monitoring your guru's daily trade picks (or paper-trading and back-testing your homemade system). You've done it by the book. No seat of the pants trading for you! OK, now you're confident. It's time to put your money where your homework is. You've had your coffee and your firs...

Taking an honest evaluation of your own strengths and weaknesses is crucial to becoming a consistently profitable trader. If you can't identify those habits which continually make (or cost) you money, then you're just shooting in the dark. It's extremely important that you know things about yourself such as: * The time of day you are most profitable. * The position size that works best for you. * ...

Three psychological traits prevent traders from becoming consistently successful: fear, anger, and guilt. Fear blocks the trade decision-making process due to worry about negative events that may or may not occur in the future. Guilt blocks the trade decision making process with unresolved concern about something that happened in the past. Anger is an emotional response to guilt, fear, the indecis...

How a market does what it does, is just as important as what it does! When day trading, watch closely the way prices tick. If ticks are jumping, someone may be taking the market up or down. If the market ticks fast, it may be a clue to an upcoming fairly good-size move. Watch volume in conjunction with tick speed and direction. Fast ticking is often accompanied by an increase in volume. If prices ...

Joe! Is it true that selling a market when it is limit up is usually a great strategy? This "brilliant" strategy stems from the idea that selling a market at limit-up, may result in the trader gaining two limit moves in his favor while theoretically not losing any money the day of entry. I think is that this is an absurd idea. I don't advise this high-risk approach as a trading tactic. Keep in min...

Hi! Can you give me some principles to determine how long I should set an expiry for in a pending order? Should it be a multiple of the time frame (e.g., 12 X 15 minutes)? If so, what multiple would you recommend? Some other method? You sent an interesting question, but no detail as to what you are trading. In any event, I know of no formula regarding how long to wait for an order to be filled. In...

Hey Joe! Has anyone that you know put together a compendium of what to look for when you first start out trading? Not that I know of. But consider the following: As a trader, you are in a contest. Your strongest opponent has plenty of capital. He follows a program and he does it without emotion. He is totally aware of the fact that no one knows where the next tick will fall. Whereas he usually has...

Once prices have broken out, look for a retracement. Successful retracement trading can lead to very nice short-term profits. When prices finally do overcome resistance or support, penetrate a psychological barrier. or break out of a formation or trading range, it tends to do so boldly at first. But after their initial thrust, prices often seem to need reassurance. It's as if prices need to reconf...

There is an old saying that when day trading positions have had negative open equity most of the day, and an opportunity arises to exit the market at break-even with less than 30 minutes of trading rises, go ahead and exit the market. Unless the market is moving rapidly in your direction with expanding-in-length bars, and no more than 5 minutes left, exit immediately and consider the opportunity t...

I don't write much about investment. I'm a trader. But I did come across something I am happy to share. I'm a long-time subscriber to the Stansberry Alliance, and this comes from an email article. The 10 Ways to Find Your Next Great Investment Opportunity Finding great investment ideas is hard work. They don't just drop from the sky and say, "Here I am!" You have to uncover them. Today, I'd like t...

Technical analysis is a trading discipline employed to evaluate investments and identify trading opportunities by analyzing statistical trends gathered from trading activity, such as price movement and volume. Unlike fundamental analysts, who attempt to evaluate a security's intrinsic value, technical analysts focus on patterns of price movements, trading signals and various other analytical chart...

When I began trading, no one had ever heard of such a thing as "swing trading." Swing trading, as I recall, began when more and more people had the ability to day trade from a PC. In this issue of Chart Scan, I'm going to provide you with some swing trading help that you need when just starting out. If you follow these rules you will avoid a great majority of mistakes made by beginners. Swing Trad...

Hey Joe! How can I get a feel for what's happening in the market? One of the things that has helped me was beginning to use tick charts for my day trading. In a past issue of Chart Scan, I explained that there are two kinds of volume: Contract Volume and Tick Volume. Almost everyone is familiar with contract volume. It's usually shown as a histogram at the bottom of a price chart. For a given time...

Hey Joe! You've said that prices are not always moved by supply and demand; That they are heavily manipulated in some cases. We know that they intentionally run the stops, but what else do they do? Besides intentional stop running, those who have the power to move prices often resort to other dirty tricks. This may be more-true of stocks and Forex than of futures, but I believe all of the tricks b...

Hey Joe! Have you ever traded the Gold/Silver Ratio? How do you go about doing it? I think I traded the ratio a couple of times. It's not something I pay a lot of attention to. Here's some background about this ratio: According to a Mocatta Metals Corporation article, as of April 1980, when the price ratio of one ounce of gold to one ounce of sliver approaches 40:1 gold should be sold and silver b...

During the years I've been in the markets, I have been trained by two super-disciplinarians. One was my great uncle, Julius, and the other was John Wooden. Both emphasized extreme discipline and both told me to be all I can be, which for me was not a great outlook. Having been dyslexic all my life, I grew up with an inferiority complex. My dyslexia was very much present in the area of numbers and ...