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 has ...
Emotions are what drive the markets. The markets are not driven nearly as much by world events as by how people respond emotionally to those world events. The most important factor in increasing performance is emotional. Consumed by anger, fear, doubt, or hopelessness, you lock up inside and fall short of the mark again. What is possible for you remains tragically out of reach. Unless you experien...
Trading can be a complex activity. A broad range of information must be studied and integrated. Not only do you need to keep up on possible news and factors that may impact the market action, you have to look at indicators, such as price and volume, in order to anticipate where the market will move next. And it isn't easy to identify chart patterns. It can be a lot like putting structure onto an a...
This question was sent to me from one of our students: What if you can't help it, but you are really afraid to fail as a trader. You have put so much into your desire to trade. You have a wall full of books. You have invested most of your money. You don't dare fail now, but you fear you will. How do you deal with your fear of failing? How you think and how you approach life affects how you approac...
Risk Tolerance: Knowing Your Limitations and Working Around Them Winning traders know how to tolerate risk. Trading outcomes are far from definite, but they don't mind. They have no problem putting on trade after trade and doing so with grace and nonchalance. However, not everyone can live up to this standard. Many novice traders have trouble taking a risk, even a small one. They either avoid exec...
Winning traders manage risk. Risk management is vital for their survival. But financial risk management doesn't come naturally for most people. Behavioral economists have shown that people can be extremely undisciplined when it comes to risk control. After a big win, they can become overconfident to the point of exuberantly taking unnecessary risks. And after a big loss, they have a strong desire ...
People ask me, "Just show me how to make big profits. I'm running out of time and money, and I just need to achieve financial success and get on with my life." Many would-be traders think this way. At Trading Educators we can tell you that of the masses that dabble in the trading profession, many don't want to put in the time and effort to master the markets. They are looking for a get rich-quick ...
As a short term trader, your goal is to stay ahead of the crowd and let their money flow from their pockets into yours. The better you can anticipate the behavior of the masses, the better you'll be able to capitalize on their irrational decisions. The masses are notorious for over reacting to media news. A popular theory in behavioral economics is that buying and selling by the masses is motivate...
Before the opening bell rings, you may have clearly outlined your trading plan. You know where you will enter, and which signals will indicate the plan has gone sour. But when you try to execute the trade a few hours later, you find that you can't control your emotions. You enter, the market moves against you, and you panic. Stuck and frozen, you don't exit as you had planned. The market continues...
Have you ever seen a pattern emerge, and you instinctively trusted your gut instinct even though your logical mind told you otherwise? Sometimes it works, but other times your intuition may fail you. Scientists are fascinated by how people use intuition. There's something intriguing and mystical about it. Intuition helps us make quick and rapid decisions without full conscious awareness, but somet...
Are you having a bad day? Has media coverage spoiled your trading plan? Perhaps you are just feeling a little off? When you encounter an unexpected setback, you can feel beaten down. You might be tempted to just stay knocked down, stuck, and unable to get back up. "I'll never make enough winning trades to recoup my losses." Ever have these thoughts, when you feel beaten? It's natural, but you can'...
When you put your money on the line, there's a strong need to seek out perfection. Many novice traders believe they can get everything just right. They believe that they can locate infallible information, find the perfect setup, and execute every trade flawlessly. In "Trading in the Zone," Mark Douglas notes that many traders are so consumed with making the perfect trade that they never get around...
If you want to become a winning trader, you must be willing to face losses without letting them get you down. Upon facing a loss, our first inclination is to feel disappointed, but how you react emotionally is merely a matter of how you look at matters. If you go in with unrealistically high hopes, you'll feel devastated when you encounter a setback. If you expect a setback here and there, however...
Trading is a challenging business. Only the most skilled traders can make a living as an active, full time trader. Trading experts suggest that novice traders approach trading the same way that students pursue their vocation in professional school, which requires a resolute dedication to sharpen their skills in order to move to the top of their field. The seasoned, professional trader has rare and...
If there are people in your life who do not support your efforts to become a successful trader, avoid them. Avoid those who express negative energy on a regular basis, and vent their hostilities towards you. Wherever possible, terminate unhealthy emotional relationships that cannot be repaired, and if necessary, do it immediately. Negative energy has a cumulative effect that eventually wears down ...
The problem with many traders is that they have only half a plan, the easy half. They know how much profit they're willing to take, but they don't have the foggiest idea how much they're willing to lose. They're like a deer in the headlights, they just freeze and wait to get run over. Their plan for a position that goes south is, "Please God, let me out of this and I'll never do it again," but tha...
Winning traders approach the markets with an optimal mindset. They trade "in the zone," but it's surprising how stress can impact your ability to enter this ideal state of mind. You can carefully delineate a complete trading plan, for example, in which every aspect is spelled out clearly, from when to enter and when to exit, and you may have a wealth of experience executing such plans, but when yo...
It's the day after a holiday. Are you going to trade today? Some traders believe that stock prices tend to rise the day after a holiday. Perhaps you have anticipated a rise in prices, and are holding a few positions in the hopes that you can sell into the strength brought on by the holiday. Nevertheless, the day before the holiday there's going to be less trading, just by the mere fact that the tr...
Note: I believe the article below was written by Adrienne Tograhie, a good friend and great trading coach. The Manic/Volatile trader has learned to create emotional volatility by developing a great imagination. By looping positive and negative stories with more detail, he is very effective in becoming dramatic. With enhanced feelings, he has justified to himself about being right. This keeps him s...
When confronted with a choice, how do you decide? Are the choices you make in life in general different from the choices you make in trading? It has been my experience that decisions in life that involve a perception of a possible loss, being wrong, or making a mistake, will very often take the same approach as the decisions you make in trading. Stuck Gary was a "want to be" trader for over twenty...
