Trading Educators Blog

Trading is risky. Depending on your personality, you may be extremely intolerant of risk. I know a man who uses "riskaverse" for his email address. Most people avoid risks at all costs. Humans had to make prudent decisions in order to survive and evolve. Even though traders know they must risk money to make money, the natural inclination to avoid risk is powerful. How much risk are you willing to ...

If you're an eternal optimist, you hate bad news. But bad news is relative. What is bad news to some people is mere information, and possibly good news, to others. Some traders hate bad news, and do anything to avoid hearing it. It takes many forms, and at Trading Educators we have heard them all. Some traders keep losses on paper to avoid acknowledging them. Other traders avoid looking at perform...

The experienced private trader doesn't have to trade all day, every day. Market conditions change, and it is wise to stand aside until your trading methods, your risk tolerance, and your objectives match market conditions. At other times you might be feeling "off," and it might be better to watch the market than to trade it. Trading is a matter of moving from studying and observing to actively par...

Of all the email I receive, I dread most the ones that are sent to me by traders and investors who want to be (and want me to be) socially responsible. "Socially responsible" is cousin to being "politically correct." However, I am not a good judge of what is socially correct. I can measure moral correctness only in terms of the Bible. I have held Philip Morris, Altria, and Lorillard stocks at one ...

A couple of years ago I read an article on "thedailybeast.com", which discussed the debate of whether or not the brain acts like a muscle. An interesting part of the article described a program that was set up for a low-performing elementary school in Oakland. Over the course of eight weeks, twice a week, kids would go into one of two rooms to play board games, video games, and card games. Each ro...

This morning, I happened to catch a video on YouTube. It was something about the coolest guy on Earth. It made me think about being cool and having your act together as a trader. Trading can be fast-paced. As an active trader, you may sift through a barrage of information from media reports to earnings statements to unexpected national events. It's sometimes hard to make sense of it all, and to se...

In the trading profession, profits are hardly a sure thing. Even the most experienced traders make big mistakes and pay the price. Professional traders, as well as independent short-term traders, can mount huge losses. If you are experiencing a severe drawdown, don't feel badly about it. You're not the first person, and you won't be the last, to experience a severe drawdown. Emotionally, it is dif...

How good a trader are you? Everyone eventually must ask and answer this question. The answer may be unpleasant, but sooner or later you have to face your limitations. Some traders feed their accounts every month to avoid looking at how poorly they are doing. It's natural to take such measures. We all want to be successful, and it can be devastating to discover that, despite our best efforts, we ju...

Have you ever had one of those days in which you wished you had stayed in bed rather than executed your first trade of the day? Perhaps you excitedly put together a trading plan the night before, only to get a poor fill when the markets opened the next morning. Maybe you were just in a bad mood and frustrated that nothing was going right. Some trading experts warn against trading while upset or fr...

In trading, it's not whether you win or lose, but how much you profit on a winning trade compared with how much you lose on a losing trade. If you can cut your losses and move on, you'll survive. It makes sense, logically, but psychologically, many traders have trouble cutting their losses. We hate to lose, and we will do almost anything to avoid losing, even it means denying that we've lost. Some...

Would you rather have a job that pays a low salary but provides a steady income, or a high-paying job that might not be around next year? The answer to this question reveals a lot about your preferred trading style. If you are like most short-term active traders, you don't mind exchanging a little bit of security for a higher salary. Compared with typical jobs, short-term trading is risky, and one...

Are you ready to work all day and make absolutely no money at all? If you ask most people who are accustomed to working a 9-to-5 job, they would say, "No way, are you kidding?" But if you are a serious, active trader, there are many days that you must accept the fact that you aren't going to take home any money. There are various reasons that might cause you to decide to work for no immediate payo...

Have you ever been stuck in a rut? All you can think about is how "behind" you are, and how hard it will be to come back. Maybe you're thinking "I haven't made enough winning trades. What am I going to do? I'll never make it back." It's natural to panic a little when you're first starting out as a trader. The anxiety and worry can get to you, but winning traders have a trick that you may find help...

While risking capital on a trade, it's hard to not feel a little cautious. After all, if this trade, the next trade, and the one after that are losers, you'll begin wondering about what you might be doing wrong. You might feel a bit desperate, and think of trying to regain your edge. Feeling uneasy after a series of losses is understandable. But experienced traders keep cool, even when they are in...

If you're like most traders, you are in this business to make money big money. In all probability, you are ambitious, independent minded, and ready to take on the world. With this ambition usually comes a need to be the best. Only the people at the top of the field achieve the highest level of success. Although striving for expertise is a prerequisite for success, it usually coincides with a need ...

When it comes to protecting your money, one of the biggest dangers is so called impulse trading. Resisting the urge to have something right then and there is a skill everyone needs to learn in order to build a strong financial foundation. Recently I watched an entertaining TV show called "Auction Kings." One of the pieces being auctioned off was a 1975 Cadillac Eldorado. Cars don't get much b...

Do you ever feel as if you are just going through the motions, acting without thinking? Are you surprised that you react emotionally, selling prematurely when you meant to hold out a little longer? Or do you jump into a trade too soon, before you have systematically thought out your trading plan? You may be giving into a natural inclination to follow the crowd. I...

At the end of the year, it's tempting to examine the events of the past year, learn what you can from them, and start the New Year feeling that you can tackle anything the New Year throws at you. But you don't want to take a scrupulous self-examination too far. Sometimes we can waste a lot of time overanalyzing, and searching for lessons that just aren't there. A little bit of introspection can be...

Have you been making plans for the coming year? Have you been trying to make sense of where you've been so far? It's useful to ask and answer a few key questions: Where have I been? Where am I going? Where am I going to go next? The answers to these questions aren't always obvious. But consider the plight of Rey Aktiv and Pro Aktiv, brothers, both novice traders with very different personalities a...

How much time do you devote to charts study each day? It varies for me, but ideally, sufficient time to truly consider what is happening in the markets I'm interested in trading. For me, charts study is a part of my self-control and self-discipline efforts. Confidence comes from the self-disciplinary aspect of doing little things consistently right. I believe that when traders do their chart work ...