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Trading Educators Blog

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Nov
14

The Golden Rules of Martin S. Schwartz

I like Marty Schwartz and his trading book "Pit Bull" a lot. It is an honest book about a trader who had his ups and downs in the market as we all do. In his book he writes, he made his highest progress, when he stopped trying "to be right" with the trades and instead followed the approach of "making money". Here is what I found on Wikipedia about him: Martin S. Schwartz (Buzzy, born March 23, 194...

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  7530 Hits
Nov
14

Be Objective

When your money is on the line, you can't help but feel a little uneasy. What if you lose? It's hard not to put some of your ego on the line with your money, and when you lose, feel hurt. Winning traders, though, keep cool. They don't ride a roller coaster ride of emotions, feeling euphoric after a win and beaten after a loss. They take losses in stride. However, it's hard to stay objective and co...

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  1259 Hits
Nov
07

Golden Rules by Paul Tudor Jones

​During the next few weeks, I want to have a look into the "golden rules" of famous traders with the idea, to find something they all have in common. I am starting with Paul Tudor Jones. Here, what I found in Wikipedia about him: Paul Tudor Jones II (born September 28, 1954) is an American investor, hedge fund manager, and philanthropist. In 1980, he founded his hedge fund, Tudor Investment Corpor...

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  3394 Hits
Nov
07

False Consensus Part 2

​Jim own a Hog farm. He produces 1,000 hogs per month to take to market, so he runs a fair-sized hog operation.Jim grows corn and soybeans for feed. He grinds his own beans into meal, and has silos for storage of both the corn and the beans. In years where the crop of the best quality, Jim stores as much of his crop as possible. If the crop is of lesser quality, he sells his crop in the open marke...

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  1324 Hits
Nov
01

Self Control

To become a truly successful trader you must become a truly committed trader. How do you get yourself to be in control? Statistics and society may predict, but you alone determine whether you will succeed or fail. You alone are in control. You alone must take responsibility for your performance and your life. There are always tremendous opportunities in the markets. It is not what happens; it is w...

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  1729 Hits
Nov
01

False Consensus Part 1

​Traders and investors try to understand their world. They make hypotheses and test them. Rather than conducting formal experiments, however, they use their everyday experience to test out theories they have about the markets. We study the markets and try to develop our own personal theories about how the markets work. Because we don't conduct formal experiments, we may fall prey to psychological ...

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  1216 Hits
Oct
23

Ready for Action

​In 1981, when I first started day trading, I would get to bed early night, wake up early, and be excited about starting the trading day. I remember on time when it was a cool, sunny day, and I really felt rejuvenated. After a quick exercise session, I couldn't wait for the markets to open, so I could make a few winning trades. I was really hyped. "Today is my lucky day. Today I'm going to make a ...

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  1284 Hits
Oct
23

Repetitive Mistakes

​Anyone is allowed to make one mistake. When the same mistake is repeated a second time, caution should be noted. The third repetition of the same mistake constitutes self-destructive habitual behavior that must be reversed. All trading must stop immediately until the trader's self-discipline is thoroughly examined. Once the reason for the repetitive mistakes is understood, usually fear, anger or ...

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  1520 Hits
Oct
17

Making a Comeback

​Have you ever had a bad day when nothing seemed to go right? First, you got up late. Second, your computer wouldn't boot up, and third, when it did, you couldn't seem to get in and out at the right time when executing even the most basic trade. What really upset you was when your Data line went down for 10 minutes during a critical moment in your trading plan. Traders face setback after setback, ...

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  1420 Hits
Oct
10

Intuition

​If only humans were more like machines. In theory, the ultimate trader would act like a robot, analyzing market data with unfailing accuracy, devising a trading plan, and executing it without flaw. But does trading work that way? Trading is more art than science. Without an intuitive grasp of the markets, it's difficult to successfully trade the markets using short-term trading strategies. Humans...

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  1355 Hits
Oct
03

Spreading Against a Related Contract

​In this instance, you spread by taking an opposite position in a related contract. You might spread corn against wheat. You might spread heating oil against unleaded gasoline. Quite often, operators who trade large size and are market makers hedge the S&P 500 by taking an opposite position in the Nasdaq or the Dow. Soybean traders often hedge by spreading off against the meal, the oil, or bot...

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  1351 Hits
Sep
26

Be Aware

​Beginning traders may make trade after trade and watch their account balance dwindle with each trade. They may feel unintelligent and thoughtless and think, "Why am I making so many losing trades?" At times they may wonder if they are thoroughly incompetent. But it's all a matter of perspective. If you aren't trading profitably, it isn't because you can't. It isn't because you have bad luck. It i...

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  1636 Hits
Sep
26

Accurate Records

As a trader, it's very important that you keep accurate records of all factors that may impact the outcome of your trades so that you can learn from your losses, improve your performance, and do better next time. From a psychological viewpoint, by documenting actions, thoughts and emotions associated with both wins and losses, you will come to see what works and what doesn't. When it comes to loss...

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  1365 Hits
Sep
19

Your Role in the Market

​Our past experience is a factor coloring the way we see things. We get an electric shock, and we decide never again to put a hairpin into an electrical outlet. Or, when we kiss our mate and receive a kiss back, we learn that kissing that person produces pleasure, so we enjoy doing it again! Likewise, our experience with the markets, colors our perception, and can influence the way we approach the...

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  1430 Hits
Sep
19

Graceful Trading

​Whether you're a novice or seasoned trader, there are days when you face setback after setback: Adverse events go against you. You make a trading error. You misread the markets. The possible setbacks can be endless, and it hurts a little to watch your account balance take a hit when one of them catches you off guard. But whatever roadblocks get in your way, you have to take them in stride. How ca...

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  1521 Hits
Sep
12

Setbacks

​Are you experiencing an emotional roller coaster, euphorically celebrating wins, but facing despair when losses mount? If you are, you may be taking things a little too personally. If you want to trade like a winner, you need to take responsibility for your actions, taking every precaution possible to neutralize adverse events and to control risk. That said, when things go wrong, it may not alway...

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  1574 Hits
Sep
05

Getting in Step with the Market

​Early in the trading day, as part of your daily preparation (you do have a daily preparation, don't you?) it's helpful to practice a little to get a "feel" for what you might do and how you might trade. One way to do it is to make a few small trades, using just a small percent of your normal trading size. Putting on a small position usually helps you focus. Once you've entered the market, see how...

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  1446 Hits
Sep
05

Be Flexible

​As traders in the markets, it's informative to study everyday examples of mass psychology. Although humans are highly intelligent, they can act like cattle blindly following the leader of the pack to the slaughterhouse. For example, have you ever observed how people drive in busy rush hour traffic? On a crowded freeway, it's common to see people refuse to acknowledge that the flow of traffic has ...

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  1468 Hits
Aug
29

Emotions

​Winning traders are extremely disciplined. They wisely study the markets, devise a trading plan, and follow it. They control their impulse to abandon their plans prematurely, and they don't allow emotions, such as fear and greed, to influence their trading decisions. In the trading profession, emotions often get a bad rap, however. There are critical moments of investing when it's vital to contro...

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  1508 Hits
Aug
22

Successful Trading

​Because we don't know what "successful" means to every individual, we should divide traders into different groups. I think most traders can be found in one of the following groups: Group One - these are mainly traders new in the trading business. They have read a book or two and they find trading very interesting, but they still don't know where to start. Group Two - these are the traders who alr...

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  1712 Hits

Derivative transactions, including futures, are complex and carry a high degree of risk. They are intended for sophisticated investors and are not suitable for everyone. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results, and all of which can adversely affect actual trading results. For more information, see the Risk Disclosure Statement for Futures and Options.