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Trading General

Trading General

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Joe Ross

It Can Look Good in Hindsight

Trading General
It Can Look Good in Hindsight
The human mind is capable of extreme optimism. We have a strong need to win. This need can be so strong that everything looks rosy. For example, you may look backward at old charts and think, "It's easy to see winning patterns." Behavioral economists call this optimism, 'hindsight bias.' When we know how a stock price moved in the past, we think it all seemed inevitable when we look backward. For ...
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Andy Jordan

I just wiped out for the second time. Am I some kind of trading freak?

Trading General Psychology
I just wiped out for the second time. Am I some kind of trading freak?
Most successful traders failed at some point in their careers and wiped out their account. Many traders lose because they do not understand the nature of the decision-making process, which should be based on rational price action analysis versus emotional, irrational reactions to price action. A reason should be required for each market action taken. When fear exits a trade, it is more difficult t...
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Andy Jordan

Is Seasonality the same in all Markets?

Trading General
Is Seasonality the same in all Markets?
You can find seasonality in all markets but I personally think there is a big difference in "reliability" or "strength" of seasonality in the markets. I personally think seasonality is strongest in the commodity markets. In all markets where you have a physical product and a production cycle during the year. Because the production cycle is always the same you get typical seasonal behaviors in thes...
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Joe Ross

Trading is a Business

Trading General
Trading is a Business
​ Is learning the trading business like learning any other business? The importance of how you learn the business of trading cannot be minimized because of the factors that determine your success or failure. Learning the business of trading is basically no different from learning any other business. Winning means learning major guidelines and concepts that you repeat so often in your own behavior ...
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Andy Jordan

Is learning the trading business like learning any other business?

Trading General Long Term Trading
Is learning the trading business like learning any other business?
The importance of how you learn the business of trading cannot be minimized because of the factors that determine your success or failure. Learning the business of trading is basically no different from learning any other business. Winning means learning major guidelines and concepts that you repeat so often in your own behavior that they become good habits. These good habits then become automatic...
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Andy Jordan

Being in a positive state of mind

Psychology Trading General
Being in a positive state of mind
Being in a good mood won't necessarily make you a winner, but being in a bad mood will almost assuredly make you a loser. Starting since time began, the number of people who have won large sums of money through trading while feeling depressed, irritable, or angry could probably be counted on the fingers of one hand! In short, try to trade when you are in a good mood. Restrict yourself to times whe...
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Marco Mayer

Who's next in line?

Forex Trading General
Who's next in line?
"Buy low, sell high" is one of the most popular memes in the investment and trading world. And obviously, it does make sense, who wouldn't like to buy low and sell high all the time? I found this to be quite a helpful advice to invest in stocks for example. Wait for a crash, buy it and sell again when prices are back to old highs. Of course, the problem often is to figure out what's actually a low...
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Andy Jordan

Patience as a Central Pillar of Your Strategy

Trading General Psychology
Patience as a Central Pillar of Your Strategy
Think of patience as a primary part of your trading strategy. Don't assign it a secondary or lesser role, elevate it on the list of what you consider important. And don't be put off by it when it doesn't seem to be working — it's working. Don't start feeling self-righteous about not trading, as if now it owes you (because you have been so disciplined and patient). This is a trap. Don't start to fe...
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Joe Ross

Plans and Objectives

Trading General
Plans and Objectives
I was watching an old movie "Coach Carter," starring Samuel L. Jackson. I couldn't help thinking about the many similarities between what a coach must do to prepare his players and what a trader must do to prepare to trade. Since trading is largely a self-directed business venture, embarking on a trading career requires that you are able to set clearly defined objectives and develop a specific pla...
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Andy Jordan

Achieving Self-Esteem

Trading General Psychology
Achieving Self-Esteem
The single most important component of the personality related to personal achievement is self-esteem. Self-esteem is simply how much an individual likes himself and correlates to high achievement on a one-to-one basis. The more an individual likes himself the higher levels of performance he can achieve in any area of his life. Traders should always have at least one physical or mental activity ev...
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self esteem high performance self image personal achievement self concept
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Marco Mayer

The right mindset to deal with drawdowns

Trading General Systematic Trading System/Method Trading
The right mindset to deal with drawdowns
Drawdowns are an unavoidable fact in trading that's tough to deal with. But you probably already noticed that and might have encountered some of the serious issues this can lead to during your trading career. Maybe you tend to stop trading a system or switch systems always at the wrong time. Or worse. But as I've written about these issues before, here's a mindset that has helped me a lot to deal ...
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Andy Jordan

Emotional Extremes

Psychology Trading General
Emotional Extremes
Many beginning traders undergo emotional extremes, feeling sheer ecstasy after a win, but crushing disappointment after a loss. However, as a mature trader, you grow to realize the folly of allowing the natural ups and downs of trading to impact your emotions. Although as a winning professional trader you may stay calm and relaxed even after a series of losses, remaining rational and composed can ...
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Marco Mayer

Don’t get married to a market!

Trading General
Don’t get married to a market!
There are so many different instruments to trade like stocks, bonds, futures, spot forex, options and so on. And even when you decide to get into futures, there are tons of futures out there! So where to even start? I was as confused as anyone else about this when I started trading. That's why it probably feels good to focus on just one market in the beginning. "I just trade the EUR/USD" or "I onl...
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Joe Ross

Contrarian Trader

Trading General
Contrarian Trader
Being a contrarian trader means not just following the crowd. It means being willing to break the rules when necessary! Statistics show that the “crowd” loses close to 80% of the time position trading, and very close to 90% of the time day trading.  Why would anyone want to do what all those people are doing? So, what is it the crowd is doing?  For the most part they are struggling with ...
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Andy Jordan

Admit when you are wrong

Trading General Psychology
Admit when you are wrong
Recently I heard another tale of woe involving the failure to admit being wrong. This man followed a familiar path. As a day trader in the E-mini S&P 500, he first contacted me to tell me that he was unhappy with the data he was receiving. He wanted to know if I could recommend a good trading program for him. I mentioned a couple of them to him and he decided on one. Another interval of time w...
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Joe Ross

The Nature of the Trading Business

Trading General
The Nature of the Trading Business
Consider the following: As a trader you are in a business. 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 good insights regarding the major forces that drive the market, he does not fool himself into thinking he can explain the vagrancies of p...
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Andy Jordan

Overtrading

System/Method Trading Trading General Psychology
Overtrading
Overtrading is putting on trades unnecessarily, arbitrarily, and without a specific trading plan. Overtrading can also be trading with more risk than you can afford, and trading more contracts than you can effectively manage physically, mentally, and emotionally. Mistake #1: Assuming a real trader trades all day. Mistake #2: Trading for excitement. Mistake #3: Trading because you are frustrated. M...
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Joe Ross

Pulling the Trigger

Trading General
Pulling the Trigger
Dear Joe, Sometimes I absolutely dread sitting down to trade. I have had so many bad experiences that I’m not sure I can pull the trigger. Is there anything I can do about it? What happens to us as we trade colors the way we see things in the market and influences the way we approach them. We take a big hit in a particular market, and we decide never to trade there again. Or, when we have a great ...
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Andy Jordan

Some things that keep traders from “making it”

Trading General Psychology
Some things that keep traders from “making it”
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 indecisi...
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Joe Ross

Developing a Trading Style

System/Method Trading Trading General Psychology
Developing a Trading Style
Master Traders develop a style that is a reflection of their education and character. Most individual trading styles are either positional or combinational and, rarely, a synthesis of both. However, there are other styles.  Positional traders take x amount of positions within a specific price area where the market is thought to be favorable to their trading strategy. This may occur on short t...
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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.