Trading Educators Blog

​Once you get into a trade, you must eventually get out. Some argue that this is more important than where you get into a trade. My experience has been that any fool can get into the market, but it takes a successful trader to consistently get out with a win. As I follow the markets, I find there are four reasons to get out of a trade. Prices move significantly against my position. Prices stop mov...

​Eternal optimists often make the best traders. The winning trader engages in a constant search for innovative ways to take profits out of the markets. It takes a positive attitude to persist in the face of almost endless setbacks. If you are an optimist, you will pick yourself up gracefully after a loss. When you can't seem to find a high probability setup, you'll keep searching until you find on...

​How well have you been doing in the markets these days? There have been many opportunities in the past few weeks, but an abundance of market opportunities, don't always guarantee success. Setbacks can be the rule rather than the exception when it comes to trading. Discovering reliable trading strategies is a challenge, and frequently, a promising strategy produces a series of losses, especially u...

Diversification is one of the crucial factors in the success of some, but not all trading plans, and may in fact make the difference between success and failure of the plan. Putting all your eggs in one basket is not a good idea for some traders. This approach takes the position that rather than trading ten contracts in one market, look to trade smaller amounts in several different markets. The ai...

​Mental Momentum drawdown, you can feel a little disappointed, a little stunned, as if you have fallen, and you are having trouble getting up. After you've made a series of successful trades, however, you can feel much more powerful, as if you can relax a little bit. And when you feel relaxed, you also feel creative, and can think of winning strategies. Everything seems to click and you start...

A few years ago I had an interesting conversation with Joe about "what makes a trader a successful trader". We discussed this over several days because we wanted to find out how we can help struggling traders to enhance their trading. We finally came to the conclusion that "confidence" is what makes a huge difference. A trader can have a good system, good money and risk management in place, good u...

You will never be a perfect trader. However, as traders we have a strong need to want complete control over the outcome of a trade. We want to believe that if we analyze the markets long enough, we'll have perfect knowledge and we can trade to perfection. But such desire leads to wrong assumptions that can do us more harm than good. Assuming we must have control restricts our actions and reactions...

It has often been said that trading is not rocket science. I believe that. You don't need to be as brilliant as a rocket scientist to trade the markets profitably. I know I'm not that bright. That said, there are moments when a trader has a brilliant insight and takes home huge profits because of it. (I don't know any rocket scientists, but I'll bet that a rocket scientist isn't brilliant every wa...

​It is Tuesday, and you've been watching the markets closely for the past two weeks. It appears to be the fulfillment of your dreams: prices are making new market highs. You wonder, "What is the smart thing to do?" On the one hand, you can go long, but will this optimism last? Oil prices are still high, but they are lower and a little more stable compared to last summer. Everyone is hoping that co...

Much seasonally based information conforms to random probability generated data. Avoid trading seasonally based information without a fifteen year pattern, a minimum 80% win probability, profits twice losses, and a price action based entry. Price based trading information is superior to seasonal based information, because a trend or swing can be established before entry. Seasonal trades with less ...

​Richard Wyckoff wrote: "My stop was moved down so there couldn't be a loss, and soon a slight rally and another break gave me a new stop, which insured a profit, come what might… I strongly advocate this method of profit insuring. The scientific elimination of loss is one of the most important factors in the art, and the operator who fails to properly protect his paper profits will find that many...

Have you ever watched the last minute of a close football match and felt excited? When you are anticipating what will happen next, you often feel a little high, especially if you expect a desirable outcome. Humans like excitement. Whether it is a traffic accident on the way to work or the last scene of a murder mystery on television, we like suspense. Trading is naturally exciting, but if you are ...

Every trader makes bad trades and faces regret, it is inevitable. And we all have the human tendency to be overtaken by emotions. When we screw up we have a feeling of loss, and even a sense of denial. We wish we could undo the mistake. Going through such a thought process is understandable. It is what you do about it that matters. Virtually from the time we were born we learn to use our emotions ...

Under what conditions would you like to trade if you had your choice? You would probably want to trade in a strong bull market, be way ahead so that a loss wouldn't hurt at all, and have a foolproof trading plan. In addition, you would want to have a mental edge. You should be in a good mood, alert, and ready to take action. We can't always trade under such ideal conditions, however. If you are a ...

​If you had to describe the best trader in the world, who would that person be? What qualities would he have? Take a moment to envision him. This is important because this is the person you want to be, so you need to have an exact picture of him and what his qualities are. The answer is that he is someone whose trading is somehow "complete". Someone who is controlling his trading at all times; som...

​Keeping Losses Small I cannot say this enough times, so I'm saying it again, you must learn to keep your losses small. It is the single greatest concept that I can show you that will help you make profits in the market. This principle is of such magnitude that it dwarfs all other principles for trade, money, and risk management. Did you know that if you keep your losses small, you can flip a coin...

​Letting your emotions influence your trading decisions is virtually a guarantee that you will lose as a trader. If you are going to survive as a trader you have to bring your emotions under control. If you find that your emotions are swinging up and down as you trade, you have to confront the resulting feelings and deal with them. No one can do this but you. One way to keep emotions under control...

No one enters a trade with the idea of breaking even as a goal. Rather, we set out with high hopes, excitement, and expectancy – the promise of big dreams. But then something odd happens with our trade – we break even. Our reaction is a feeling of annoyance, of let-down. Breaking even happens. It is one of the possible outcomes of a trade. We must not see it as an unwelcome event. Distaste for bre...

​Is there a difference between chart analysis and technical analysis? In my opinion there is. I am surprised at how many traders lump charting together with technical indicators into a category they call "Technical Analysis." I am often accused of being a technical analyst because I am not a fundamental analyst. In the past, I've often carelessly, and without much thought, allowed myself to accept...

​Someone asked, "What in the world is 'covalent bonding of futures pairs?'" Covalent bonding of futures pairs is said to create the best trading system portfolio structure. After the most stable individual futures parameters have been selected, the optimal portfolio should be created. Atoms share electrons to form molecules of a substance. This same covalent bonding process finds the trading syste...