Trading General

Jun

21

Overconfidence

Joe Ross

Trading General

How should a trader deal with "overconfidence?" Maybe a better question about confidence--trading and otherwise--is not why people are overconfident to begin with, but why they stay overconfident. You see, the problem with overconfidence is not the innate bias toward optimism that most people seem to possess. That's a good thing it keeps the world moving forward. The problem is the inability to ...

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Jun

15

What's my real reason for trading?

Andy Jordan

Trading General

"The Rorschach test (also known as the Rorschach inkblot test, the Rorschach technique, or simply the inkblot test) is a test in which a subject's perceptions of inkblots are recorded and then analyzed using psychological interpretation, complex scientifically derived algorithms, or both. Some psychologists use this test to examine a person's personality characteristics and emotional functioning...

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262 Hits

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Jun

15

Confidence

Joe Ross

Trading General

When it comes to trading the markets, nothing is certain. How do you cope with uncertainty? Many traders are overconfident. Rather than face the possibility of losses due to market uncertainty, they fool themselves into thinking they are omnipotent. Behavioral economists Brad Barber and Terrance Odean illustrated how novice traders are especially overconfident. They analyzed account records from a...

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239 Hits

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Jun

06

Traders "Pro Active" and "Ray Active" – A Story!

Andy Jordan

Trading General Psychology

Pro Active and Ray Active are both wannabe traders, but their approach to trading is quite different. Ray is consumed with trading for profits. He imagines himself achieving great wealth, and thinks that when he amasses the riches he is after, he'll finally get the respect and recognition he always wanted from his wife, family and friends. He thinks, "If I can only make it as a trader, I can show ...

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winning traders confidence consistently trading skills goals

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Jun

06

Efficiency and Success

Joe Ross

Trading General

How much time do you spend preparing for the trading day? Do you spend hours scouring the markets for a winning trading opportunity? Do you watch hours of commentary or read all the major financial newspapers? You don't need to spend hours and hours reading about the markets if it doesn't directly lead to a profit. For example, most media coverage of the markets is for entertainment value, so spen...

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efficient trading winning trades profitable trades skilled trader trading

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May

31

Greed

Joe Ross

Trading General

In the movie "Wall Street," Gordon Gekko argues, "Greed is good." Greed can motivate you to strive for perfection and keep you persisting in the face of adversity, but greed has its downside. It is often said that the markets are driven by fear and greed. The masses have a natural desire for wealth and all the advantages that money can buy. In their zeal, the masses invest in stocks and believe ...

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308 Hits

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May

24

The "Crush Spread"

Andy Jordan

Trading General

The spread is defined as buying one futures contract, and selling a different, but related futures contract. Specifically, when trading the crush spread, you would buy soybeans and sell its respective products, the soybean meal and soybean oil. This is what is referred to as being crushed. If you buy the soybean meal or the soybean oil and sells soybeans, that is what is referred to as being rev...

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futures contract crush spread great value

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May

24

Maintaining Discipline

Joe Ross

Trading General

Winning traders are disciplined. Discipline means controlling impulses and fighting the urge to abandon your trading plan prematurely. Maintaining discipline is often easier said than done, especially when the market is moving in your favor. It's hard to avoid closing a trade out early in order to lock in profits. Some winning traders face more losers than winners, and when you hit upon a winner, ...

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discipline disciplined trading plan winning traders exit point

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May

19

Trading Opportunities

Joe Ross

Trading General

Good trading times may be just ahead. Are you ready? It's times like these when the right mental edge can make all the difference. If you want to take advantage of trading opportunities for the New Year, it's vital that you approach trading with the proper mindset. Be ready to work hard and do whatever it takes to come out a winner. Unfortunately, many traders aren't up to the challenge. They don'...

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trading performance good trading times confidence setbacks

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May

09

Why Stops

Joe Ross

Trading General

Would you ever think of jumping out of an airplane without a parachute? Of course not, but that's what some people do when they trade the markets. They are very willing to put their money on the line, but they don't have much to protect them from a major disaster. Placing a stop, for example, can prevent you from allowing a small loss to turn into a big one, but many traders avoid placing stops....

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trade loss traders Other people Many experts

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May

04

Don't Give In To The Death Wish

Andy Jordan

Trading General

The death wish is resignation, fatalism, dejection, despair — in the face of "luck" repeatedly turning against us. The death wish is admitting defeat and shrugging our shoulders and throwing up our hands (generally after a string of losses) and not caring from then on whether we win or lose. The death wish is throwing money into the pot fatalistically, to punish ourselves. It is saying, "I might a...

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death decision-making function turn-around point clear mind

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May

04

If You Doubt, You May Be Out

Joe Ross

Trading General

It's almost impossible to have rock solid confidence as a trader. Sure, some traders can't be thrown off track very easily, but it's natural to feel a little afraid occasionally. Let's look at some of the reasons that you might feel shaken. What the markets will do tomorrow or next week is far from certain, and you don't have a crystal ball. Your information is fallible. And without perfect info...

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confidence crystal ball media analyst trading strategies trading strategy

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May

01

What is “walk-forward” testing?

Andy Jordan

Trading General System/Method Trading Systematic Trading

Walk-forward testing is the first real step in testing any system on live data. A trader should be somewhat confident that the system or method can produce results in line with the hypothetical results received from back testing. At this stage of testing, it's important to watch a trading system or method run over live data for a period of weeks or months until a large, statistically valid univers...

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system testing method results simulatior

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Apr

27

How to Handle Fear

Andy Jordan

Trading General

The best way to handle fear comes in two steps: 1. A detailed trading plan 2. Risk control Let's look at risk control first. You have no doubt, read it many times: "Trade with money you can afford to lose." Here's another one: "Trade positions that are so small that you may think, "what's the point of even putting on the trade?"" One more: "Do not over-trade!" All of the above carry essentially ...

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280 Hits

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Apr

22

Ready to Lose

Joe Ross

Trading General

Imagine what you would do in the following scenario. You have been looking at a position for a week. You had a clear and simple trading plan: Just wait for an announcement at the end of the week, watch prices jump, and then sell. As might be expected, things aren't working as you had planned. First, no clear trend has emerged; prices are moving chaotically up and down. Second, it's been two days s...

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mind prices jump trading plan trading education control

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Apr

20

It's the Decision of the Market

Andy Jordan

Trading General

The market will tell you on any given trade how much money you are going to win (or lose, or break even). It will tell you this quite simply, by how well it is moving or not moving in your direction. If you think, contrary to this, that you have any influence on the outcome of the trade, or that you "deserve" to win more, you will probably overreach yourself. The market will let you know the range...

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249 Hits

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Apr

20

Being Flexible

Joe Ross

Trading General

How flexible are you in your everyday life? When you are in a new city, do you worry about getting lost or do you just go your own way and assume that somehow and someway you'll eventually get back to your hotel? Do you get upset when you are told you are wrong, or do you welcome criticism or an opposing opinion? The ability to be open and flexible often makes the difference between winning and lo...

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234 Hits

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Apr

09

Pulling the Trigger

Andy Jordan

Trading General Psychology

"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. 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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trading plan discipline big hit experience

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Mar

23

Handling Success

Joe Ross

Trading General

In his book, "Trading to Win," Dr. Ari Kiev notes, "winning days are often followed by plateaus and losing streaks." Behavioral economist Dr. Terrance Odean observed that novice online investors who had a series of winning trades tended to have periods of overtrading. It's as if they believed they could take more risks, and potentially lose profits, since they had just made more than they expected...

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lower probability loss of focus handling success traders profits

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Mar

15

Take Advantage of New Market Opportunities

Joe Ross

Trading General

Something is usually going up when something else is going down. Therefore, good trading times may be just ahead. Are you ready? It's times like these when the right mental edge can make all the difference. If you want to take advantage of trading opportunities for the New Year, it's vital that you approach trading with the proper mindset. Be ready to work hard and do whatever it takes to come out...

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Trading Educators Blog

Overconfidence

What's my real reason for trading?

Confidence

Traders "Pro Active" and "Ray Active" – A Story!

Efficiency and Success

Greed

The "Crush Spread"

Maintaining Discipline

Trading Opportunities

Why Stops

Don't Give In To The Death Wish

If You Doubt, You May Be Out

What is “walk-forward” testing?

How to Handle Fear

Ready to Lose

It's the Decision of the Market

Being Flexible

Pulling the Trigger

Handling Success

Take Advantage of New Market Opportunities

Joe Ross' Trading Philosophy

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