Trading Educators Blog
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...
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 ...
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...
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...
From a longtime friend and student: "I thought that I’d pass on something that you might want to share with your trading community. I spent way too long thinking that range bars and/or tick bars were my way to the holy grail and I would like to tell you what I realized and why I think I was wrong." "First some background: I got started down that path, because wasn’t seeing format...
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 rever...
Day trading has always been a tough game, requiring a very strong psyche, discipline and a high level of trading skills to succeed in. Nowadays though it's even harder due to the stronger competition, not only by humans but especially by computers trading at a speed a human trader simply can not match up to. High-Frequency Trading is happening in literally all of the popular markets out ther...
How should you feel about losses? I once read somewhere that you are supposed to love losses. Does that make sense to you? It doesn't to me. The worst aspect of losing is that it tends to create pessimism. Traders should feel bad when they lose money only if they fought the market trend, or violated their own trading strategies. The best traders have a healthy "so what, big deal!" attitude that ma...
Once a trade is entered, there are two possible outcomes: Win or lose. Between the two is the breakeven point, and because it is in-between, it’s psychologically significant. Losing is involved with fear and hope. Winning is involved with greed. When on the losing side of a trade, the breakeven point is a place that inspires hope. Being human we have a natural tendency to avoid risk and loss...
Taking a second look at potential trades at times results in “why didn’t I see this before?” For instance, what if you are looking at a market as it approaches a support area? Isn’t it reasonable to ask yourself, “If this market breaks through and I am long, what will I do?” Ask yourself how such an event would change the picture. If you have a position, will you still want...
Money management involves a number of things and it is not to be confused with trade management. Money management is static. It deals with things like deciding the size of your margin account; deciding how much of your account you will put at risk on any one trade; deciding where to place your stop; and deciding on fixed objectives. The main purpose of money management is to save you from a disast...
I was asked the following question: “Joe, is it important to be creative in your trading?” I’m not sure I can describe it in terms of importance. The creative process is somewhat of a mystery, even to scientists who study it, but that is only because scientists do not recognize the spiritual factors of our lives and consequently in our trading. The Bible says: “There is a spirit in man.”&nbs...
Careful analysis of all possible alternatives and all possible consequences of your trading decisions is the first step in good decision-making. Make every attempt to avoid impulsive trading decisions, invariably these lead to taking unnecessary risks. Strive to have a clearly defined trading plan, but keep it as simple as possible. Chart the equity of your trading method so that you can quickly k...
When you are in a slump and feeling frustrated and disappointed, you tend to think, "I'll never be profitable, and there is nothing I can do about it." The consequences of such reasoning are that you'll never feel like putting on a trade ever again. It is better to think, "Profitable trading is almost impossible, but I can learn how the markets work, develop the necessary skills, and eventually ac...
I came across a very good article from the "Sovereign Man by Simon Black" - Please send this on to family and friends! "A few days ago the following information was put out by a finance professor at Columbia University in New York City who has been doing a deep dive on the financial management industry. ""His results were pretty concerning.""One of the things that he said was that fund mana...
For the most part, trader’s stops are based on money, ticks, pips or some percentage of their trading account. All of these are money management stops. In this respect, the level selected for the stop should take into consideration your risk tolerance. However, very few traders use time stops in addition to money management stops. Time stops are trade management stops. Using a time stop is quite s...
“Hello, Kramer? You got a minute? Take a look at the Swiss Franc chart what do you think?” “Well, I’ll tell you what I think! If the market is not going up, then it ought to be going down. But, if it’s not going down or up, it must be going sideways unless, of course, it’s making a correction. But, if it’s not making a correction, maybe this is a small congestion, unless, of course, it’...
It seems as though everyone believes in trading education except those who really need it. For years, knowledgeable brokers have advocated it. Trading coaches recommend it. And great traders are also believers. Why then do wannabe and aspiring traders not believe in trading education? Why are beginners so reluctant to shell out a few bucks to get the education they need in order to be succes...
Trading can be difficult. It often requires you to look for trading opportunities during off hours. You can be making the mistake of thinking you have to take trade after trade during the trading day. When you think you have to trade all the time, trading can become a real labor, something difficult to keep at doing. Even the most exciting, rewarding activity can become commonplace if you drive yo...
Many times in the past I’ve written about the need to adapt, the need to be able to change your behavior relative to the market because the markets are ever-changing. I’ve stated that mechanical systems may be workable, but for only a short time relative to the life of markets. You must learn to trade what you see, and to understand what you see on a chart. When I first began trading t...
