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Oct
04

Patience as a Central Pillar of Your Strategy

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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756 Hits
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Sep
23

Plans and Objectives

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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723 Hits
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Sep
18

Achieving Self-Esteem

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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771 Hits
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Sep
09

The right mindset to deal with drawdowns

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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812 Hits
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Sep
08

Emotional Extremes

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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756 Hits
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Aug
26

Don’t get married to a market!

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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719 Hits
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Jul
28

Contrarian Trader

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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1293 Hits
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Jul
28

Admit when you are wrong

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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1120 Hits
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Jul
20

The Nature of the Trading Business

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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900 Hits
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Jul
12

Overtrading

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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1157 Hits
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Jul
08

Pulling the Trigger

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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937 Hits
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Jun
27

Some things that keep traders from “making it”

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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1132 Hits
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Jun
24

Developing a Trading Style

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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1119 Hits
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Jun
16

A Great Lesson

A Great Lesson
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...
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976 Hits
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Jun
14

The Crush Spread

The Crush Spread
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...
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1065 Hits
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Jun
09

5 Tips to Improve your Day Trading

5 Tips to Improve your Day Trading
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...
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1335 Hits
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Jun
03

More About Losses

More About Losses
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...
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1050 Hits
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May
30

What kinds of emotions go with winning and losing?

What kinds of emotions go with winning and losing?
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. When...
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1059 Hits
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May
27

Second Look

Second Look
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...
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972 Hits
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May
25

Money Management explained in a few simple words

Money Management explained in a few simple words
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...
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1225 Hits
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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.