- Many traders I’ve known have sought to keep their specific trading performance secret, obviously embarrassed that they’re not making more money. They freely talk about winning days, but remain strangely vague or silent following bad ones. This is exactly the opposite approach to the one that will work for you.
- You want to be visible, warts and all, because that will help you—emotionally—put those warts into perspective. If your flaws (or your concerns about others’ reactions to those flaws) are so threatening that you must hide them, then your defenses control you.
- When you can make yourself completely visible to others, you have nothing to hide. Their acceptance of you is complete and genuine, not a false reflection of a false self.
- Let us not forget what it means to be a trader. It means that I am free to own property.. I can take delivery of my property and dispose of it as I wish, or I can trade it to others. My decisions are mine to make; I need not follow the dictates of those who would put other interests–those of gods, governments, or guns–above my own. If I lose, it is my loss. If I profit, the gain is mine.. Without freedom, there is no trading. Trading is a celebration of economic and political freedom. Slaves are traded; they do not trade.
- I’ve never seen a trader succeed whose explicit or implicit goal was to not lose. The trader who trades to not lose is like the person who lives to avoid death: both become spiritual hypochondriacs.
- Our worst trading comes from managing our feelings and not our positions.
- Self-awareness may-be the most important characteristics of a professional trader. To become great is to become aware of greatness.
We can’t overcome something if we remain unaware of its presence. Many traders use their bodies to repress their minds: their physical tension binds them, restricting the physical and emotional expression of feelings. - Being successful in trading means deciding what you want, understanding what it takes to get it, and being willing to pay the price to achieve it. Trading is a balancing game. We must balance the possibility of loss against the probability of profit. We need to keep both in mind, because while we must reach for opportunity we cannot overly risk our capital.
- The trader who can’t pull the trigger. She’s imagining all the ways the trade could go wrong. And we know that when imagination and will power are in conflict, the imagination wins every time. If she’s imagining loss, she won’t take the trade.
- When traders experience fear in a volatile market and prematurely exit a position, we can readily appreciate that they are managing their emotions, not their capital.
- At the root of many trading problems is a sense of scarcity or a lack of belief in the abundance of wealth and opportunity. To trade effectively, I believe, a person needs to have a sense of life’s potential bounty.
- The first step toward good planning is to know why you are trading. That sounds silly: doesn’t everyone trade to make money? yes and no; I’m continually surprised at traders’ fuzziness about their goals. If you’re a beginner, your goal is simply to learn the ropes, internalize market patterns, and practice skills related to good execution and risk management.
- In your trading business, the questions becomes:
• What will you trade and how will you trade it? What simulated and live trading experience tells you that this will be successful?
• What will your overhead be? This includes software, hardware, com- missions, and other expenses related to full-time trading, from the cost of data to your electronic connections and educational materials.
• How much can you expect to make per trade? Per month? Per year?
What is the likely variability of your income? Will this be manageable?
• What is the average size of my winning trade?
• What is the average ratio of my winning trades to losing trades?
• What is my average percentage of winning versus losing trades?
• What is my average variability (volatility) of returns per day, week, and
month?
• What kind of trader am I: do I tend to make money by being right more often than wrong, by having larger winning trades than losers, or a combination of the two?
• How much variation in my winning percentage and in the ratio of the size of winners versus losers is normal for me?
• How large would my trading need to be to generate acceptable returns and how much capital would I need to support that trading without undergoing drastic swings? - Many beginning traders think they’ll find a way of trading that is profitable and then trade that for a career. Rarely are markets so accommodating.
- Fear can lead us not only away from the thing we fear but also away from the thing we seek. Ironically, fear frequently leads us directly into the thing we fear. If we fear loss or lack, we can create it.
- if you base your trading business on a single type of trading—a limited set of ideas or patterns—it is a vulnerable place to be.
- Execution is a much larger part of success than most traders realize. The average trader spends a great deal of attention on getting into a market, but it’s the management of that trade idea that often determines its fate.
- The best traders I’ve known are quite skilled at managing trades. By trade management, I mean something different from generating the trade idea and executing it. Rather, I’m referring to what you do with the position after you’ve entered it and before you’ve exited.
- It’s okay to be emotional; it’s not okay to let emotions change your management of risk.
- You don’t make yourself fit a market or trading style; you find the markets and styles that best fit you.
- In trading, Win rate is overrated. Trading success comes from knowing when you’re right—and taking full advantage—and knowing when you’re wrong—and minimizing losses. Overcoming the psychological need to be right is essential to success; without that, it’s too easy to take profits early and remain stubborn in losing trades.
- If you’re celebrating or bemoaning a trade while you’re in it, you’re not focused on the market itself.
- You are capable of much more than you’re doing now.
- It is better to make a mistake with your own judgment—and learn from that—than to make a lucky trade based on the tips of others.
- Scarcity can freeze a trader and keep her/him from pulling the trigger when he/she needs to get into a trade. Can keep her/him from ever trading. Can keep them researching, researching , researching until their time and money runs out and she/he still hasn’t traded.
So, Traders who get their accounts up to a certain amount and each time, proceed to give it all back. Such traders doubt their worthiness to accumulate wealth. - An attitude of lack and insufficiency can keep a trader from recognizing and taking a loss. Can lock him into a losing trade until he buries himself. Can keep him from trading smoothly thereafter.
- A trader can have a huge loss, and instead of implementing good money management and proper risk control, he becomes phobic of pulling the trigger to enter a trade. Learning the wrong lesson does not constitute wisdom.
- Stay in the now. Don’t trade yesterday, today. Don’t trade tomorrow, Only today matters.
- Don’t risk too much of your trading capital on any single idea.
- Want what the market wants.
- There’s always going to be another trade.
- Every trading day offers you an opportunity to repeat old mistakes or to make changes. If you focus on personal change, you can’t guarantee that every market day will make you money, but you can ensure that every day will be profitable.
- Fear and greed are potent influences on trading, but the greatest trading problems, I find, are addictive in nature. Successful traders really want to trade; they have a passion for trading. Addictive traders need to trade; they have a passion for action and excitement.
An addictive trader will not manage his risk. That is because risk is part of the high.
An addictive trader will not stop trading, even when losing money. That is because action, not profit, is the goal.
An addictive trader will cycle between periods of guilt and responsibility and periods of excess and irresponsibility.
Good traders trade actively. Addictive traders overtrade.
If you see yourself in this profile, do the right thing, before your patterns ruin your career and harm those who depend on you. Get help. You can change. Your trading and your happiness lie in the balance. - Overthinking is a trading error.
- If you put on a high probability trade and the trade fails to make you money, you have just paid for an important piece of information: The market is not behaving as it normally, historically does.
- What does it take to be a good trader? Many would say it is an excellent understanding of the market, or perhaps a lot of good contacts. Having access to technology and the ability to get trades in quickly are important.
But above all else, the one thing that is more important to successful trading is something that seems very simple.
Discipline. - Trading, indeed, is a microcosm of life.
- When you lose your ego, your trading becomes better. The challenge for traders is that we inevitably bring our schemas to our trading. How we interpret the world will color how we interpret market action.
- Perfectionism is often the chief culprit when the pain of losing exceeds the pleasure of winning. Desperately trying to feel good about themselves, perfectionists set unrealistically high ideals. They think they will finally be OK if they just accomplish X. If a trade doesn’t work out, the constructive trader focuses on, “What can I learn from this?”—not “What’s wrong with me?”. The best antidote to perfectionism is the ability to reassure yourself, “There will be better trades down the road.” The key is to not miss those better trades while you’re beating yourself up.
- Ego involvement in trading, however, goes further than this. When the ego is involved, we write the market a blank check for our self-esteem. If trading is green, we feel good about ourselves; if we go into the red, we feel diminished. That places tremendous pressure on our trading over time. Not only do we have the burden and challenge of reading complex market patterns; now we also have a psychological gun pointed to our head ready to go off any time our pattern recognition fails us. We know that ego threatens our trading when we find ourselves needing to trade just to win back some recently lost dollars; when we feel a desire to advertise our positions; and when we find ourselves riding an emotional roller coaster as profits wax and wane. Just as we can recognize traders’ perfectionism from anger/frustration, we recognize ego-involved traders from euphoria/depression.
- If you are thinking about yourself—how much you’ll make or lose, how well or poorly you’ve done, how much you’re a success or a loser, how much better you could have done—you can’t be fully focused on the markets. It’s not about you. It’s about the setups and the ability to read them.
- In mastering the markets, you can further yourself as a human being; and in developing yourself as a person, you can enhance your trading success.
- Finding the proper fit between who you are and how you trade is a big part of finding success in trading.
- To become a master trader, traders need to trade, and need to continually hone their skills.
- The successful trader is one who can rapidly observe market conditions, orient himself, integrate information into effective decisions, and quickly act upon those decisions.
- Everyone thinks of changing the trading strategy, but no one thinks of changing themselves.
- Your goal is not just to learn to trade, but to become a trader.
- Some traders create consistency by generating rules. Great results come from small improvements that are implemented with consistency.
- Unfortunately, many traders do not allow themselves the opportunity to cultivate superior strategies. They flip from one trading approach to another, in search of rapid rewards. They become a jack of many trading techniques, but they master none.
- The hardest thing in trading is, “walking away”. Learn that and you gain control.
- Enter your trades with confidence but lose with acceptance.
- All trading failures stem from thinking about the past and the futures. Learn to dis-identify from your mind. Feel every moment, be aware of every tick.
- If you know the market and know yourself you need not fear the results of a hundred trades.
- What will make a good trader a great trader is not a shortcut. It is the understanding of which hard work is worth doing and doing more of it.
- Even when you’re not trading. Reflect, review and observe. Everything that was done right and everything done wrong. Backtest, sharpen those skills and allow yourself to be in the moment. That way, you create a positive trading habit.
