Trading Educators Blog

If you're like most traders, you are in this business to make money big money. In all probability, you are ambitious, independent minded, and ready to take on the world. With this ambition usually comes a need to be the best. Only the people at the top of the field achieve the highest level of success. Although striving for expertise is a prerequisite for success, it usually coincides with a need ...

When it comes to protecting your money, one of the biggest dangers is so called impulse trading. Resisting the urge to have something right then and there is a skill everyone needs to learn in order to build a strong financial foundation. Recently I watched an entertaining TV show called "Auction Kings." One of the pieces being auctioned off was a 1975 Cadillac Eldorado. Cars don't get much b...

Do you ever feel as if you are just going through the motions, acting without thinking? Are you surprised that you react emotionally, selling prematurely when you meant to hold out a little longer? Or do you jump into a trade too soon, before you have systematically thought out your trading plan? You may be giving into a natural inclination to follow the crowd. I...

At the end of the year, it's tempting to examine the events of the past year, learn what you can from them, and start the New Year feeling that you can tackle anything the New Year throws at you. But you don't want to take a scrupulous self-examination too far. Sometimes we can waste a lot of time overanalyzing, and searching for lessons that just aren't there. A little bit of introspection can be...

Have you been making plans for the coming year? Have you been trying to make sense of where you've been so far? It's useful to ask and answer a few key questions: Where have I been? Where am I going? Where am I going to go next? The answers to these questions aren't always obvious. But consider the plight of Rey Aktiv and Pro Aktiv, brothers, both novice traders with very different personalities a...

How much time do you devote to charts study each day? It varies for me, but ideally, sufficient time to truly consider what is happening in the markets I'm interested in trading. For me, charts study is a part of my self-control and self-discipline efforts. Confidence comes from the self-disciplinary aspect of doing little things consistently right. I believe that when traders do their chart work ...

Use all your senses to trade the markets. If trading directly from a screen, watch for the signs of activity in the market. One trader I know booked a $9,500 day trading soybean profit, because he noticed a step up in trading activity as prices were making a new daily high. How could he know that suddenly the market had become very active? He was watching both contract volume and tick volume....

Winners learn more from losses than from wins. When a profit is taken, there may be little room for improvement. When a loss is taken, a trader's self-discipline and self-control are the first things to be examined. The second aspect of studying a loss is to see how the actual price action caused the loss. Was there a trend reversal; an unexpected gap? Most beginning traders sustain losses du...

There are some common mistakes I've seen traders make in the area of money management. First, let's understand what money management is all about. Money management overlaps with risk, trade, business, and personal management, yet it has many aspects that make it unique, distinctly different from all of the other areas of management. In this chapter we want to examine some areas of money management...

If you want to be a successful trader, you must make sure you do not deny reality in any phase of your trading. You cannot deny losses, price direction, mistakes you make, being undercapitalized, or a whole host of things you would rather not think about. Many traders think the best way to deal with unpleasant ideas, events, or personal character flaws is to shut their eyes and pretend they don't ...

Everyone is allowed to make one mistake. When the same mistake is repeated a second time, caution should be noted. The third repetition of the same mistake constitutes self-destructive habitual behavior that must be reversed.All trading must stop immediately until the trader's self-discipline is thoroughly examined. Once the reason for the repetitive mistakes&nbs...

When traders are "hot" and seemingly cannot lose, when they make several trades that perform exceedingly well, there is a surge of human pride. They feel like the pitcher who strikes out the other side for all nine innings of baseball. They feel invincible, brilliant, and like "master traders," to say the least. When a trader feels like that, he thinks he can do no wrong and make no mistakes....

You pay a price for every profit you take with time and effort required to obtain it. Not to mention the years of experience upon which your knowledge and methodology have been constructed. The slippage, and getting knocked out of a winning trade by one tick, cause a cumulative mental attrition that can be offset only by constant profits, vacations, and other interests not market-related. Tim...

Of course not! We hope for exactly the opposite. Just about anyone who traders or who teaches trading will tell you two things early in your conversation, "Trading is speculative, so only risk capital should be used," and, "Limit your losses and let your winners run." It makes perfect sense. You have to wonder why, with something so logical, we still find traders "letting ...

Making a profit in the trading world is hardly a sure thing. How you deal with this fact of trading, though, depends on your personality. Some people take risks in stride, while others obsess over them. Which type of person are you, a natural born risk taker or an obsessive, fearful seeker of safety? Life is a matter of taking risks, but some people embrace it while others superstitiously try to a...

I can't speak for others, but it didn't help me much in the past when volume was "a day late and a dollar short," back when only daily charts were available unless you were a floor trader. But these days, now that live volume is at your fingertips, it can indeed be a very useful tool. At Trading Educators, we use both contract volume and tick volume as guidelines and filters for our trading. Here'...

During trading, it's easy to think that no matter what you do, you won't make a profit. The markets can be brutal at times, and it's tempting to fall prey to a "victim mentality". However, such beliefs may paralyze you. It's more productive to believe that if you take control, you'll make a profit. Even if you have no real control, it helps: you take action, you plan, and think of some sort of str...

Even the most exciting job can become boring at times. Trading is a tough business. If you lose your passion for trading, all it means is that you are human. Here's an obvious cure. Why not take the rest of the month off? Make it your own personal holiday season. Maybe you're just stressed out. A little rest will help put things back in perspective. Once you are rested, relaxed, and re-energized, ...

Do you ever make big plans for the trading day, but fall short of your expectations? Maybe during the off-hours you decide to make a dozen trades, but when you get down to actually doing the work, you end up making only one or two trades. Do you procrastinate, feel overwhelmed, and feel like you are ready to crack under the pressure? If you're feeling overloaded, perhaps you've taken on too much. ...

Do you have trouble pulling the trigger? Do you doubt your decisions, or close out a trade before your trading plans come to fruition? Do you over-analyze data and end up missing a major market move? How many profitable trades have you missed because you have frozen at critical moments? If you answered "yes" to any of these questions, you may have a problem with analysis-paralysis. Putting your mo...