Trading Educators Blog
Once a trade is entered, there are two possible outcomes: Win or lose. Between the two is the break-even 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 break-even point is a place that inspires hope. Being human we have a natural tendency to avoid risk and loss. Wh...
Hey Andy! My plan has been to learn one way to trade and then stick with it. I would even prefer to learn to trade in a single market in order to simplify my life. What do you think? I think you won't be trading very often, and if you do, you will end up being a loser. When the market environment is not favorable for longer-term trading techniques, you should consider short-term trading techniques...
There are three foes you must overcome in order to become an adequate trader. The first foe is fear. If a trader runs away out of fear and avoids trading, nothing will happen except that he will never learn. Fear causes your logic to become fuzzy and unclear. Lack of clarity becomes the second foe you have to overcome. Clearness of mind about the trading process removes fears. If you yield to the ...
I cannot count the number of times I've been asked this question. It seems as though every person who is new to trading asks this question, and sometimes it is asked by people who should know better. It's often the first question that pops up in my email, at seminars, and private tutoring sessions. Right up front I'm telling you I do not know the answer, and I often wonder if it is even the right ...
A thorough understanding of who you are and what makes you tick is essential in trading. How and what you think, what you believe, and how you behave are critical parts of winning in trading as well as winning in life. It seems very few traders understand, or are aware of this subtlety in the trading profession. You can get by without knowing who and what you are in most other careers but in tradi...
When it comes to trading, you've got to unlearn what you've learned your whole life. It isn't all about you; it may just be the odds working against you. In other fields, probability plays little if any role. You put in effort, make sure you meet the expectations of the folks who pay you, and you're a success. In the traditional work environment, it makes sense to put a little ego and pride into y...
Even if I do not want to generalize the following for each trader, there are some "general problems" in day trading. Here is a short list of why I personally think day trading is much more difficult than position or spread trading. - Fast decisions: You have to make very fast decisions when you day trade, especially when you day trade very short time frames like 5-, 3-, or 1-minute charts. When yo...
Most options expire worthless, so lots of traders are interested in selling options. I certainly agree with that thinking. Options are a wasting asset. All things being equal, an option will lose part of its value day after day until finally, the option expires worthless. As time passes, the option seller earns premium from time decay. The risk to the option seller is that of a large move against ...
Because some markets are very "expensive" and do not offer a mini or micro contract, many traders have to stick to a single contract once in a while. In this case, you might trade a single-lot strategy. Finding the right target for a single-lot strategy is tricky and depend on your general trading strategy. You have to study your results to see what target gives you the best performance. You need ...
Trading is a stressful business. When you are in a trade, your money is at risk, and you repeatedly face the possibility of losing substantial amounts of trading capital. If you are a novice trader, the stress is even greater, since you have not yet learned to trade consistently, and losing significant amounts of trading capital is the norm, not the exception. Managing stress is a key to trading s...
Figures show that 90% of traders who ever trade lose their account and that 10% actually go bankrupt. Those are scary numbers, I'm sure you'd agree. Traders are not stupid people; most traders have an above average IQ and are above average in most categories such as education and income. I think they don't make a success out of trading because they lack proper education and mentoring. By education...
In general, we are our own worst enemy when it comes to trading. There are many ways to sabotage yourself as a trader. Not creating a trading plan, or creating one and then not following it are two of the most common. Some ways to self-defeat are deep seated; they lurk at the back of your mind and work behind the scenes. These are often self-image problems that can rise from as far back as early ...
One of the most important things to learn in this life is how we ourselves behave, not only when we are acting on our own, but when we are part of the crowd. And what few of us understand is how many of our important daily actions are not thought out in advance. We are all attempting to survive in what is basically a hostile environment. Many of our actions are in response to some sort of stimulu...
I've read this phrase over and over again in scam emails, Twitter posts of different Gurus and other sources mainly because of marketing reasons using the current panic in the markets to sell their wisdom. But all I know from brokers I know is, that many of their clients are losing or already have lost tremendous amounts of money because they only think in terms of "how much money can b...
Traders are willing to gamble a lot of money to avoid a potential loss, rather than immediately accepting a smaller but certain loss. Likewise, traders will hold on to a losing trade, and continue to watch it loses money, rather than face the loss. Why is it that we see money as being so important? The answer stems from our culture. What we esteem as good things are associated with money. Money i...
Paper trading cannot replace real trading for many (mainly emotionally based) reasons, but it can be an important part of the process of finding and trading a new method. First you might have an idea about how to trade a market based on price bars, candlestick charts, indicators, or whatever you use for your trading. Next you would back test it with older data. You would do it manually or by using...
In most other fields of activity we need to convince people around us that our opinion is correct. In the market, it just doesn't work that way. It's suicide to try to trade from your opinion. Instead of insisting that you are right, you have to get rid of your ego and any opinion you have of the market. What you want, is simply to be in tune with what's happening at the moment. Connect to the re...
Most successful traders failed at some point in their careers and wiped out their account. Many traders lose because they do not understand the nature of the decision-making process, which should be based on rational price action analysis versus emotional, irrational reactions to price action. A reason should be required for each market action taken. When fear exits a trade, it is more difficult ...
You must be disciplined in following the plan of your trade religiously. Once you have closed your position, you should record everything about the trade. Write down where you wanted to enter the trade, what you expected out of the trade, and what you actually did get out of the trade. Make sure to include notes that will help you learn from the trade, reasoning what actually took place once you ...
Anyone is allowed to make one mistake. When the mistake is repeated, watch out! The third repetition of the same mistake constitutes self-destructive habitual behavior that must be reversed. Stop all trading immediately, and thoroughly examine your self-discipline. Once the reason for the repetitive mistake is understood (usually fear, anger, greed, or guilt) it must be corrected before trading ma...
