Trading Educators Blog

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...

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 ...

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...

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...

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...

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...

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...

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...

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...

“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’...

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...

  People have the tendency to believe that the accuracy of their forecasts increases with more information. This is the illusion of knowledge - that more information increases your knowledge about something and improves your decisions. However, this is not always the case - increased levels of information do not necessarily lead to greater knowledge. There are three reasons for this. First, s...

Imagine playing tennis if the ball had a mind of its own, if it could run off to the sidelines and bounce up and down for a minute or two. Imagine a game of golf in which the ball could occasionally go off down the fairway, dance about, and do whatever it wanted. Imagine a chess game in which the pieces suddenly became worthless, or a hockey game in which the puck suddenly went against everything ...

Trading is a business where you expect to see more losing trades than winners. Expecting to win is apt to produce more disappointment than joy. That doesn’t mean you won’t have a high percentage of winning trades, but it is safer to anticipate otherwise. To the beginning trader, especially, this fact of life can be stress producing and somewhat disappointing. How you cope with losses is all a matt...

Today I am looking at a so called ratio spread: Long 1 November Soybean and short 2 July Corn. The spread looks interesting to me because it is trading at a level where it could turn around again and follow its seasonal pattern to the up-side. The current level (approx. 235) has provided support several times. The seasonal statistic looks promising as well, with 17 winning trades in a row. But thi...

Conclusion It is critical to develop a well thought out and organized trading plan. It is then important to have the discipline needed to follow it. Diversify your trading into several unrelated markets, or focus on one market and time frame where you have seen you can make money. Trading, by its nature is not investing. Trading requires consistent monitoring on at least a daily basis because of t...

Manage the Trade Once you get into a trade, you must eventually get out. Some argue that this is more important than where you get into a trade. My experience has been that any fool can get into the market, but it takes a successful trader to consistently get out with a win. As I follow the markets, I find there are four reasons to get out of a trade. Prices move significantly against my position....

  Please listen to the following podcast when you have a few minutes: https://soundcloud.com/bloomberg-business/the-incredible-true-story-of-the-real-life-trading-places I found the podcast interesting because of a few facts I want to discuss in today’s blog post. First of all, I am also a believer that trading can be trained but not necessarily everyone can trade. Trading requires a certain ...

Follow the Markets After you've determined your strategy and the market or markets you will trade, you can start following the price action. It is important to follow each market consistently and see the trading opportunities as they develop. Jumping around from one market to another often leads to missed or late execution of your method. I think it's important to let the market tell you what to d...