Trading Educators Blog

​Almost anyone who wants to succeed needs to ask themselves certain questions before beginning to trade. Essentially, it is a matter of counting the cost BEFORE, not after you decide you want to pursue trading as a serious part of your life. What time period trader are you? How long do you feel comfortable holding a trade and how such financial risk can you comfortably assume on a one contract bas...

​Have you ever made a dumb mistake? Perhaps you knew you should have used a protective stop before leaving for two days to take your children on a road trip. You may have thought, "I'll stop off at an Internet café and monitor the trade." But it didn't happen. You got wrapped up taking care of your children or worrying about traffic, and you didn't get around to looking at the market. It fell hard...

Trading is a challenging profession. Many seek out success, but few make it. The markets don't always cooperate with your plans. You can trade all day, and work hard at it, but you can still end up losing money. Thinking of the big picture helps ease the pressure. You can calmly think, "What's there to worry about? It's just one trade among many. It's just one day. There are many more days to trad...

​Charles is on edge. He isn't extremely uptight but he isn't completely calm either. He is just a little fidgety and it's getting to him. He is having a little trouble concentrating. He's reading charts incorrectly and he is having trouble outlining a trading plan. He can't figure out where to place his stops, where to enter or where to exit. Can you relate to Charles' plight? There are times when...

In trading, hopelessness is not brought about by the situation, but rather by your interpretation of the situation. How you explain the cause of a bad situation accounts for how you cope with it. If you think, "I've always been incompetent and this is just another one of those times that proves how incompetent I've always been," you will tend to view the situation as hopeless and just want to give...

Inaction - not putting on a trade - is one of the greatest, most powerful tools you possess. Many large funds have to always be invested with at least some percentage of their capital. Moving into or out of a trade, without their own actions moving the market, is much more difficult for them. They are usually not able to quickly jump in and out of a market. This is an important advantage a smaller...

​Which would you be willing to part with first, your money or your self-esteem? If you are like most traders, you are likely to let your money go before your self-esteem. Trading stories are full of traders who gladly fed losing trades to avoid admitting the fact that they made a mistake. They hoped against hope that a losing trade would turn around if they could merely wait long enough. In the en...

Are you ready to tackle the markets at any time? Bring it on, right? It would be ideal if we were ready to trade at any given moment, but the human mind has its limits. You don't have an endless supply of energy. After a marathon stretch of trading, for example, you may not be able to tackle the markets in earnest. You may not be able to concentrate fully. You may be easily distracted, and while y...

​Seasoned traders observed long ago that after a series of wins, a trader is vulnerable to over-confidence and trading errors. It's quite understandable. Trading is a competitive business, and when you win, someone else loses. Market participants trade because they are greedy for profits, but often sell out of a fear of losing. How do many traders deal with the inevitable feelings of uncertainty a...

Pro Active and Ray Active are both wannabe traders, but their approach to trading is quite different. Ray is consumed with trading for profits. He imagines himself achieving great wealth, and thinks that when he amasses the riches he is after, he'll finally get the respect and recognition he always wanted from his wife, family and friends. He thinks, "If I can only make it as a trader, I can show ...

"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. 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 ...

Next to lack of discipline, I find that pride has resulted in the destruction of many traders. Pride is a powerful emotion. Pride is what we feel when we've made a great trade or done something that makes us look good in the eyes of others. Trading is a tough business. Few traders succeed at it, so when you are doing well, you feel proud. But watch out! There come a time when pride can overpower y...

There are at least three things you can do to avoid mounting losses: 1. Write off a relatively small loss 2. Admit your mistakes 3. Don't let the desire to protect your reputation interfere making logical trading decisions. The three are common human shortcomings, and you need to be aware of them. None of us are immune and if you are not aware of these weaknesses you will not be able to keep them ...

We sometimes delude ourselves into thinking that the most successful traders somehow were somehow born different from the rest of us. We imagine they were born to win no matter what they did. But if that were true, you would also have to believe that those who succeed tend to do so because of their genes, social background, or luck, and not because they pursued success with more diligence, patienc...

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 e...

I keep one of sorts, it is part of my monthly homework. The journal is very basic and includes what trades I made during the day and my reasons for getting into the trade. My journal has changed a bit over time since my reasons for entering a trade now are pretty consistent. I think there are three reasons for keeping a journal. One reason is to have a manual backup in case there's a system or sof...

There is a great attraction in all aspects of the modern age to immediacy. Likewise, most of the trouble in trading occurs through this love affair with the "now," with impatience, and with trying to hurry up the trading game. Traders want to make money in the markets now, today, and not tomorrow or next week. We love the Now. We are devoted to it and give it much weight. This problem may be espec...

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 t...

Being in a good mood won't necessarily make you a winner, but being in a bad mood will almost assuredly make you a loser. Starting since time began, the number of people who have won large sums of money through trading while feeling depressed, irritable, or angry could probably be counted on the fingers of one hand! In short, try to trade when you are in a good mood. Restrict yourself to times whe...

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...