facebook  youtube  blogger

Trading Educators Blog

#1 Trading Blog Site
Apr
17

Don't Overdo It

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 ...

Continue reading
  187 Hits
Apr
11

Controlling Impulses

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...

Continue reading
  333 Hits
Mar
28

Making a New Beginning

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...

Continue reading
  422 Hits
Feb
22

Money Management

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...

Continue reading
  808 Hits
Nov
02

Getting the Job Done

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. ...

Continue reading
  1277 Hits
Oct
26

Paralyzed

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...

Continue reading
  1310 Hits
Feb
06

Clear Perspective

There are times when our judgment is cloudy. Perhaps we want to win so badly that we optimistically see trading opportunities that aren't there. At other times we may be so stressed out, busy, and tired that we can't concentrate, and end up making an impulsive decision or a trading error out of a sense of frustration. As much as we search for a rational, robot-like perspective on the markets, it i...

Continue reading
  1463 Hits
Jan
16

Beliefs About Randomness: Do They Impact Profits?

​As you trade, do you ever just think, "It's all just random, why even bother trying at all?" If you passively think you have no control, you may end up making less money. A team of scientists studied a group of university students who played a computer game of roulette. All participants reported they had gambled recreationally in the past year. Researchers asked participants to describe the strat...

Continue reading
  1539 Hits
Jan
09

Self-Control

Self-control is often the key to trading success. Masters of the market are disciplined. They don't sporadically act on a whim. They develop specific trading plans and follow them. Trading is largely a matter of capitalizing on odds. If you assume that a given trading strategy has a past performance record of 50%, for example, it's a matter of odds as to whether that particular strategy will obtai...

Continue reading
  1948 Hits
Jan
02

Look at the Facts

​Have you ever made a small losing trade and thought, "It's alright.I'll win on the next one." The next trade comes along, and you lose. And then the next one is a loser, and so on, and so on...until finally, you are in a severe drawdown. Before you dig yourself into a hole that is virtually impossible to climb out of, it is vital for survival to constantly monitor your progress. Take a good hard ...

Continue reading
  1692 Hits
Dec
26

Fighting Back

​It's not the number of times you fail that matters. It is all about getting back up after you've been knocked down. Ask any successful person and you'll find that he or she has experienced a mountain of failure. Trading is a challenging profession. Few make it, and of those who do, many eventually blow out their accounts and give up the profession. What's the difference between the successful, wi...

Continue reading
  1725 Hits
Oct
17

Making a Comeback

​Have you ever had a bad day when nothing seemed to go right? First, you got up late. Second, your computer wouldn't boot up, and third, when it did, you couldn't seem to get in and out at the right time when executing even the most basic trade. What really upset you was when your Data line went down for 10 minutes during a critical moment in your trading plan. Traders face setback after setback, ...

Continue reading
  1794 Hits
Sep
12

Setbacks

​Are you experiencing an emotional roller coaster, euphorically celebrating wins, but facing despair when losses mount? If you are, you may be taking things a little too personally. If you want to trade like a winner, you need to take responsibility for your actions, taking every precaution possible to neutralize adverse events and to control risk. That said, when things go wrong, it may not alway...

Continue reading
  1845 Hits
Sep
05

Be Flexible

​As traders in the markets, it's informative to study everyday examples of mass psychology. Although humans are highly intelligent, they can act like cattle blindly following the leader of the pack to the slaughterhouse. For example, have you ever observed how people drive in busy rush hour traffic? On a crowded freeway, it's common to see people refuse to acknowledge that the flow of traffic has ...

Continue reading
  1738 Hits
Aug
15

Stress Errors

Have you ever been so excited about a trade that you couldn't sleep at night? Or perhaps you are trying to dig yourself out of a hole and worry has taken a toll. Studies of disasters, ranging from major environmental catastrophes to minor laboratory accidents, happen when people are under extreme stress or experience physical exhaustion. When people are tired, there's an increased risk of disaster...

Continue reading
  1704 Hits
Aug
04

Creative Idea

​The winning trader stays ahead of the crowd. In ever-changing market conditions, you have to think of new, innovative trading ideas. But it isn't always easy. There are times when you feel mentally stuck and unable to think creatively. When you are feeling a little stuck, there are specific steps you can take to get your creative juices flowing. Creativity can't be forced. If you try to force you...

Continue reading
  1951 Hits
Aug
01

Three Traders

​The expectations you hold about where your trading career is going can have a powerful impact on what you do and how you do it. Consider three traders, Jake, Steve, and Paul. Each has a different outlook, and this outlook dictates how they approach the markets. Jake is a pessimist. He wants to become a profitable trader, but his attitude gets in the way. He thinks, "I just don't have the talent t...

Continue reading
  1891 Hits
Jul
25

Concentration

​Your ability to concentrate fully and intensely can mean the difference between consistently taking home huge profits and barely staying above water. It's really important that you pay attention to multiple sources of information, sift through them, prioritize each separate piece, and make a wise decision once all information has been scrutinized. You can't be distracted and unfocused while formu...

Continue reading
  1788 Hits
Jul
18

Stereotypes

​Marvin has been following a company stock for the past year. It's a great company with solid management, high sales growth, and consistently high earnings. It is in a booming industry sector and a favorite of the media. After a year's worth of careful deliberation, Marvin has decided to pull the trigger and buy a large position. He can't see what can go wrong. What can go wrong? It's a good compa...

Continue reading
  1784 Hits
Jul
12

Your Own Way

Don't follow the crowd! You've been warned over and over, but few are that independent minded. Breaking away is harder than it looks. We are all familiar with the rebel, the person who breaks all the rules and is skeptical of the status quo. At the other extreme, the ultra-conformist seems to follow the rules too blindly. Neither extreme is optimal for trading. It's necessary to find the right bal...

Continue reading
  2031 Hits

Derivative transactions, including futures, are complex and carry a high degree of risk. They are intended for sophisticated investors and are not suitable for everyone. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results, and all of which can adversely affect actual trading results. For more information, see the Risk Disclosure Statement for Futures and Options.