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Trading Educators Blog

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Oct
16

​Making Choices

When confronted with a choice, how do you decide? Are the choices you make in life in general different from the choices you make in trading? It has been my experience that decisions in life that involve a perception of a possible loss, being wrong, or making a mistake, will very often take the same approach as the decisions you make in trading. Stuck Gary was a "want to be" trader for over twenty...

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  565 Hits
Sep
04

​What Did the Market Do Today?

In a number of places and at various times, I've mentioned that trading in the past was a lot easier than it is today. When it comes to making money over the long-term, the "instant results" generation is at a huge disadvantage. Most of the focus today (thanks to the business media) is on checking your financial scoreboard frequently. As a result, many modern market watchers are more like gamblers...

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  481 Hits
Aug
15

The Complex Emotions of Loss

Losses apply to all traders, regardless of their chosen markets. The story below could apply to Forex, futures, bonds, or stocks. Ray Activ has just taken a big risk and lost. He has been watching a stock for the past month and it's been going down. But today an earnings report was released. Yesterday, Ray had a strong hunch that actual earnings were going to beat analysts' estimates. In preparati...

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  1551 Hits
Jul
24

​Accepting and Reducing Risk

Trading is risky. Depending on your personality, you may be extremely intolerant of risk. I know a man who uses "riskaverse" for his email address. Most people avoid risks at all costs. Humans had to make prudent decisions in order to survive and evolve. Even though traders know they must risk money to make money, the natural inclination to avoid risk is powerful. How much risk are you willing to ...

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  1128 Hits
May
23

Cut Your Losses

In trading, it's not whether you win or lose, but how much you profit on a winning trade compared with how much you lose on a losing trade. If you can cut your losses and move on, you'll survive. It makes sense, logically, but psychologically, many traders have trouble cutting their losses. We hate to lose, and we will do almost anything to avoid losing, even it means denying that we've lost. Some...

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  1831 Hits
May
02

Waiting for the Payoff

Are you ready to work all day and make absolutely no money at all? If you ask most people who are accustomed to working a 9-to-5 job, they would say, "No way, are you kidding?" But if you are a serious, active trader, there are many days that you must accept the fact that you aren't going to take home any money. There are various reasons that might cause you to decide to work for no immediate payo...

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  1776 Hits
Apr
25

Cool and Profitable

While risking capital on a trade, it's hard to not feel a little cautious. After all, if this trade, the next trade, and the one after that are losers, you'll begin wondering about what you might be doing wrong. You might feel a bit desperate, and think of trying to regain your edge. Feeling uneasy after a series of losses is understandable. But experienced traders keep cool, even when they are in...

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  2235 Hits
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 ...

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  2088 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...

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  2570 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...

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  1759 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...

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  1815 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. ...

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  1712 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...

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  1650 Hits
Feb
06

Opinion Doesn’t Count

​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...

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  1655 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...

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  1690 Hits
Jan
31

Wiping out the Trading Account

​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 ...

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  2161 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...

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  1823 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...

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  2227 Hits
Jan
02

Record your Trading

​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 ...

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  2217 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 ...

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  1940 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.