Psychology

Are traders preprogrammed to fail?

Trader Todd Brown explores the psychological inner workings of traders and shines a spotlight on the obstacles between unsuccessful traders and their profit goals.    

becoming a trader

I was burned out and had analysis paralysis badly. I had taken in so much info I was overwhelmed; step away from the markets for a while to gather thoughts and re-focus.38 steps to becoming a trader by Mike McmahonThey are as follows:1. We...

Belief In Yourself

Belief is the one single thing which one needs to master anything . Legendary cyclist LanceArmstrong was told that his chance of surviving was almost negligible as he was suffering fromtestical cancer , brain tumour and lungs cancer . Yet he firmly believed...

big players

You don’t have to be a big player to understand their motives and actions. You just need to put yourself in their shoes.The big players consist of an exclusive club of wealthy individuals who are born rich or self-made billionaires, major banks, i...

Destroy Your Trading Account With These Mistakes

One of the most common mistakes is sticking in a trade where you know your trading strategy is correct, but the market continues to move against you. As the famous economist John Maynard Keynes once said: “The markets can remain irrational longer than yo...

emotion

Efficient financial theory assumes that all investors are rational. However, in reality, emotions often leads investment decisions, creating exuberant and panics. Behavioral finance offers clear explanations where current financial theory often fails...

Failures

Thomas Edison's teachers said he was "too stupid to learn anything." He was fired from his first two jobs. quote by Edison: "I speak without exaggeration when I say that I have constructed three thousand different theories in connection with the...

Following the Sheep to Slaughter

DEFINITION of 'Sheep' An investor who lacks a focused trading strategy and trades on emotion and the suggestions of others, including friends, family and financial gurus. This type of investor often makes rash investments without first determining whether...

Graeme's Trading Blog - Review of Van Tharp

Review : Trade your way to financial freedom Chapter One - The legend of the Holy GrailVan Tharp makes some great opening remarks and reminds us that:Quote: Life starts out in the neutral position between profits and losses - it neither...

I deal with mine Trading psychology

According to Mark Doulgas ( trading in the zone ) our actions or judgments are based on our beliefs. So in order to achieve my conquer over them I have to take the energy from those beliefs. How, well I have to protect my self from getting into their...

January Effect

Facing January, most investors have come to expect a surge of buying often termed the "January effect." To be sure, it is usually a strong market month. The most feared month is October. Many remember severe intermediate declines in October come to be...

Keeping Your Focus and Don't Gamble

Introduction Ever have one of those days that starts out just great then, goes in the dumper real fast and you’re powerless to do anything about it? Well, that can happen real easily in the stock market if you fail to keep your focus on the facts a...

Limit your risk to what you can afford to lose

When I first joined a well known stock picker's group I had about 20K seed money to invest. While I am an experienced Mid-Cap Corporate COO, Private business owner, and have many excellent long term investments, a large 401-K, paid-off home, etc. and...

Mark Weinstein

Mark Weinstein interview with Schwager:You mentioned earlier that one of the reasons you split with your former trading partner was that your own trading style was geared to extremely low risk. Since 1980, what was the worst percentage drawdown you...

Martingale and Anti-Martingale Approaches

A position sizing strategy which incorporates the martingale technique is basically any strategy which increases the trade size as a trade moves against the trader or after a losing trade. On the flip side a position sizing strategy which incorporates...

Money management and Discipline

 I personally do not see how one could get ‘edge’ with trading system in markets. But I believe this is a matter of definition. My opinion is that all edges come from money management and self-control/discipline. You cannot control the markets, but...

Never gamble

Most traders, as Steven A. Cohen wrote "are indecisive, lack conviction, and are afraid of taking risks and making mistakes;" moreover, they are "unaware of the personal demons that are holding them back from true success." Trading Like Gambling - Signs...

News Events

News comes from journalists who could be reporting from a biased source: a "Smart Money" manipulative liar or an analyst who is trying to get the public involved in a scheme to manipulate a market. Even taking a contrarian view doesn't help because we...

Overcoming Losing

1. Accept The Inevitability of Losing -- For active traders, losses are a part of the cost of doing business. Like any entrepreneur you should work to reduce your costs as much as possible, but expecting costs to be zero is unlikely.2. Know Your Edge...

Perseverance

Perseverance=to maintain in spite of  difficulty, obstacles, or discouragement and continue  steadfastly.I'm willing to make it happen, no excuse. it's possible.success is a lonely road that I have to walk alone.too delicate everything to...

Protecting Your Trading Capital

Learn to Protect Capital FirstMore than 90% of people trading the market lose money and the major reason is because the majority do not use correct Money & Risk Management principles: Money Management, Position or Trade Sizing…One of the m...

psychology, how I deal with mine!

Which are my weaknesses?1. I am too impulsive2. I have hard time to keep my patient3. I loose easy concentration4. Pretty often I loose my self in the charts5. Seeing the both sides of the coin. In some cases this can be helpful, but...

Sanity Always Prevails

Neil A Costa We have had a stock market shakeout. Did it really come out of the mist? Did it creep up on traders like a thief in the night, stealing their profits before they knew what had happened? NO! There were warning signs. There were warning...

Simulators VS real trading

In general no matter what market people trade they will almost always do better in paper trading than they will in real trading.The first is that slippage, or the difference in the price where you click to enter a trade and the price where you are...

Stages of Development of a Trader

When you read about expert traders in books such as Market Wizards you must be amazed with the ease and poise with which they conduct their business. Why are they experts, and how did they get there?Expert traders are in complete control of themselves...

Stop Taking Profits Too Soon

The Beauty is : Big Profits and Small Losses You can design a great trading strategy with profits size two times  or more the size of losses, as well as you can design a great trading strategy with profits size half the size of losses. Base the distance ...

Straits make you sucessfull

1. Dont quit, never give up. U have to get to the finish line.2. Drive: what drive u? What make u go extra mile when u have no energy left? What make u do it better? Is it ur desire to beat ur competitors? Is it ur pain? Is it ur love for it? Things...

Stressed Men Take More Risks

Stressed men take more risks, while stressed women play it safe, according to research published in the Journal PLoS One this week. ©Nichole Lighthall, from the University of Southern California Davis School of Gerontology, asked volunteers to play a ...

Successful Trading Journal

A major factor that separates the successful from the unsuccessful is those who are successful look at each experience as a chance to learn and grow where those who are not move from one experience to another without learning much at all. With this in...

The Singing Trader

Garnett ZnidaricMany people know me as Mr Trading Plan. There are some with damaged hearing that refer to me as The Singing Trader. I earned that title when I sung / murdered a verse of a classic Sinatra song at the start of a presentation on applied...

The Temple of Boom

Part A - Speculative Mania Neil A Costa Introduction One of the fundamental weaknesses of human beings is our desire to 'get rich quick'. On the one hand, our head tells us to be cautious. We know that there are few genuine rewards to be gained...

The Temple of Boom

Part B - Surviving and Prospering Neil A Costa Introduction The trading and investment industry is made up of, on the whole, fine honest and ethical people. As with any industry, however, there are those who try to prey on people using get-rich-quick...

The Traders' Four Letter Word

Chris Shea As a coach of individuals at all levels of the trading spectrum from beginner to seasoned supertrader, I am often asked what the biggest hurdle is to overcome to become consistently successful. There are numerous barriers to success...

Things Your Trading Journal Should Tell You

Simply writing the days activity down in your trading journal is the first step. The next and equally important step is to review your journal on a regular basis to see what is working and what is not. This way you can leverage your journal to help you...

Trading is a business

Trading is a business and a performance activity that must be measured over the long-term, but managed on a trade by trade level. For example, your main goal should be to come out net profitable over a period of trades, days, weeks, or months. It doesn't...

Trading is hard

I had no idea what trading was. One night i saw an infomercial on TV. People made tons of money trading stocks, party with hot chicks. They made it ez. I bet they made a ton of money. It was better than selling porn.Trading is very hard. It's the ...

Trading schools

my experience : they dont make it as traders, they make it as educators.after watching hours of youtube, videos, that is my conclusion.teachers teach from text books. We r not kids, we can read books urselves.the smarts learn from their own...

What's Your Edge?

1. In order to consistently win, you need an edge ( an advantage that others don’t have. ) 2. On some level, you need to be contrarian -- meaning you need to be willing to go against the crowd of people you’re competing with.Contrarian : If you ...

Why people lose money in the stock market?

By John Hwang The reasons for losses are simple. In fact, there are only two root causes for investing losses :Over estimation of one's ability to invest Letting emotions, not processes, guide decisions. These two reasons account...

Why Speculators Win

Chris Shea There is a common belief that only 10% of people who set out to become traders actually achieve their initial desire for consistent high returns over the long haul. Objective data to verify this belief would be extremely difficult to obtain...

Why Traders Lose Money

You will lose money in trading. I guarantee it.Smart people who have been intelligent enough to accumulate large sums of money in their non trading careers open a trading account and loose huge sums of money making what you would think are easily...

Why We Hold Losing Positions

Humans in general grow up being taught by their environment of the importance of always being right. Those who are right are envied as the winners in society and those who are wrong are cast aside as losers. A fear of being wrong and the need to always...

WILLIAM D. GANN

by: Ticker and Investment Digest, Vol 5, December 1909 WILLIAM D. GANN An Operator Whose Science and Ability Place Him in the Front Rank His Remarkable Predictions and Trading Record Sometime ago the attention of this magazine was attracted to...

Win Some You Lose Some

calculating right trade size is a relatively simple process. Even so most traders don’t bother doing it until they suffer large losses and then decide to learn more about money management. New traders concentrate on the result or the outcome of the t...

you must keep your emotions out of investing

stock investing beginners guide  Why you must keep your emotions out of investing? Investing your money is a personal thing. It’s your money; you work hard for it so of course you have an emotional attachment to it, which can lead to problems. St...

Trading is 10 % knowledge and the application of that knowledge, the rest of trading really is psychological.

Why do 90 % of new wannabe traders fail? Because they have not developed themselves psychologically; Trading is a skill that can be learned, but it is far more than just knowledge of technical indicators, trend identification, and risk management ideas. Trading is about mastering of thyself mentally as a trader.

What does this mean? It means having a system that you know works, you know how to use it and you have traded it with discipline over time to get a positive expectancy. This makes you trust the system, trust yourself, and trade with confidence. A new trader needs to get to the point where they build a trading system that works for them, understand how it works, and know exactly when and how to use it. Trading is a game of odds and the quicker new traders learn this the quicker they can be off learning how to turn themselves from Gamblers into the Winners House.

Professional Gamblers know the odds; they have a system, and have the discipline to stick to that system. This is why they make money over time, the good thing about day trading is, the odds are much better, but the rules required to succeed are exactly the same. Why, because this is a business of odds, period.
A very good Holy Grail wining trading system should be right more than it is wrong and win more then it looses, if you have that, then the only final thing you need to conquer is yourself. Conquer fear and build confidence which will come as you trade and build that positive expectancy with discipline.

Don’t take real money trades lightly, we all know it is easy to do, but you need to take these trades serious. When in doubt, stay out. There will always be another trade tomorrow and the day after that, and the day after that. Many if not most of my biggest loosing days happened when I had a loss then got angry and started trading poorly. I revenge traded and emotion took over and I put myself into a viscous cycle. I kept placing trades, digging myself into a big loss on the day. After that you are wiped out emotionally and mentally. It damages you. You tell yourself you will not do it again, but after some time it is just so easy to have it happen all over again and again. The best way to stop this viscous cycle is to make a rule and stand by it. That rule will help frame your mind and control yourself form digging back into that hole that you know you do not want to be in ever agian.

What I have come to do now which has greatly helped me in solving this problem is I have made a rule that if I have 2 loosing trades in a row in the first 90 minutes of the trading day I stop and close down my computer. I will then come back for the afternoon am only allowed 1 more loss so any trade I make better be good. I swing trade S&P emini Futures on the tick charts with a exact list of trend identification entry rules.

What I found was that if it was a bad trading day, choppy, poor signals, ect. I would not dig myself into a hole. If it was a good day I make money. But best of all it puts me in a frame of mind that tells me and my mind that I cannot lose more than twice in a row so I better pick good trades. This makes me look for good set ups that I know are good. If by chance it does not work out, I am ok usually if the day is good and trending the next trade will work out, if not it is not a good trading day and it is just best to trade better trends tomorrow.