Hello, friends! Today I want to talk about the next... Any trader should have a good trading plan. Do you stick to the well-thought-out trading plan? What habits (and how many) help you to avoid losses and to be disciplined in this uneasy business?
That take a couple chapters to explain I think and I won't write books. Comes down to "Know thyself", if you are easily swayed people, have to work on that before you start learning, you have to be insane to become day trader cause all the hours you must give away without any idea whether you succeed. This is a business first, and if you have never owned a business, this is the worst to start with this one. I know many will laugh, but men seldom change unless they have physical pain in some way, I went and got a "Tens Unit" and every time I did non Trading Plan trade, I give myself a "5" for a second, that was the quickest way for me to stop doing really horrible non system trades. When I had students who flew to see me, I attached it to their arm and gave them "3"s, they learned faster. I eventually made what I call "Dumb Journal" when I had sensations to put on non-signal trade, I enter in "Dumb Journal", after a year I found I was wrong 95% of the time, I still keep this journal now 23 years as few months ago I over rode my system and lost out on profits cause I really thought with my divine wisdom I was smarter. Yea, laugh now funny boy. You have to have a check list and get into habit that numbers game, you play it over and over and if your back testing was good over ten years, future should bring the same. But way too many don't know how to back test or program or what to study, very hard way to learn and yet as soon as we have money in our pockets we are trading currency for products.
10 habits of a Good Trader" This is all just talk and conversation to pass time. 100 or 1,000 or 10,000 traders could read this list religiously...and they would still have lackluster, average results I wish I could be more insightful, but it's up to the individual trader...to See the Light, listen to good, divine music -- it helps
In this business, if you want to see the light, better start making your own damn candle! Some see it as a fight for survival, others surf on the big waves. What may be fierce competition, may also be grace and dance. Despite living and breathing beings, minds seek imprisonment and conformity. Biggest fear is our own Light, so minds seek Darkness out of ignorance and fear, hoping for some relief - instead of grabbing life by the balls! What is repeated over time become habitual, difficult to escape but also comfortable stability. Just make sure they are good habits, not just neutral, and know why they are there.
Avoid em..., or take em -> then move on unaffected.., unencumbered Avoiding a loss (any loss) is a sure way to flat broke ============ What an absolutely white bread..., useless - response Cutting losers short should be the exception (and only when the preponderance of available information (PA) says to do so) The vast majority should (must) be allowed to reach their PREDETERMINED target (you know..., that trade plan thingy for each trade - we damn well better be creating) Cutting losers short - one can't help but also be cutting their winners short Not bustin on Ya FW - simply stating what it is ============ OP Why 10..., why not 2..., or 5..., or 13..., even 782 Rhetorical Check your journal - the necessary habits will be self evident RN
I had posted this a while ago. I hope it helps. ---------------------------------------------------------------------------------------------------------------------------------------- Before we indulge into what makes a trader successful, let's get a few things out of the way. Trading is not a hobby, trading is not a game, trading is not what we do when we are bored, trading is not a tool that we use to insert some sort of excitement into our life, or to make a few extra dollars to buy one's girlfriend that Gucci hand bag. Trading is a business! I have to admit, that in my early days as a trader, I have been guilty of a few things mentioned in the above paragraph. However, with time and some pain, I have learnt from trial and error on how to become a consistent trader. I hope this comes in helpful to beginner traders and as a refresher to the more seasoned traders. This thread concentrates on the aspect of discipline. Just as there are hundreds of ways to reach the peak of Everest , there are hundreds of tools you can use to your trading goals. However, to reach the peak, it doesn't matter which route you take, provided the route is heading up. In the same way, it doesn't matter so much what trading tools you use, provided you have discipline (and have a plan that back it up). The success of a trader is directly proportional to one's discipline. Disciplined trades win; undisciplined trades lose. Simple. 1) Discipline is practiced 100%: Trading discipline is practiced every single time, in every single trade, on every single day. If this is not the case, the phrase "discipline" can be flushed down the drain. Let's take for example a trader that trades breakouts. These trades often take off, but occasionally tend to fail. If a trader trades 2 out of the 5 possible breakouts, there is a chance that those 2 will be the failed trades. "Every single time, in every single trade, on every single day." 2) Discipline = profits!: A traders wages are paid to them by the market. The market only pays out to disciplined traders. 3) Don't let your winners become losers: There are two factors that contribute to this happening. Greed and ego!. With greed, the trader has decided that he will stay in until the target is reached. With ego, a trader feels that since he has determined the stock as being strong/weak, it can go no other way, but his way. Sometimes, the facts change after entering a trade. The facts have to be observed and obeyed. In obeying the facts, a successful trader puts money in his pocket. 4) Trade with a plan: Trading without a plan, is like driving to Timbuktu without a map. The only difference is that you will end up with empty pockets. Have a plan and stick to it! 5) Start small: The right to trade bigger must be earned!. A trader must consistently be able to profitably trade 100 shares for a given period of time, before increasing his/her size. Starting with big sizes in the beginning can play havoc with one's emotions and account. Don't rush, your time too, shall come. 6) You are who you are: Do not try and be the next Dan Zanger or Timothy Sykes (does he even trade anymore?). I don't know how they did it, nor do I care. All I know is that, if I tried to do what they did, I would be hiding somewhere in Afghanistan. Every trader has his own emotional and psychological skill set. Use yours and make a good living, or find your way to Afghanistan. 7) Don't hold on to those losers: Having a losing trade does not make one a loser. However holding on to one does!. If you have figured out that the trade is not going in the intended direction, what are you waiting for?. Most of the times, your intuition too will kick in; listen to it! 8) Keep your losses small: Be careful with this one. A few small losses will give you very good end of day balances. However, many small losses may make things look a little more uglier. But, this should never be the case, as after a certain number of losses one should understand that something may need altering to get back on track. Over trading is a common reason. 9) Love your losses: Almost everyday there will be losing trades. Don't try and fight these. These are equivalent to overhead costs incurred in other businesses. Knowing, and accepting, that you will have losing trades, will keep your emotions in check. It reduces the stress factor multiple times over. 10) Watching is never fun: Make sure you have loss limits for each trade and for each day. These limits need to be determined by the amount of capital one is investing in this business. You always want to come back again and play the next day. 11) Watch Bloomberg and CNBC.......because the presenters are soft on the eyes: And that's it!!! If you're watching it for the news, here's a little tip; it's too late!!!. The fact is that by the time the news comes on these channel, it has already been dissected and consumed by the professional traders and more so by the many sophisticated algo's these days. 12) Let your winners run: Use your moving averages, trendlines, support and resistance lines, or whatever it takes to keep you in the trade. In my early days, I would be jumping in ecstasy with a $.50 gain. By the end of the day, that move would be a $2.00 move and I would have missed 75% of that move. More than anyone, I understand the irony of winning and still being unhappy!. 13) Keep your targets realistic: Who doesn't love making $5K and $50k a day. To make these targets, one must increase size. If you are not used to it, then no target will be reached except a big 0! (see #5). If $1K is more realistic, then aim for that; you will be pleasantly surprised to see that on most days you will actually exceed your target. At worst, $1K x 251 trading days will still put $251K in your pocket at the end of the year. 14) Starbucks is a better hangout place: Sometimes after entering a trade, the movement dies down. There are many reasons for this, but regardless of the reasons, it's time to exit. Hanging out in trades like this, leads to a loss of time, capital and emotional energy. All these, utilized in a stock that has movement, will lead to a better looking P&L account. 15) Discipline + Consistency = Confidence: I remember in my early trading days, I would have a breakdown after 2 to 3 losing trades. Now I can have the same happen and my heart beat remains at 72 bpm . The reason for this is that in my early days I traded with very little or no discipline. Discipline now gives me control; I control the trade, rather than the other way round. 16) Scale out your winners: There is multiple ways that this can be done. For example, if you are holding 1000 shares, cash in on 700-800 when the final target is reached. Let the remainder run to the next target, if a slight potential is shown for a further move. Make sure that the appropriate stops have been placed for the remainder. This, in effect, allows you to "play with the house's money". You can't be in a better position than that. Note: It is not a good idea to scale out of a losing trade; a trade either works or doesn't. If it doesn't, get out. It's as simple as that. No if's, but's or why's. 17) Don't sit around, keep busy: Entering a trade requires a little babysitting. Once things have settled down, move the chart on to another monitor where you can keep an eye on it, without making it a priority. Whether to have hard stops or not depends on each one's trading strategies and risk appetite. Once the trade gets moving, move on to find other opportunities. The plan and strategies remain the same; you are only multiplying what you're doing. McDonald's didn't become the Corporation it is, by just sitting on one store. 18) All traders are created equal: Before the markets bell sounds, all P&L logs, look identical. That is, they all read $0.00. It is how we conduct ourselves from that point on, that will determine who survives and who doesn't. 19) Don't hesitate, don't over analyze, don't procrastinate or you will lose: Ever been in a situation where you have pinned down the trade and only missed entering it by a penny or two and then it runs in your direction for the whole day. Despite the correct analysis and dissection, your P&L gives you back a big 0!. In this business, you do not get paid, unless you put on the trade. 20) The market is always right: The market has no intention of belittling anyone. The market doesn't care to favor you or me; the market does not discriminate. However, if the market is not respected, subsequent retributions will follow almost instantly. Watch what the market is doing and then follow it. Do not follow what you "feel"!.. That is just your ego messing with your head and that will take you down a big dark hole, never to be seen again. 21) Only you can inflict the pain: When trading, it is not other traders that will pick your pocket. It is you that empties your pockets out for them. Who's to blame a trader for taking money that's laying around. This business is difficult as it is; don't trade against yourself!
Is that the same TENS unit that is used for muscle therapy? Someone suggested I try one to relax with...meditation. I keep seeing remarks about journaling my mistakes and attitudes, not just the reasons for a trade and the individual trade. I need to try that. @Jamie.........I wish I could help you but I am still learning too. But here are some from Jesse Livermore....Reminisces of a Stock Operator. ---------- No diagnosis, no prognosis. No prognosis, no profit. Page 49 You never grow poor taking profits. But neither do you grow rich taking a four-point profit in a bull market. Page 52 Being broke is a very efficient educational agency. Page 58
Yes, Tens unit can do nice, but don't increase to highest level as then unit is useless for you, better to not go above 4 and let nerves feel that to simulate. But you go from zero to 7, it is huge pain, LOL. What I discovered from journaling is my thoughts I would write of just "knowing" the trade should go to the moon and I can buy five corvettes, I real good in calling the Highs, when I am short and I just "know" those corvettes can be convertibles, have found the lows. So if you write down little feelings, subconscious often know more than me.
1. Use the smallest stop possible 2. Use the smallest stop possible 3. use the smallest stop possible 4. Use the smallest stop possible 5. Use the smallest stop possible 6. Use the smallest stop possible 7. Use the smallest stop possible 8. Use the smallest stop possible 9. Use the smallest stop possible 10. Use the smallest stop possible You don't need any more positive habits than those 10. The number one reason why so many find it so hard to make money overtime in this game is because they use a wide stop. Using a wide stop means you'll struggle to make more on your winners than losers. You will have plenty of both that much is guaranteed. If you use a 5 tick stop then to say make 3:1 you've got to make 15 ticks. But if you double the stop to 10 ticks the profit target to make 3:1 also doubles to 30 ticks. If you use a 25 tick stop the profit level is 75 ticks. This is the semi-equation that is the number one cause of frustration in the markets and it's why many can get to be breakeven traders but not make the jump to profitable. If you think using a tight stop is dangerous, ie just a little blip in the current price action will stop you out then you haven't worked out yet the right time and place to trade. Go look at many good moves (whatever time period), before 80% of them there's a tiny window which is similar to a big heavyweight boxer being off balance (then a lightweight can take him down with one punch). You have to find those areas to place your trades. If so, that offers 2 MAJOR advantages, 1) the tight stop can be used, and b) the moves are often good if your analysis is right hence you'll get 3:1, 4:1 maybe even as higher as 10:1 trades, and you'll get them on a regular basis.