It probably goes without saying but, don't trade when the odds are against you. Most successful traders know the kind of market conditions that favor their trading style. On some days, they can almost be certain in advance that their trading will be profitable, while on other days, they might have solid reasons to suspect that their trading will more than likely end the day in the red. The best traders, IMO, have the discipline to simply not trade during those times when they know that the odds do not favor them. This may sound simply, but how many traders actually follow this simple rule? Personally, my trading tends to benefit from increased volatility and heavy volume (as is likely true for many traders). As a result, I have substantially reduced my trading during the declining volatility of the last year, although my trading has increased somewhat in the past month. Be creative to determine ways to predict whether your trading will be profitable, then use this as a guide to adjust your actual trading. One simple method, for example, is to look at your average profit per share (or better yet, average percentage profit per trade - so that stock price is does affect the results) over the past 5 trading days (or 10, or whatever). => If this number is above average (relative to your 'normal'), then you might consider increasing your trading size (possibly trade 150% of your normal size per trade). If your average profit per share is below normal, then cut your average trade size. If your average profit per share really sucks for the past x days, then consider trading the absolute minimum possible per trade, or even go into paper trade mode. Personally, I am a huge fan of paper trading. When done properly, it is an excellent, and free, method to monitor the performance of a system. Anyway, to summarize, a trader should "Make Hay While the Sun Shines" => and maximize his/her gains when trading is going well (within the constraints of good risk management) and most importantly, reduce trading during poor trading environments. Every trader should figure out how this should apply to them, but all of the successful traders I know use some form of this to manage their trading and reduce their inevitable losses.
discipline is the most important thing in the world - without experience discipline is useless. without self awareness and a willingness to adapt displine and experience means nothing. m
Here are my favorites from this web URL What do all successful traders have in common? http://www.smbtraining.com/blog/what-do-all-successful-traders-have-in-common Roy felt that successful traders: 1) are very solid with what he called the âbasicsâ (tape reading, execution, preparation for the trading day), 2) have discovered the trades that fit their personality and became excellent at those and 3) realize that successful trading is about pulling a small bucket of profit water out of the market well multiple times (in other words they are not greedy). Mikeâs top 3 were: 1) a passion for trading, 2) the willingness to admit you are wrong in your bias and to change your bias or terminate a losing trade and 3) to work really hard to become better each day. steve ----------- 1. A great trader puts in the work outside market hours. Imagine Brian Urlacher trying to figure out the Colts' offensive scheme in the middle of the game-- it doesn't work. The same thing happens in trading-- many new traders try and figure out their strategies during the 6.5 hour live-fire sessions on the weekdays. Trader development significantly slows when there's a crapton of red/green flashy lights on the screen; it's best to set aside a few hours outside of RTH to review and plan for the next day. 2. High self-efficacy. This essentially means that you believe that any subject you take on can be learned. @stockbee is great at describing this psychological component of our trading in many, many posts: http://bit.ly/hd1rBX 3. Dedication to something outside of trading. This is needed both to keep you sane and help your trader development. If you can take on something that has measurable goals that you can track yourself against, it will help you develop cross-discipline strengths. I tend to suggest physical activities such as powerlifting or running, but it can also be chess, piano, go, skeet shooting, etc. ---- 1. Iron control. You can't lose discipline. 2. Knowing what makes your trade setup work and what makes it fail. 3. Knowing when time is right is more important than knowing when price is right.
This is so funny. I took the test a year ago. Before I even knew what day trading really was. I was a Socially Resonsible Trader. Now I am taking the test again. I am a "detailed trader:. I only aggree the the challenging part. "You tend to earn your success by being thorough, methodical, systematic, organized, and dependable. You are also realistic and responsible as long as things make sense for you. You probably decide logically what needs to be done and work toward it little by little until you are finished. "One of Your Trading Strengths - You should be really good at data analysis/developing business plans especially when someone provides you with the exact steps to take. One of Your Trading Challenges - You can be overly critical and only notice the negatives in your trading. If you do not learn to recognize your mistakes, you could become stuck"" Conclusion: one year later, I have changed.
every trade is a dart throwing, or coin toss. no matter what setup, there is no way to know beforehand whether you will win or not. so this is definitely NO NO characeristic of a successful trader. to me, if I enter a trade, I know when I am wrong and need cut loss and reverse. so there is no such thing of " do not trade when the odds are against you", when I woke up this morning at 5:00AM ET, I noticed crude at 102.54, I shorted it (fell off overnight high 103.03), some time I gained some (like 13ticks,I ignored the gains), but most time I was red (once hit almost 20ticks), what I learned is 6:00am and overnight high are key to my judgement, if 6:00am the market still not broken night session support 102.3 (my profit target is 101.6~101.8), I know I was wrong, so after 6:00am, I reversed at 102.67, then I was monitoring whether night session support get broken, if overnight high 103.03 is token, I know the market most likely move higher,corfirmed my long judgement and my target is 105. so I long till 105. I do did it. in this case if I was wrong, I will cut loss at 102.3 and reverse.
very interesting article ----- Judgmental âHeuristicsâ Or Biases And Developing Your Trading System, Part 1 http://www.traderplanet.com/article...ses_and_developing_your_trading_system_part_1 For example, two such biases that make it difficult for most people even to make money in the markets are - the gamblerâs fallacy - and the tendency to be risky in the realm of losses and conservative in the realm of profitsâthe opposite of what it takes to become a successful trader. The real âsecretâ to making money in the market has to do with developing an edge in the market by using probabilities and proper money management. Unfortunately, people have trouble distinguishing between luck and skill when it comes to market predictions. We are unable to comprehend the many factors influencing an event as complex as the movement of a market. For example, if we had access to the number of buyers and sellers in the market at a given time plus information about the conviction and capital behind each trade, we would probably find the markets to be very predictable. Thus, any uncertainty you may have about how the market is going to behave at any given time is in you, not in the market. When you accept the fact that uncertainty is in you, rather than in the market, you will suddenly find you have much greater control over your own behavior towards the market. More importantly, you will have much greater control over the process of designing a trading system and greater understanding of how that trading system works.
There is no logical arrival...or there would be many more successful traders. It takes an edge...Thats all... thats it. Shedding the "I always need to trade" and just concentrating and focusing on what works at the time it works...that might be just a few hours a day. ES
Dr. Van Tharp's Trading Secrets Http://www.traderplanet.com/articles/view/120-dr_van_tharp_s_trading_secrets Secret 1 The first secretof trading success is having Discipline. A good trader must have the discipline to make sure that they do not make mistakes, and a mistake is not following your rules. And if you don't have enough rules to guide your behavior, then anything you do is a mistake. Secret 2 The second secretof trading success is the Golden Rule of Trading, which is cutting losses short and letting profits run. This means that success really has nothing to do with "stock picking" or selecting the right investment. Secret 3 The third secret of trading success is having a Trading System that Fits Who You Are. Your system must fit your objectives, your beliefs about yourself, your beliefs about the market, and your beliefs about each of the part of the trading system, such as set-ups, entry, stop, exits, and position sizing. When you have a system that fits you and the confidence to trade it, then you are likely to do well with it. Secret 4 The fourth secret of trading success is that you must Use Position Sizing to meet your objectives. Position sizing refers to "how much" size you have on throughout the course of a trade. And position sizing is really designed to meet your objectives. Thus, you must know what your objectives are and you must know how to use position sizing to meet those objectives. Secret 5 The last secret of trading success is that everything is 100% Psychological.Even these five secrets are 100% psychological.
Find out what Van Tharps alleged secrets really mean. 'Discipline'. This means a temperament for trading. Many amateurs don't have it, won't be able to get one, can't learn it .. so a dead end straight away. 'Cutting losses'. Half an answer is no answer. You have to know the metrics of your market. If you are playing the intraday swings you need to know the numbers on where to place your stop. You have to work out the distance from the top or bottom .. its the optimum number you want. 'Having a trading system that fits you'. LOL. Everyone can have one that fits you. Its called either failing consistently or failing to make sufficient progress. 'Position sizing'. A convoluted answer won't do. You must only ever use low leverage - in other words, the maximum number of contracts always in the same ratio to you capital in the market. 'Everything is psychological'. Of course it isn't. First you must have a sufficiently successful methodology or you don't need to worry about any psychological aspects. You research and know the metrics of the market you are trading, that means the hard data. And you get yourself a methodology you can rely on.
- Having a plan with positive expectancy - Having adequate capital to execute the plan - Having the discilpine to execute the plan to perfection particularly during periods of drawdowns and on a much harder level - Having the experience to recognize when the plan no longer has positive expectancy so it can be modified or resurrected with a new one Everything else is psychological babble that does nothing but fill pages of snake oil books. NAD