Secrets of Market Wizards

Who Should Be Your Trading Mentor?

Experienced trading mentors have groomed successful traders over the years. While some frown on the idea of mentioning mentors, it’d be necessary to say that the writer of this article would’ve quit the trading world many years ago when things became so hopeless in the markets, provided he didn’t come across those seasoned coaches and traders who revealed the secrets of successful trading to him. It’s reckless to assume that you can just read a few articles from some ‘Golden Goose proponents’ and then conclude that you can go to the battlefield of the financial markets on your own. The reality is totally different from this.

When it’s possible to become successful after many trials and errors of your own, things would be very much easier and far less intricate if you go to the battlefield with a trading veteran who’s also a talented trainer. It’s easier for one to call oneself a hero/heroine before one faces a real battle. Those who ignore the fact above would eventually be forced to look for help when they face the quirk of the markets with their shallow experience.

You tend to be like trading mentors you like. They can be successful traders - or losing traders - based on whom you like. There are mentors whose trading principles are worth emulating. You don’t need to have met the mentors face-to-face. In this Internet age you and your mentor can telecommute.

Your trading mentor doesn’t have to be perfect, nor winning always. It’s unrealistic to think that a mentor must be a saint that no one can ever find any fault with. You also have your own weakness and human flaw. No human being is perfect, and such your mentors may exhibit some human errors, yet they would be exemplary when it comes to trading and some other professional aspects, and therefore they can be great role models in the world of trading.

It’s possible that you’ve many trading mentors; as many as you want. One might be good at trading with precision accuracy, while another might be a good trading money and risk manager. Another one might be an expert in trading psychology and disciplined mindset. My own role models are many. They include Joe Ross, Dr Van K. Tharp, Sam Evans, Dr. Alexander Elder, Dr. Emilio Tomasini, Loiuse Bedford, and others.

How You Can Benefit from Your Trading Mentors
1. Carry out research and observe them and have an insight into their trading principles.

2. Interact with them. There are many technological devices that can be used in achieving this, like telephone, webinars, trading rooms, teleconferencing, chatting facilities, etc.

3. Ponder your role models’ trading qualities, strengths and principles. As you ponder these, you’d see yourself imitating them.

4. When you choose a trading mentor, your aim won’t be to transform yourself to be exactly like the person. Probably, you still possess your own innate good trading traits and strengths. Nonetheless, having role models in the trading world would help bring out the best in you as a trader.

You can learn as part of a trading team or group. Before you can become part of hedge fund, you’ll first need a good account history, even if your capital is small. Getting employed as a funds manager is highly dependent on your track records. Should you become part of a trading group, you’d then need to gain more ideas from the most talented and the most proficient speculators in that group. Good reputation in trading has to do with your records and longevity – these are mandatory.

Excerpts from Trading Role Models
Quotes are beneficial and inspirational, for they have transformed many souls. Quotes from famous, seasoned and profitable traders are thus no exception. Below are excerpts from articles written by a few of my role models:

“People act like they've got all the time in the world, oblivious to the fact that the hourglass is running out of sand. They waste time when they could educate themselves. They entertain when they should focus…. People's lives seem to be getting more and more crammed with a lot of ignorance, self-entertainment one way or another, and... well... not much else. Don't let this world-wide trend define THIS month for YOU! You have a choice. Invest your time and reap the benefits. Spend your time and it will be gone forever.” – Louise Bedford (Source: www.tradingsecrets.com.au)

“Learning to trade is different from learning to ride a bike; it’s more like learning a profession. Unfortunately, most traders think they can just close their eyes, pick stocks, sit back and let the money roll in. But it doesn’t happen that way, and eventually, new traders figure that out—often painfully. Successful trading takes a tremendous amount of planning, skill and training—just like any business venture. Essentially, your trading should be viewed as a business—because it is a business. And if you want that business to be profitable, you need to understand the parts of your business, you need a good plan, and you need the discipline to follow the plan… If you're looking for a quick and easy way to make money in the markets, even Tharp Think won’t help. There is no "silver bullet solution" to trading success.” – Dr. Van Tharp (Source: www.vantharp.com)

 

The Surest Bet You Could Ever Make in the Markets

“The simplest trades are usually the best ones.” – Michael Hewson

There are no guarantees in the markets, but there are certain things you can do that would ensure your continuous victory. Interestingly, there’s also one bet you can make and reap sure gains from – as far as your long term investment goals are concerned. What kind of instrument is that? To answer the question, please let’s take a look at the interest rates below:

Australia = 2.50%
New Zealand = 2.50%
Canada = 1.00%
Great Britain = 0.50%
Switzerland = 0.25%
Europe = 0.25%
United States = 0.25%
Japan = 0.10%
Note: The above are the central banks rates of some countries whose fundamentals impact the global markets the most. The rates above were correct at the time of preparing this article.

You can see that the interest rate in the US is almost zero. The national debt of that country is extremely huge and it’s becoming worse and worse by roughly $1 trillion per annum. Because of this terrible debt condition, the Fed is striving to make sure that the interest rates remain as low as possible (almost zero). The effect on the Greenback is deplorable; plus the interest rates can only go upwards. When the value of something is almost zero, it’s nowhere to go but the north. Indeed, the forecast/bet on the possibility of the interest rates going up is the most accurate long-term forecast/bet you’ll ever make in your life.

In future, the interest rates have nowhere to go but towards the upside. So how can you take advantage of this? Congratulations, the astute bulls!

What is the Surest Bet in the Currency Markets?
Apologies, currency traders. Interest rates aren’t currency pairs, are they? So you may ask, is there any surest bet in the currency markets?

I don’t know of any single surest bet on Forex, but I know what can be done to ensure the permanent safety of one’s capital. Those things have been mentioned in the past and would be elaborated on in future articles. However, what I’ll say right now is: Keep looking for nice trading setups that offer low risk and high reward opportunities. Take advantage of them and disregard the confusing squawk about the markets.

Conclusion: We don’t need to know every piece of the fundamentals affecting a trading instrument – something that’s not attainable. We’d need to make decisions with the only information we’ve. Experienced fundamental analysts seldom see eye-to-eye on events affecting the markets. Sometimes, the fundamentals that aren’t expected can come out suddenly and have effects on the markets. The effects may be in your favor or against you, but no matter what, you can be victorious.

This piece is ended with the quote below:

“Over the long term, the market will correct expectations and reflect reality, rewarding traders that have anticipated that reality.” – Jose M. Pineiro

 

Tell that to all those who have been carried out shorting JGBs over the decades.
And you might want to take a glance at a long term chart of US bonds or notes.

http://chart.finance.yahoo.com/z?s=^TNX&t=my&q=l&l=on&z=l&a=v&p=s&lang=en-US&region=US

So yeah, congratulations, astute bulls. But not the bulls you're talking about.

 

Dedicate Yourself to Trading Success

AN INSIGHT INTO THE MERITS OF TRADING

“Trade as professionally as you can.” – Mebane Faber

Successful trading is possible, but it requires dedication. You need to commit yourself to learning how to be the best trader you can be. Commit yourself to learning risk control and sound money management methods. Commit yourself to learning how to trade with peace of mind, irrespective of the market conditions. For you to make profits personally, you need to invest your time and money. Without this it’s impossible to make profits. Trading always costs something.

As you probably agree, and based on your experience, making money in the markets is sometimes easy and it’s sometimes difficult. When things are hard, dedicated traders minimize their losses and gain an insight that makes them become better traders. When things are easy, dedicated traders know that it’s normal and expected. It’s novices that would be extremely joyous when things are easy, only to give up when things become hard.

Many times we look back for a few years on what we thought of as a flop, we see that our determination was leading us step by step. We mayn’t have jumped from ‘beginning’ to ‘end’ in one attempt, but our determination was pushing us ahead. The wrong steps we took during our formative years in trading weren’t a curse – they were blessings!

We would like you to benefit from trading. We’re seriously interested in helping others to be the best traders they can be. We want you to be happy as a trader. You would’ve to stop the trading styles that don’t help your account and seek winning standards that ensure permanent victory. The decisions you make right now will definitely affect your future career. It’s better to make small profits and losses and be happy than make big profits and losses and end up being miserable. You can speculate consistently in the markets with peace of mind, knowing that your risk is always under control.

We want you to walk in the paths that lead to trading success, especially those that ensure permanent success. We want you to improve yourself. We want you to experience peace and happiness in your trading career – permanently. Do you want to live in the part of triumphant traders? Our regular contact with fellow experts strengthens our heart and determination to be successful. We too appreciate the notes and lessons we receive from experts. Don’t keep this message to yourself. Share it with others as soon as you can!

This article is concluded with the quote below:

“Realize that it can take a long time to become a successful trader, just as it can take long to become successful in any other business. You need time to build your trading skills. You need time to acquire experience in the market. Experience and skill ensure that, over the long term, you will become consistently profitable.” – Joe Ross (Source: Trade2win.com)

 

Important Questions Traders Should Ask Themselves

“Only execute the trade when the chart matches your plan, if it doesn’t – no trade.” - Gavin Knoesen

Intelligent speculation includes some salient aspects like opening of trades, trade management, emotions control and strategy optimization. There is no way around the fact that these salient aspects can never be avoided by active traders, but our attitudes towards them can make a big difference between good and bad trading habits. These are the questions traders need to ask themselves often and often:

Did I open my trade according to my entry criteria?

It’s imperative that you open a trade according to strict entry criteria. Trading discipline entails your refusal to trade a setup that doesn’t match your entry criteria; no matter how attractive the setup is. Trades shouldn’t be opened randomly. No matter what the news shows or how attractive the markets are, we won’t open any trades until our setups appear. You make mistakes only when you don’t follow your trading rules. A loss trade isn’t a mistake, provided that you opened the trade according to your entry rules. A trade that’s opened in violation of your entry rules is a mistake – whether it results in profits or loss.

Did I follow my trade management plan when the trade was open? If not, why?

This is one of the reasons why many traders find trading difficult: they’re unable to stick to their trading plans after they enter the market. A swing trader opens a trade and quickly closes it after about a 10-pip gain, for the fear of a price reversal. An intraday trader decides to run a negative position for several more days with, the hope that the price could turn in her/his favor. These attitudes are bad. You need to know that once you enter the market – irrespective of how great your signal is – trading becomes managerial. It’s your trade management and exit techniques that’ll ultimately determine your long-term success, and this has nothing to do with your trading accuracy. When you’ve open positions, never forget to stick to your breakeven rule (if any), trailing stop rule (if any), trading duration rule and exit rules. Anyone who constantly violates her/his trading management rules needs psychological help.

What was my reaction after the trade was closed?

If you traded flawlessly, the outcome didn’t matter. Sane traders gauge their success by how flawlessly they execute their trades, not by how much they make or lose. If the AUDJPY moves significantly in your favor, it makes little difference than when it moves significantly against you. A significant movement in the market is a significant movement. If the AUDJPY moves significantly against you, it makes little difference than when it moves significantly in your favor. An adverse movement has negligible effect on good risk managers; whereas a favorable movement has satisfactory effect on their portfolios. Traders occasionally sustain negativity but they don’t want to take responsibility for that, they think they’ve been treated unfairly when the markets simply move without having anyone in mind. We must take responsibility when we make a profit and when we make a loss.

Is there any way I can optimize my trading strategy?

Permanently victorious traders use conservative trading methods for long-term objectives. It doesn’t matter whether the methods are boring or not. Anyone looking for thrill may try sky-diving or bungee jumping. The real trading breakthrough has to do with finding a good setup rule and trading it constantly. A negative expectancy system needs improvement, but a positive expectancy system doesn’t need that. This doesn’t mean that the positive expectancy system can’t have losing streaks. During a losing streak which may be normally protracted, it’s sad that an average trade abandons a good system when it’s on the brink of a winning streak. The newly found system can either start losing or winning right away; only to later begin to experience an opposite streak. You oughtn’t to be discouraged even if you strategy is no longer interesting. Stick to it as long as it helps you make money. And don’t forget that it’s possible to keep your account safe no matter what the market does.

Conclusion: It’s imperative that you stick to your winning strategy – even if it’s no longer interesting. Your trading strategy mayn’t be interesting, but keep on using it as long as it helps you obtain average winners that are bigger than average losers over a long period of time.

I end the article with the quote below:

“Many people hold trading in the same regard as gambling but it is an unfair comparison. Trading is not gambling unless you are trading blindly, randomly, without adhering to a trading plan and completely ignoring any risk management.” – Stuart McPhee

 

When Fundamental Analysis Fails

“Everyone is following the economy, but I’m following the market.” – Joe Granville

There are those who invest successfully using only fundamental figures, and there those who successfully trade using only technical analysis. There are those who combine the two types of analyses and make money.

Nevertheless, I can see that many investors believe so much in fundamental analysis that they refuse to smooth their orders when caught on the wrong side of the market direction, because the fundamentals support the wrong side. I’m not saying that fundamental analysis doesn’t work; it works, but it isn’t a Golden Goose trading method, for there are investors/traders who lose heavily despite the fact that they position their orders according to the fundamentals that are affecting the instruments they’re interested in.

When fundamental analysis fails, what do you do? What you can do to survive and become victorious requires that you look beyond fundamental analysis. Further articles will shed more light on this.

No type of analysis is perfect: therefore it’s risk control that can make one survive the vagaries of the markets. Fundamentals or no fundamentals, you need to know what really works in the market. Joe Granville of blessed memory is quoted as saying that he followed the market when everybody followed the economy. Joe, who focused on the market, was a highly respected and successful trading expert.

One profitable itinerant speculator once declared that the only thing that we need in order to make money in the market is to understand how the market works. That’s a fact. Most veteran traders acknowledge this fact. The knowledge of how the market works is what would make you a profitable trader.

For example, there are a few stages of investors’ attitudes in a bear market. Investors may be overconfident and greedy, thinking that the price is too cheap and could turn in their favor anytime. At this time, most bears are ecstatic about pushing the price further south, but investors would keep on buying. Then there would be a stage of lack of dread and conservation, which makes investors to become sober and cautious because the market keeps on plunging. The falling price makes some investors angry and shameful. Then there would be another stage of total apathy and frustration when the market has become extremely oversold and it’s really ready to shift gears and start a new long-term bullish bias, that’s when investors would lose confidence in the market and stay out altogether (or leave their positions for the worst that could happen). The timing of the masses would continue to be wrong.

Many traders are making money in the markets in spite economic problems in developed countries. Sometimes, it’s not uncommon to see the market going up when negative data is being released. Sometimes, you’ll see a market plunging despite good figures that are being published. It just depends, if a bad figure that’s just been released is the most encouraging among similar figures released in the past several months or years, it might have a positive impact in the market rather than a negative one.

This article is ended with the quote below:

“Most traders fail because they think they know more than the markets… I say humility because to me every time I caught myself saying ”oh this market has to be a buy because it can’t go any lower” really is a statement of ego, which is another way of pretending you know more than the market.” – John Person

 

What Would Happen Next to the EURUSD?

“It is not so important to be right, but how to make money when you are right.” – Ivan Hoff

I remember what happened at one interesting trading conference I attended about 5 months ago. It was an interesting conference indeed. At one stage, the moderator showed us a EURUSD chart (whose dominant trend was bullish, but the short-term trend was bearish) and asked us this question:

Where do you think the price would go next?

There was silence in the hall. Predicting the future is a great challenge; plus it’s senseless to talk about the future price action with an utmost certainty. A few traders stood up and tried to give their opinions. I later stood up, took the microphone and said that two things could happen at that juncture: the price could turn in favor of the dominant trend which would continue OR the short-term bearish correction could actually be the beginning of a strong bearish outlook. Was I wrong?

One man quickly got up to announce that I was wrong. He said that the price MUST turn upwards since the dominant trend was bullish. I kept quiet. Can you see how traders showcase the mindset that can endanger their career?

This was a bone of contention; some seriously thought the pullback would end up blending with the overall trend. But the reality was that it could be the beginning of another long term reverse trend.

Being opinionated is a not a good thing in trading. Those who’ve enjoyed lasting success in the markets know how to admit their errors, get out of losing trades and look for the next signals which may be profitable. However, opinionated traders would never admit their mistakes and would take a decision to run their loss for as long as the market goes contrary to them. An opinionated trader may even be confident enough to open a very large position (like 20% or 40% risk), believing that the price MUST go in their favor. The person may even refuse to put a stop for disaster prevention

Was the man right? Yes, he was right, but the short-term correction took the price downwards by up to 500 pips before the price went in the direction of the dominant bias. In some cases, the market could even go down by over 1500 pips within the next few weeks before any meaningful reversal, if that would happen at all. Can you see how people make decisions that have adverse effects on their portfolios?

Was I also right? Yes. I gave two possibilities of the price direction – either up or down. In order to benefit from this expectation or ensure that an adverse movement doesn’t affect my portfolio, I truncate my loss when I’m wrong and give my gain some leeway when I’m right. I’m not opinionated: I know what to do whenever I’m proven wright or wrong.

Being Bearish or Bullish Makes No Difference
It’s common for many a trader to say ‘I’m bearish/bullish on this market.’ That doesn’t make any difference. What would happen when a swing trader goes short in a market because she/he hears a scalper announcing being bearish? When a position trader says she/he is bullish, do you think an intraday trader can make a ‘fool-proof’ long trade?

I look at a EURUSD chart and I say I’m bearish, but you look at it and say you’re bearish. A chart is a chart, plus both the bear and the bull can make money in the same market. When a dominantly bearish market rallies by over 600 pips, the bull can make some gains. In the same market, the bear can also make some gain when the price pulls back in the direction of the dominant bias in which the buying selling is prevalent – what make the difference are the timing methods and trading styles.

Being bullish or bearish makes no difference. What makes difference is your respect for the realities taking place in the markets. A confirmation of a reversal wouldn’t happen overnight; it takes days or sometimes, weeks. The transition from a downtrend to an uptrend doesn’t happen in a flash; instead there would be a gradual thinning out of the downtrend which then translates into an uptrend, causing lower highs amidst consolidation and swing lows. No matter how significant a counter-trend bullish or bearish engulfing candle pattern is, it doesn’t mean the trend is over, unless the next series of candles continue to hold onto the reversal long enough. Otherwise, the significant bearish or bullish engulfing pattern may be a spike which gives traders an excellent opportunity to enter the market on a good bargain.

Conclusion: The FX markets are among the most liquid trading markets in the world, and therefore, when a strongly trending instrument assumes an established bias, it may go on longer than anticipated. In the face of this fact, a reversal in the context of the established bias may either be transitory or be a start of a protracted movement in the opposite direction. Rather than being opinionated about a direction, you’ll help yourself by aborting your losers and riding your winners – the only way to face the vagaries of the markets victoriously.

This fact is summed up in the quote below:

"I spend my day trying to make myself as happy and relaxed as I can be. If I have positions going against me, I get right out. If they are going for me, I keep them." - Paul Tudor Jones

 

But what has happened to the majority of these market wizards now?

 

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One is in jail, most are NOT,LOL

Newest Jack Schwager top trading book will answer it better.{HF Market Wizzards}; buy it or borrow it.

Interesting they average less [as a group]than the 70's 80s, 90's Jack Schwager top traders, not a prediction; cant really say one year like 2008 bear 0r 1990's bull is enough time to prove it.

 

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Good quotes,not that it makes'' no difference in a bull or bear market''.That would be real false even in a daytrade, over time.
Good quotes, mostly .
A bear market by definition would not be traded well , if you try to daytrade it like a bull market, over time. Thanks for the small sample seminar thats what is was, a small :sample.