Professional traders know all about the guts and glory of live trading. Trading discipline is the only difference between unprofitable and profitable traders. Watching a violent swing in the charts that can put a dent in your trading capital can be tough to swallow.
Avoid the Cringe of the News
To preserve your trading capital and avoid a heart attack, it is best to stay away from news related market activity. Even proven strategies are proven to fail when there is a large amount of volatility and gut instinct present in the market. After data releases, such as the Nonfarm payroll or inflation statistics, the markets will go wild with volatility.
Plan to Avoid the News
A trading plan planner should always be kept to outline under what conditions your strategy works best, but also to include times when the strategy is not as profitable. Key news dates should be written down in an easy to see area of your workstation. Markets like to respond to news 15 minutes before the actual news release and continue for hours after the news breaks. Avoiding high volume news times is the best way to preserve your trading capital and keep the cringe-inducing trades to a minimum.
Preservation Equal to Growth
To master day trading is to know when not to take a trade. Preserving your capital is equally as important as growing your portfolio. If the market loses 30% one year and a profitable trader preserves his capital, he’s outpaced the market by 30%. While wealth was not created, he made an effective gain of 30% after comparing to other investors. In a downtrend, trading discipline is critical to keeping your head and your profits.
Monitor the Trends
Cringe-inducing trades are often the product of a sideways trend, rather than a downtrend or uptrend. The uncertainty that comes with a sideways trend makes it that much more difficult to swallow than a well defined uptrend. A sideways trend can snap at any time, sending the price up or down at a violent pace.
Stay True to Your Trading Strategy Plan
The most common mistake made in testy markets is to interfere with your trades. Moving stop losses, taking early profits, or letting a loser run are all dangerous. It is best to let the proven strategies work their magic over the long run than to interfere with the odds on the short run. Creative techniques, such as trading smaller trade sizes or avoiding the trade all together, is the best way to prevent a loss.
Friday, August 28, 2009
How To Manage The Passion Of Trading
Being a trader is more than just a day job. Traders will often find themselves studying the numbers on unrelated events. After taking the plunge into the world of technical investing, you might find yourself looking for trends and chart patterns on things as simple as a weather chart.
Seeing Charts Everywhere
The professional trader will rarely leave work at work. Trading success with technical analysis will bring a trader to actively discuss key issues after hours, such as late day breakouts or momentum strategies. The markets are a bit of an obsession for the average day trader.
Traders who use technical analysis have the hardest time getting away from work. Everywhere you look there are patterns, specifically chart patterns. After years of looking for patterns on stock prices, it is hard to ignore the patterns in everyday life. Finding established chart patterns in a sea of data is easy for a professional trader. It is very likely that traders become obsessed with numbers and chart patterns.
24/7 Trading Makes Stepping Away Difficult
Because trading is such an up and down event, stepping away from the trading desk can be difficult. With the world markets open anywhere, anytime, 24/7, it is hard to ignore the computer screen in favor of a relaxing event. Even financial freedom is not enough for some traders to ignore the markets; buying and selling can be a lifestyle rather than a simple way to make money.
After years of successful trading, life-changing results, such as a ten-bagger in a retirement portfolio, is usually not enough to get away from the markets. Look at any of the most successful professional traders – even though they have financial prosperity, they are still on a quest for more. Financial freedom is just a status rather than a gateway to retirement.
Find Another Passion to Manage Your Trading One
Finding an activity to do each day is paramount to keeping a level head. Ignore your day trading strategies and the late day breakouts and focus on something you like to do. Many trading firms have game consoles, libraries, and even arcades that cater to their employees. Trader burnout is easy to achieve when you spend hours each day looking at candlestick chart patterns. The constant emotional rollercoaster of watching your positions go from the red to the black and back to red can be nerve-wracking. The best thing to do is find another passion to take you away from the day to day and to something you enjoy.
Seeing Charts Everywhere
The professional trader will rarely leave work at work. Trading success with technical analysis will bring a trader to actively discuss key issues after hours, such as late day breakouts or momentum strategies. The markets are a bit of an obsession for the average day trader.
Traders who use technical analysis have the hardest time getting away from work. Everywhere you look there are patterns, specifically chart patterns. After years of looking for patterns on stock prices, it is hard to ignore the patterns in everyday life. Finding established chart patterns in a sea of data is easy for a professional trader. It is very likely that traders become obsessed with numbers and chart patterns.
24/7 Trading Makes Stepping Away Difficult
Because trading is such an up and down event, stepping away from the trading desk can be difficult. With the world markets open anywhere, anytime, 24/7, it is hard to ignore the computer screen in favor of a relaxing event. Even financial freedom is not enough for some traders to ignore the markets; buying and selling can be a lifestyle rather than a simple way to make money.
After years of successful trading, life-changing results, such as a ten-bagger in a retirement portfolio, is usually not enough to get away from the markets. Look at any of the most successful professional traders – even though they have financial prosperity, they are still on a quest for more. Financial freedom is just a status rather than a gateway to retirement.
Find Another Passion to Manage Your Trading One
Finding an activity to do each day is paramount to keeping a level head. Ignore your day trading strategies and the late day breakouts and focus on something you like to do. Many trading firms have game consoles, libraries, and even arcades that cater to their employees. Trader burnout is easy to achieve when you spend hours each day looking at candlestick chart patterns. The constant emotional rollercoaster of watching your positions go from the red to the black and back to red can be nerve-wracking. The best thing to do is find another passion to take you away from the day to day and to something you enjoy.
Success In Real Estate Investing Requires The Right Mindset
Back in the 1980s, if you were going to go on a diet, popular magazines would suggest that you “think thin.” The magazine articles were reluctant to explain what that meant, but people were aware that they were supposed to do it. Adopt the psychology of the thin, whatever that was supposed to be. It follows that, if you want to make money, you would be able to accomplish that by adopting the psychology of the rich, right? As a matter of fact, this is true. In particular, you should internalize the mindset of the accomplished property investor.
Successful property investors are opportunists. They always have their antennae up and ready. They place themselves in the way of information. They “live the life” of the property investor, so to speak. Because of all this, they notice things that others do not.
Ken McElroy, author of The ABCs of Real Estate Investing, part of the Rich Dad book series, says it is all about seeing patterns. If you check out enough properties, study enough areas, talk to enough people, McElroy said, you will start to see these patterns. Then certain things will start to happen. You may start to feel luckier. And, McElroy says, it may be luck, however it is a sort of luck that comes from being prepared.
Don't forget: fortune favors the prepared mind. Opportunity is all around us, but if we don't stay alert, it will be as though it doesn't exist. The alert mind recognizes opportunity.
Ken McElroy stresses over and over again that being successful in real estate is a process. It isn't just something that occurs instantaneously. It's something that you do each and every day. Eventually things begin to happen for you.
A successful property investor focuses on doing a little at a time, on learning this or that thing, or closing this particular deal. It's a “walk before you can crawl” process.
For instance, McElroy says that if you've found a potentially profitable deal, you will be able to get funding for it as others will inevitably want their own share of the eventual profits. This isn't necessarily about skillful negotiation, McElroy said. Of course, those skills can net you an even more advantageous deal on occasion, however you don't need to worry about whether or not you can hold your own when negotiating. Focus on searching for good deals.
Though investors are always considering risk, always aware of it, successful investors aren't scared away by it. They decide whether or not the risk seems reasonable. If the numbers work out correctly, says McElroy, it is a good deal. If it is a good deal, the savvy property investor goes ahead with it.
Easy.
Those who don't understand how to accurately evaluate risk may think that everything is too risky. They make the assumption, for instance, that a larger deal may be too risky for a novice to deal with. They assume that because they think the investor is sinking a lot of personal cash into the deal when, in reality, a larger deal stands to generate greater profit for the participants. For this reason, you may be able to get backing for a deal like that. In the end, not have to put up as much of your own money as you would have on a smaller transaction.
Real estate investment is similar to anything else you might want to learn. Well, for one thing, you first have to learn the ropes. And you learn by doing it. Get out there and examine properties. Visit cities as though you had the intention to make a purchase. Log on to the Internet and read about areas. See what others have to say regarding the real estate climate a particular area. Get to know people. Before long, you will know enough to start considering making a deal. You don't have to have a pile of cash at your disposal prior to entering the game. All you have to do is get out there and enjoy yourself. Everything else will come.
Successful property investors are opportunists. They always have their antennae up and ready. They place themselves in the way of information. They “live the life” of the property investor, so to speak. Because of all this, they notice things that others do not.
Ken McElroy, author of The ABCs of Real Estate Investing, part of the Rich Dad book series, says it is all about seeing patterns. If you check out enough properties, study enough areas, talk to enough people, McElroy said, you will start to see these patterns. Then certain things will start to happen. You may start to feel luckier. And, McElroy says, it may be luck, however it is a sort of luck that comes from being prepared.
Don't forget: fortune favors the prepared mind. Opportunity is all around us, but if we don't stay alert, it will be as though it doesn't exist. The alert mind recognizes opportunity.
Ken McElroy stresses over and over again that being successful in real estate is a process. It isn't just something that occurs instantaneously. It's something that you do each and every day. Eventually things begin to happen for you.
A successful property investor focuses on doing a little at a time, on learning this or that thing, or closing this particular deal. It's a “walk before you can crawl” process.
For instance, McElroy says that if you've found a potentially profitable deal, you will be able to get funding for it as others will inevitably want their own share of the eventual profits. This isn't necessarily about skillful negotiation, McElroy said. Of course, those skills can net you an even more advantageous deal on occasion, however you don't need to worry about whether or not you can hold your own when negotiating. Focus on searching for good deals.
Though investors are always considering risk, always aware of it, successful investors aren't scared away by it. They decide whether or not the risk seems reasonable. If the numbers work out correctly, says McElroy, it is a good deal. If it is a good deal, the savvy property investor goes ahead with it.
Easy.
Those who don't understand how to accurately evaluate risk may think that everything is too risky. They make the assumption, for instance, that a larger deal may be too risky for a novice to deal with. They assume that because they think the investor is sinking a lot of personal cash into the deal when, in reality, a larger deal stands to generate greater profit for the participants. For this reason, you may be able to get backing for a deal like that. In the end, not have to put up as much of your own money as you would have on a smaller transaction.
Real estate investment is similar to anything else you might want to learn. Well, for one thing, you first have to learn the ropes. And you learn by doing it. Get out there and examine properties. Visit cities as though you had the intention to make a purchase. Log on to the Internet and read about areas. See what others have to say regarding the real estate climate a particular area. Get to know people. Before long, you will know enough to start considering making a deal. You don't have to have a pile of cash at your disposal prior to entering the game. All you have to do is get out there and enjoy yourself. Everything else will come.
6 Trading Habits To Strive For
There are many methods to build superior trading habits. Good trading habits will make trading a part of routine, rather than a task. Getting in the habit of doing everything exactly to plan will boost trading profits, marking one more step in the path to financial freedom.
1. Trading Discipline - Following your own trading plan is very important to success. When emotions are left to go as they please, it is easier to lose track of your portfolio. Proven techniques and strategies should not be edited for any reason; follow the plan and let it work for you.
2. Look at Every Time Frame - Even when trading short 5 minute ticks, it is important to evaluate all timeframes for market data. It just might happen that a 200 day moving average is acting to support your position. You’ll never know this unless you take the time to study all timeframes rather than just a few. Long term trends can and do impact short term trading positions. Day traders are more susceptible to trading in only one timeframe because of how time-sensitive their investments are. Swing traders are probably used to checking multiple timeframes for entry points.
3. Trade As Your Capital Allows - Day traders are able to access high levels of margin that can greatly exceed their trading capital. Overextension of credit is dangerous and can compound losses just as easily as gains. Momentum trading with many different entry points can end up in costly mistakes if your account becomes overextended.
4. Understanding Risk - Managing risk is the difference between gambling and investing. Profitable traders can quickly calculate how much of a drawdown they are willing to incur before cutting a position. It is important to have a plan for pruning losses and minimizing the damage of drawdown.
5. Stick to Your Niche - Niche trading or only trading in your specific area of study is the best way to stay profitable. Too often do traders get bored with inactivity, only to take positions that are out of their trading knowledge. Sticking to what you do best keeps your account from being overextended in too many positions and minimizes loss. If you are best in high volume trading, then only trade during periods of high volume. Finding your trading niche will help you to become more a more efficient trader.
6. Trading is Affected by Emotion - It can be difficult to get away from trading. Holding positions overnight can only double the amount of stress that comes with having open positions. For the day trader, try to limit your exposure to overnight markets and keep stress levels low.
1. Trading Discipline - Following your own trading plan is very important to success. When emotions are left to go as they please, it is easier to lose track of your portfolio. Proven techniques and strategies should not be edited for any reason; follow the plan and let it work for you.
2. Look at Every Time Frame - Even when trading short 5 minute ticks, it is important to evaluate all timeframes for market data. It just might happen that a 200 day moving average is acting to support your position. You’ll never know this unless you take the time to study all timeframes rather than just a few. Long term trends can and do impact short term trading positions. Day traders are more susceptible to trading in only one timeframe because of how time-sensitive their investments are. Swing traders are probably used to checking multiple timeframes for entry points.
3. Trade As Your Capital Allows - Day traders are able to access high levels of margin that can greatly exceed their trading capital. Overextension of credit is dangerous and can compound losses just as easily as gains. Momentum trading with many different entry points can end up in costly mistakes if your account becomes overextended.
4. Understanding Risk - Managing risk is the difference between gambling and investing. Profitable traders can quickly calculate how much of a drawdown they are willing to incur before cutting a position. It is important to have a plan for pruning losses and minimizing the damage of drawdown.
5. Stick to Your Niche - Niche trading or only trading in your specific area of study is the best way to stay profitable. Too often do traders get bored with inactivity, only to take positions that are out of their trading knowledge. Sticking to what you do best keeps your account from being overextended in too many positions and minimizes loss. If you are best in high volume trading, then only trade during periods of high volume. Finding your trading niche will help you to become more a more efficient trader.
6. Trading is Affected by Emotion - It can be difficult to get away from trading. Holding positions overnight can only double the amount of stress that comes with having open positions. For the day trader, try to limit your exposure to overnight markets and keep stress levels low.
Lifestyle Of Traders
Trading can be a very active lifestyle. Whereas day traders spend hours every day in front of a computer monitor scalping small movements in price, the active trader does have a “rich” lifestyle both in money and time.
Lifestyle Depends Upon Trading Style
Professional traders usually make their income from scalping short tick charts, day trading from open to close, or swing trading over a matter of days or weeks. The trading style differs with the lifestyle. Scalpers can profit heavily in just a few hours to have the rest of the day to relax and read up on the markets. Day traders benefit from taking positions when they want through the course of the week, often taking full days off at a time. A swing trader has the luxury of placing few trades every few weeks, allowing for plenty of down time.
Improving Your Trading Skills During Your Down Time
Many traders use their down time to participate in trading seminars to meet new people in the financial world. Trading for the big firms is all about whom you know, and indeed, getting involved in the trading community is the only way to work your way to the top of the trading world. For the smaller investor, time may be better spent on an online home study course to further their trading potential.
Skill-building activities, such as looking at old charts, reviewing failed trades, or sharpening your trend line drawing skills, are a great way to spend the surplus of time trading provides. Developing a trading plan planner is another good way to spend the extra time, as a complete trading plan will give you the confidence to trade, even when the market goes against you.
Trading isn’t just about investing in the markets, but also in your own ability to trade. Locking in consistent profits means more time off and more time to review your trading plan. Bettering yourself at your own job means less time studying and more time off, while bringing in consistent profits.
Earning a Relaxed Lifestyle
To the person on the outside, the financial district appears to be “stressed out” people huddled around computer monitors for the bulk of the day. For many people on the inside, trading provides a profitable career and a relaxed atmosphere. For the home trader, a job as a day trader provides a luxurious income and the chance to be your own boss. The ability to take off work whenever you want easily trumps the consistency of a 9-5.
Lifestyle Depends Upon Trading Style
Professional traders usually make their income from scalping short tick charts, day trading from open to close, or swing trading over a matter of days or weeks. The trading style differs with the lifestyle. Scalpers can profit heavily in just a few hours to have the rest of the day to relax and read up on the markets. Day traders benefit from taking positions when they want through the course of the week, often taking full days off at a time. A swing trader has the luxury of placing few trades every few weeks, allowing for plenty of down time.
Improving Your Trading Skills During Your Down Time
Many traders use their down time to participate in trading seminars to meet new people in the financial world. Trading for the big firms is all about whom you know, and indeed, getting involved in the trading community is the only way to work your way to the top of the trading world. For the smaller investor, time may be better spent on an online home study course to further their trading potential.
Skill-building activities, such as looking at old charts, reviewing failed trades, or sharpening your trend line drawing skills, are a great way to spend the surplus of time trading provides. Developing a trading plan planner is another good way to spend the extra time, as a complete trading plan will give you the confidence to trade, even when the market goes against you.
Trading isn’t just about investing in the markets, but also in your own ability to trade. Locking in consistent profits means more time off and more time to review your trading plan. Bettering yourself at your own job means less time studying and more time off, while bringing in consistent profits.
Earning a Relaxed Lifestyle
To the person on the outside, the financial district appears to be “stressed out” people huddled around computer monitors for the bulk of the day. For many people on the inside, trading provides a profitable career and a relaxed atmosphere. For the home trader, a job as a day trader provides a luxurious income and the chance to be your own boss. The ability to take off work whenever you want easily trumps the consistency of a 9-5.
5 TIPS FOR DEALING WITH THE TRADING BLUES
Can’t seem to pick a winner? Tired of the sideways market? The trading blues are quick to set in and ruin your future trades. Depending on the trading style, you may be more or less prone to the trading blues. Day trading and scalping are very quick, nerve-wracking professions and can be easily impacted by a series of losses.
However, there are five ways in which you can improve your trading environment, allowing you to overcome your trading blues.
1. Skill-Building Activities - Taking a look back to the basics of your trading plan blueprints can help you overcome the trading blues. Skill-building activities, such as drawing trendlines on short-term movements or analyzing candlestick patterns, can help you feel comfortable again with your own trading style. Go back through the step-by-step instructions of your trading plan and fine tune any possible variables in your trading plan – these activities will all help you avoid losses.
2. Trading Seminars - Listen to what others have to say about the markets, find what will work best for you, and incorporate the trading philosophy into a trading plan planner. Trading seminars allow a different perspective on the same market, letting you see the market from someone else’s perspective.
3. Take Some Time Off - Take some time off from the computer and rest your mind. Day trading is very tiresome, both mentally and physically. A brief escape from the constant flux of the markets will give you some time to relax and rewind. Consistent profits are best achieved after a restful break from the drama of the market.
4. Establish an Emergency Fund - Even professional traders have their bad streaks. The key is to ride out each bad period for times of prosperity. Establishing an emergency fund for day to day expenses can take the worry out of living off your trading capital. The stress of knowing you have to deliver results to make money can be devastating to your trading accounts.
5. Have a Complete Trading Plan - A complete trading plan should take into account the worst of times. You should be prepared for anything, including steps for trading in bear markets and what to do in case of a large draw down. A complete trading plan should also include ways to re-up your brokerage account after large losses. A trading plan planner will help set up a plan for even the worst scenarios. Anything short of nuclear war should be included in a complete trading plan.
However, there are five ways in which you can improve your trading environment, allowing you to overcome your trading blues.
1. Skill-Building Activities - Taking a look back to the basics of your trading plan blueprints can help you overcome the trading blues. Skill-building activities, such as drawing trendlines on short-term movements or analyzing candlestick patterns, can help you feel comfortable again with your own trading style. Go back through the step-by-step instructions of your trading plan and fine tune any possible variables in your trading plan – these activities will all help you avoid losses.
2. Trading Seminars - Listen to what others have to say about the markets, find what will work best for you, and incorporate the trading philosophy into a trading plan planner. Trading seminars allow a different perspective on the same market, letting you see the market from someone else’s perspective.
3. Take Some Time Off - Take some time off from the computer and rest your mind. Day trading is very tiresome, both mentally and physically. A brief escape from the constant flux of the markets will give you some time to relax and rewind. Consistent profits are best achieved after a restful break from the drama of the market.
4. Establish an Emergency Fund - Even professional traders have their bad streaks. The key is to ride out each bad period for times of prosperity. Establishing an emergency fund for day to day expenses can take the worry out of living off your trading capital. The stress of knowing you have to deliver results to make money can be devastating to your trading accounts.
5. Have a Complete Trading Plan - A complete trading plan should take into account the worst of times. You should be prepared for anything, including steps for trading in bear markets and what to do in case of a large draw down. A complete trading plan should also include ways to re-up your brokerage account after large losses. A trading plan planner will help set up a plan for even the worst scenarios. Anything short of nuclear war should be included in a complete trading plan.
HOW TO ENJOY YOUR TRADING SUCCESS
Trading discipline is a fast track to trading success. Disciplined, working strategies will statistically win in the long run. But how should you celebrate your trading success and make the most of your wins?
Day Trading Mentality
Day traders who make a quick profit are the first to celebrate trading success. The small intraday movements in price are enough to keep day traders happy with their positions. The most important thing to remember is even with a comprehensive trading plan, losses are inevitable. Statistically, a win only brings more losses, but the biggest trading secret is that a few wins can easily strike out many small losses.
For day trading with a small account, trading success should send the trader to increase his or her stake. Your trading capital must grow over time to cover your own cost of living, as well as provide a “pay raise” over time. To obtain financial freedom, a day trader must have sufficient capital to both weather losses and collect big gains.
The Biggest Fallacy in Celebration
After a big win, the greatest fallacy a trader enacts is changing his or her trading structure. Too many times, an over-confident day trader makes trades based on “gut” feelings, rather than basic trading fundamentals. However, in this scenario, the trader eliminates strategy, instead entering the gray zone characteristic of gambling. Remember, the difference between gambling and day trading is proper money management. Proven techniques and strategies are profitable in the long run because they have set criteria for each trade, rather than just a stab in the dark based upon “gut” feelings.
The Greatest Gift of Success is Education
Learn from your successes. Indeed, the greatest gift of trading success is the education it presents you. Chances are that you placed the trade because of your own trading system and analysis; review the details surrounding your trade (ideally in the trade journal you keep) to develop a core of strategies that will produce winning trades.
Give Yourself a Brokerage “Present”
Boost your own trading profits by topping your account. Day trading with a small account is very limiting. After a big win, add some of your own personal funds to your account to keep your success. Undercapitalized accounts are the first to falter when the market turns. Investing in yourself can be the difference between profitability or simply getting by.
For large wins, you might even consider quitting your day job. Many people have found financial freedom through day trading. If the time is right and you have bankrolled a significant balance, making day trading or swing trading a career can be both profitable and rewarding. Quitting the 9-5 is the ultimate way to celebrate long-term trading success.
Day Trading Mentality
Day traders who make a quick profit are the first to celebrate trading success. The small intraday movements in price are enough to keep day traders happy with their positions. The most important thing to remember is even with a comprehensive trading plan, losses are inevitable. Statistically, a win only brings more losses, but the biggest trading secret is that a few wins can easily strike out many small losses.
For day trading with a small account, trading success should send the trader to increase his or her stake. Your trading capital must grow over time to cover your own cost of living, as well as provide a “pay raise” over time. To obtain financial freedom, a day trader must have sufficient capital to both weather losses and collect big gains.
The Biggest Fallacy in Celebration
After a big win, the greatest fallacy a trader enacts is changing his or her trading structure. Too many times, an over-confident day trader makes trades based on “gut” feelings, rather than basic trading fundamentals. However, in this scenario, the trader eliminates strategy, instead entering the gray zone characteristic of gambling. Remember, the difference between gambling and day trading is proper money management. Proven techniques and strategies are profitable in the long run because they have set criteria for each trade, rather than just a stab in the dark based upon “gut” feelings.
The Greatest Gift of Success is Education
Learn from your successes. Indeed, the greatest gift of trading success is the education it presents you. Chances are that you placed the trade because of your own trading system and analysis; review the details surrounding your trade (ideally in the trade journal you keep) to develop a core of strategies that will produce winning trades.
Give Yourself a Brokerage “Present”
Boost your own trading profits by topping your account. Day trading with a small account is very limiting. After a big win, add some of your own personal funds to your account to keep your success. Undercapitalized accounts are the first to falter when the market turns. Investing in yourself can be the difference between profitability or simply getting by.
For large wins, you might even consider quitting your day job. Many people have found financial freedom through day trading. If the time is right and you have bankrolled a significant balance, making day trading or swing trading a career can be both profitable and rewarding. Quitting the 9-5 is the ultimate way to celebrate long-term trading success.
This Investments article is provided by Articleteller - The Free Article Directory http://www.articleteller.com
About the Author:
Leroy Rushing is an active, professional day trader; trading coach; and eBook author. He is the Founder and CEO of Trading EveryDay, a distinguished provider of educational trading products and services that are available worldwide.
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