Keeping risk-taking down until you see markets clearly– Losing small and gaining big is what makes for excellent risk-adjusted returns. Accepting that you’re not seeing things well is half the battle. By continuing to actively engage markets in small size, you give yourself an opportunity to regain perspective. Trading larger or more often out… Read More »
Recently During my training session trader asked me the following question: How to cope and manage the stress that comes with trading. I have been able to cope with the stress for a while now, but in times of market volatility I have more trouble with dealing with stress and it spilling over into… Read More »
1. Traders must be great risk managers. “At the end of the day, the most important thing is how good are you at risk control.” -Paul Tudor Jones 2. Traders must manage their own stress. Trade position sizes that keep your stress level manageable, if you can’t talk calmly to someone while trading you are… Read More »
Raju couldn’t believe what was happening. Actually, the trade began on a positive note, as per his analysis. He had seen what he thought was a price pattern; an ascending triangle, which looked to hit the top of the resistance line several times and the bottom trend line was about to touch. He heard herself… Read More »
Every day money flow from trader to trader, from market to market. Many traders are just happy to dip their bucket in and take a share each day for themselves. But where does the money flow? Every day options lose time value, options sellers blow up, shorts cover for a loss, trends take place, people… Read More »
Rules that I can live by: my rules have to be rules that I stand a good chance of keeping, not the kind that I will follow for one day and then give up the next. I’m not the kind of trader that can follow rules mechanically, like if x happens 3 times then do… Read More »
1). Preparation Once you get your trading system and position size in place you must use the amount you will risk on each trade to determine your risk of ruin. If your risk of ruin is not zero then you will eventually blow out your account. Risking 1% to 2% of your capital in any… Read More »
1. Do not be overly concerned about whipsaws a good trend pays for them all. A whipsaw is when you enter a position but get stopped out quickly when the market reverses opposite to your position. If you are a trend trader this may happen many times in a row in a range bound market. … Read More »
Complacency When I think of complacency two major things come to mind: Often a traders biggest loss comes after a string of winners. This is well documented and suggests to me that complacency is present. The ‘every swing I take is a home run feeling’ or the ‘I can do no wrong feeling’. Sure enough… Read More »
Rule 1 – If you cannot see trends and patterns almost instantly when you look at a chart then they are not there. The longer you stare, the more your brain will try to apply order where there is none. If you have to justify exceptions, stray data points and conflicting evidence then it is safe… Read More »