The 5 Things That Destroy Traders At All Levels

30 Sep
September 30, 2014

 

  1. Hubris: A foolish amount of pride or confidence. No matter how good of a trader you think you are the market is always bigger and you will not win an argument with its price action no matter who you think you are.
  2. Fear: Cutting winners short because of unwarranted fear eliminates all the big wins. Being afraid to take a good entry because of fear of loss creates a loss of a potential profit. We have to do enough homework about our trading methodology to trade our system with confidence.
  3. Ego: The desire to be right more than the desire to make money leads to losing money, a lot of money. The ego causes traders to hold losers far too long and to brag themselves into a corner about their own predictions. The best traders are simply slaves to the market’s price action.
  4. Laziness: Looking to be given trades instead of doing the work to develop their own system leads to failure. Trades only have meaning inside a robust system consistently followed with discipline and risk management.
  5. Greed: The greedier a new trader is to make a fortune the higher the probability and speed at which they lose their whole trading account. The dark side to going for the huge winning trades with big position sizes is the huge losses when wrong. Money is made in the market through managing risk so you are able to keep the profits from your winning trades. If a trader does not manage risk and position sizing their winning trades are meaningless because they will eventually give back their profits with their starting capital in the longer term.

The Anatomy Of A Good Trade in 10 Steps

29 Sep
September 29, 2014

 

  1. Your trade entry must be at a price level that gives you either a high probability profit potential or a great risk/reward ratio.
  2. You must identify where price has to go to prove you are wrong and then set your stop at that level.
  3. Your position size has to be based on how much you are willing to lose if your stop is hit. 1% to 2% is the maximum loss of total capital you should ever risk to avoid the risk of ruin.
  4. If your trade becomes profitable you will have to have a plan for a trailing stop to lock in profits on a reversal or a price target to lock in profits when it is hit.
  5. Your trade must be based on a detailed trading plan. You must operate inside a set of rules.
  6. Your trade must must be made inside a profitable trading system to have any long term meaning.
  7. Trades must be based on reacting to what is happening not predictions.
  8. Trades must be based on quantifiable facts not emotions or ego.
  9. Always trade based on your own time frame.
  10. Never piggy back another persons trade. All of our trades are our own win or lose.

Ten Fast Facts About The $SPY $INDU & $QQQ Chart

28 Sep
September 28, 2014

INDU

spy

qqq

 

 

  1. The 50 day held on the $INDU chart Thursday showing big cap buyers were present at this key line in the sand.
  2. $QQQ held the 50 day on Thursday but found resistance at the 21 day ema Friday.
  3. $SPY lost the 50 day on Thursday and found resistance at the 21 day on ema Friday.
  4. We need to see breaks of the 21 day ema and a close above to confirm a return to an up trend with momentum.
  5. All three indexes are above are near the 50 RSI. While this is the right half of the chart we do not have confirmation yet that we will stay in the 50 RSI – 70 RSI range. Monday will be telling.
  6. We still have MACD bearish divergences on all charts so no confirmation of strength yet for momentum traders.
  7. The volatility on Wednesday, Thursday, and Friday was not a good sign for the up trend in the short term time frame. A bigger sell off to wash out weak hands would be healthy for the trend.
  8. The market indexes have spent the last 29 trading days range bound.
  9. In the near term this is still a buy weakness and sell strength market. Buying breakouts and shorting weakness is not working with the choppiness and range trading.
  10. Two of the best looking monster stocks in this market are currently $GPRO and $FB.

 

Five Great Trading Links For Weekend Reading

27 Sep
September 27, 2014

Weekend-Reading

 

 

 

 

 

Iron Rules of Money

Eight Things I Learned from Peter Thiel’s Zero To One

Prioritize Your Goals with Warren Buffett’s Two-List System

Interview With Ted Hayes, Ph.D., Part One: The Two Drivers of Elite Performance

Interview With Ted Hayes, Ph.D., Part Two: A Surprising Finding About the Development of Trading Performance

 

Top Trading Tweets of the Week 9/26/2014

26 Sep
September 26, 2014

Top-Tweets-2011

 

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