The Death Of A Bad Trade
We have all had bad trades. We are sure that we are not the only traders that have suffered some grief from a trade that went wrong. At least in the beginning of our trading careers before we gained control of our emotions and learn to follow our trading rules. The following is an attempt to go through the stages of grief as it relates to trading.
Our Opinion on HOW Grief Relates to Trading
Bargaining In the Bargaining stage we might think things like, I will follow the rules just let this trade go in my direction. I will trade fewer lots and use good money management techniques.
Anger When you become Angry, you get the, I will show you attitude. You try to get even with the market maybe you add on to the trade in the wrong direction. Enter larger lot sized in the same direction you were going before which compounds the problem. You might move your stop loss out further if you ever had one to start with.
Check Your Motive For Trading
The following is an article by Norman Hallett of Subconscious Training Corporation, it is about why we are or want to be traders. There are some very thought provoking questions asked. We would suggest that you ask yourself these questions. It should help you with your trading plan and how you approach the market.
Why do you trade?
Is it because you want to make “easy money”?
Do you like presenting yourself as “a trader” (romantic figure of a riverboat gambler)?
Are you trying to supplement your income or trying to transition to a more lucrative and interesting job? Have you asked yourself WHY you trade? What I’m trying to get at is this: are you serious about being a trader? OK…..what I mean by “serious”. Serious is when you treat your trading like a business. Serious is when you live a life that is supportive of trading. Serious is that you are committed to the long term road to success. Treating your trading like a business means developing a written business plan. A business plan forces you to sit down and spell out your goals and objectives and how to achieve them.
38 steps to becoming a trader
We found this post at Forexfactory.com from a member named Neers. We thought it was kind of fun to see where you are in the trading process. When you read this leave a comment as to where you are a
Enjoy the post!
They are as follows:
1. We accumulate information - buying books, going to seminars and researching.
2. We begin to trade with our ‘new’ knowledge.
3. We consistently ‘donate’ and then realize we may need more knowledge or information.
4. We accumulate more information.
5. We switch the commodities we are currently following.
6. We go back into the market and trade with our ‘updated’ knowledge.
7. We get ‘beat up’ again and begin to lose some of our confidence. Fear starts setting in.
8. We start to listen to ‘outside news’ and to other traders.
9. We go back into the market and continue to ‘donate’.
10. We switch commodities again.
11. We search for more information.
12. We go back into the market and start to see a little progress.
13. We get ‘over-confident’ and the market humbles us.
14. We start to understand that trading successfully is going to take more time and more knowledge than we anticipated.
“Ham and Eggs: A days work for a chicken, a life lost commitment for a pig.”
For the record I love ham and eggs. This is not a plea for pita. I saw this quote and had Awe ha! Moment, I wanted to share.
Let me ask a personal question. How do you trade? Like a pig or like a chicken? A pig trader is one who jumps into the market unaware of the risks the conditions of the environment inexperienced in the navigational skills of forging the waters. They foolishly throw all they have at it with no thought of the consequences. They feel that the market owes them something after all the market was made for them just like the farmer’s slop. They fail to see the end result because they are caught up in the moment. They become all consumed by the moment that they fail to see that they are losing everything. The end of this road leads to a bleak end, nothing to show for it, and worse off than when they started out.
The chicken on the other hand produced small results every other day or so. Only because they developed the ability over time practiced and perfected do they lay an egg. Each time they do it does take effort properly selecting the right position to begin and knowing the outcome before entering the next box. The chicken trader understands the importance of process, effort and repetition. After each day a perfect little packaged, a record of the fruits of its labor. A little effort everyday results in a life of productivity.
What Size Of A Demo Account Should I Practice With?
I was speaking with a good friend the other day; about demo trading versus live trading, and how to make the transition smooth. He mentioned that he had not yet started trading live, and that he had been offered by a broker a free demo account with an initial balance of fifty thousand dollars. He stated that when he did go live it would not be with that amount. He then asked “Was this a good way to practice trading the platform?”
This is my feeling on the subject. When a broker advertises “Open up a free demo account” with a large dollar amount attached I think it is poor form. This gives the beginner and anyone unable to trade with that large of a dollar amount right off the bat a faults sense of security. I think it is premature and greedy on the part of the broker.
Chin UP!
“Thrice happy is the man that has a glorious history. Far better it is to dare mighty things, to win glorious triumphs, even though checkered by failure, than to take rank with those poor spirits who neither enjoy much nor suffer much, because they live in the gray twilight that knows neither victory nor defeat.”
-”The Strenuous Life”
Successful Traders Summaries
Here are some thought by some of the best stock traders. Good trading principles apply in all markets.
Also, everyone who is truly interested in Forex should read as widely as possible.
Jesse Livermore: The World’s Greatest Stock Trader by Richard Smitten
1. Don’t lose money
2. Always Establish a Stop
3. Keep Cash in reserve
4. Let the (Successful) Position ride…until you have a Clear Reason to Sell.
5 Take the Profits in cash…and place 50% in a separate account
Lessons From the Greatest Stock Traders of all Time by John Boik
1. Trade with the Trend
2. Cut Losses short
3. Let Profits run
4. Manage Risk
How Legendary Traders made Millions by John Boik
1. Understand the General Trend of the market
2. Use the Knowledge of History in your Study and Observation of the Markets
3. Use your Own Research and Don’t Listen to Others
4. Buy the Leaders
These summaries of good traders thought are worthwhile. We thought that you might be interested in what other good traders think about the markets and how to trade.
Market Gaps
We are writing this because of the large gaps in the market at the open on Sunday September 7, 2008. The market does gap but usually it will happen on the opening of the market on Sunday. Occasionally a gap can be seen around a new announcement. It is not as large as the gap at the opening of the market.
What causes the market to gap? Most brokers close for the week end but the market is still moving because the banks are still trading. When a currency pair has a gap it is because the market was trading in a direction which moved away from the price the brokers closed at. This causes a gap in the price of the currency because the broker’s closing price has to align with the banks prices at the time the broker opens.
If you have a stop loss on an order that is open over the week end the market will gap past the stop loss and the order will not be closed at the stop loss price it is closed at the next available price. In most cases the stop is filled at the price the market gapes to. If you have a buy or sell stop and the market gaps past the market order you will be filled at the next available price. This is the price the market gaps to. If you have a sell or buy limit order then it will be filled at that exact price when the market hits the exact price of the limit (pending) order.
This is why many traders do not like to leave trades open over the week end. Position traders (long Term Traders) are not concerned about the gaps because they are trading the long term trend.
Letter From Our Strategy User- Part 1
This is a letter we’ve received from a strategy user and we thought it brought powerful insight that we would like to share with all of you.
Jed
Also, just to let you know, I find it quite amazing that two moving averages and the so-called “mao” can produce so many positive results. It is truly incredible, to say the least! So simple yet so powerful.
Please do share with me your thoughts regarding the natural laws of economics in relation to a personal account growing with such massive momentum. Let me explain what I mean.
I have taken this current MINI demo account from $10,000 to over $19,000 since yesterday morning by ONLY using your system. It is a 1:400 leveraged account, but I am only trading 1.5 to 2 percent of the capital per position. All trades are placed based off of H1, H4, and Daily trends while most entries are placed in the M5, M15, and M30 in order to take advantage of the immediate shift in trend. Currently, I have five positions open on GBPJPY with only 4.1 percent of my capital in the market (there are three very small positions open with two positions open of 1.2 percent each). This position, only counting the current equity held, has yielded over $2,800, which takes the total profit to nearly $22,000.
An Alternate To Hedging By Wayne Jackson
This is a strategy to replace hedging that Wayne Jackson created. We agree with his feelings about hedging in this post and feel that it provides valuable information. We wanted to share this theory because it presents insights into hedging and the options you have. However this is not a post to endorse his products because we have never had the opportunity to test and review his products and services. We hope you find this post as insightful as we did.
DO NOT LOSE SIGHT THAT the prime strategy is to trade medium/ long term and trade with the trend, with a trailing stop.
We have posted this in his words.
“Hedging ” to me is simply hiding a loss under another opposite trade…and sooner or later, when the hedge comes off, there is an ugly loss exposed…I don’t like that concept !!! (However, to those who use them, I say, different strokes for different folks…that is, its a personal choice).
Currently, this is what seems to happen to some Traders…
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