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Thread: Trading Wisdom

  1. #1
    aenigma's Avatar
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    Trading Wisdom

    If you are a trader, you will relate to these Trading Wisdoms....

    Reality of the Market

    Majority of the traders fail because they do not understand the reality of the market Most of us are not even playing the right game Materials available over the net and the books written by failed traders teach technical analysis patterns and indicator based signals and we assume this is the reality

    The indicator based TA signals and price patterns are illusion.These are only effect. Cause is something else Then what is the cause? Price Indicators and patterns are derivatives of price Then price is the cause and TA patterns the effect So we need to focus on price

    Do not reach a conclusion so fast Price is another effect and there is something that makes prices move in markets. What it is? It is the order flow. Orders make the market move. If the net order flow is on the buy side market will go up. If net order flow is on the sell side market will drift down

    Then order flow is the real thing that moves the market. Oh No .Dig a little deeper. Yes. It is the people who act in the market by feeding their orders When people start bidding higher, price will move up when they start lowering their offers price will start moving down
    When people are going to bid or offer aggressively? It is when they feel the urgency and desperation to transact This is when they become emotional So it all comes down to the emotion of the market participants Fear and greed are the most powerful emotions that can force people to act If you are able to identify the price levels where a large enough group of traders succumb to these emotions and able to act there without hesitation, you will win in this game Trading is nothing but engaging the other party Encashing their fear and greed

    Suppose you are in a shopping mall People will be moving around in a random manner Then you hear an announcement that the first ten purchasers of a particular item will get another free You can see so many people rushing to that counter That is greed in action Then you go and press the fire alarm button. Everybody except you will rush to the exit. Fear in action
    Now you know it Fear is much more powerful emotion than greed


    When an archer is shooting for nothing . . . he has all his skill;
    If he shoots for a brass buckle . . ............. he is already nervous;
    If he shoots for a prize of gold . . ............. he goes blind,
    or sees two targets . . ............................ he is out of his mind!

    His skill has not changed. But the prize . . . divides him.He cares. He thinks more of winning than of shooting and the need to win drains him of power. – Chuang Tzu, 400 B.C..
    Wish You Green Trades !

    Warm Regards !

    Aenigma ..... :)

  2. #2
    aenigma's Avatar
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    After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I’ve known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine that is, they made no real money out of it. Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money.

    Jesse Livermore in Reminiscences of a Stock Operator.
    Wish You Green Trades !

    Warm Regards !

    Aenigma ..... :)

  3. #3
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    As reported in Market Wizards, Paul Tudor Jones futures trading style and beliefs are summarized as follows [8]:

    * Contrarian attempt to buy and sell turning points. Keeps trying the single trade idea until he changes his mind, fundamentally. Otherwise, he keeps cutting his position size down. Then he trades the smallest amount when his trading is at its worst.

    * Considers himself as a premier market opportunist. When he develops an idea he pursues it from a very-low-risk standpoint until he has been proven wrong repeatedly, or until he changes his viewpoint.

    * Swing trader, the best money is made at the market turns. Has missed a lot of meat in the middle, but catches a lot of tops and bottoms.

    * Spends his day making himself happy and relaxed. Gets out if a losing position is making him uncomfortable. Nothing’s better than a fresh start. Key is to play great defense, not great offense.

    * Never average losers. Decreases his trading size when he is doing poorly, increase when he is trading well.

    * He has mental stops. If it hits that number, he is out no matter what. He uses not only price stops, but time stops.

    * Monitors the whole portfolio equity (risk) in realtime.

    * He believes prices move first and fundamentals come second.

    * He doesn’t care about mistakes made 3 seconds ago, but what he is going to do from the next moment on.

    * Don't be a hero. Don't have an ego. Always question yourself and your ability. Don’t ever feel that you are very good. The second you do, you are dead.

    The secret to being successful from a trading perspective is to have an indefatigable and an undying and unquenchable thirst for information and knowledge. Because I think there are certain situations where you can absolutely understand what motivates every buyer and seller and have a pretty good picture of what’s going to happen. And it just requires an enormous amount of grunt work and dedication to finding all possible bits of information.-the most important thing is how good are you at risk control. Ninety-percent of any great trader is going to be the risk control.

    Paul Tudor Jones

    [Only registered and activated users can see links. ]
    Wish You Green Trades !

    Warm Regards !

    Aenigma ..... :)

  4. #4
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    Acquiring of Traders Mindset

    01. Not caring about the money.
    02. Acceptance of the risk in trading and investing.
    03. Winning and losing trades accepted equally from an emotional standpoint.
    04. Enjoyment of the process.
    05. No feeling of being victimized by the markets.
    06. Always looking to improve skills.
    07. Trading and investing account profits now accumulating and flowing in as skills improve.
    08. Opened-minded, keeping opinions to a minimum.
    09. No anger.
    10. Learning from every trade or position.
    11. Using one chosen approach or system and not being influenced by the market or other traders.
    12. No need to conquer or control the “market.”
    13. Feeling confident and feeling in control.
    14. A sense of not forcing the markets.
    15. Trading with money you can afford to risk.
    16. Taking full responsibility for all trading results.
    17. Sense of calmness when trading.
    18. Ability to focus on the present reality.
    19. Not caring which way the market breaks or moves.
    20. Aligning trades in the direction of the market, flowing with the market.

    When you can read the trader’s mind-set list and genuinely say “that’s me,” you have arrived!

    One important key in acquiring the trader’s mind-set is to create a
    sense of balance in your trading and in your life. Each of us is able to reduce
    trading stress in different ways and you will need to find what works
    best for you. By reducing stress on a daily basis you are one step closer to
    the trader’s mind-set.
    Wish You Green Trades !

    Warm Regards !

    Aenigma ..... :)

  5. #5
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    Mark Douglas - Five fundamental truths which relate to the mental skills required to be consistently profitable

    1. Anything can happen in market.

    2. You don't need to know what is going to happen next in order to make money.

    3. There is a random distribution between wins and losses for any given set of variables that define an edge.

    4. An edge is nothing more then an indication of a high probability of one thing happening over another.

    5 Every moment in the market is unique, Stay in the 'Present' Stay in the Now.
    Wish You Green Trades !

    Warm Regards !

    Aenigma ..... :)

  6. #6
    Can't be said better than this, thank you for these posts....I think we should have this thread to be in sticky section so any site visitor including members and newbies can read it before pressing that buy/sell button..

  7. #7
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    Successful institutional traders often talk of quitting and going to trade for themselves. Only a handful of them manage to make the transition. Most traders who leave institutions get caught up in the emotions of fear, greed, elation, and panic when they start risking their own money - Alexander Elder

    95% of the trading errors you are likely to make will stem from your attitudes about being wrong, losing money, missing out, and leaving money on the table – the four trading fears - Mark Douglas

    Be your own Man when it comes to Trading. There is no such thing as an 'expert' in Markets. We all bow down to the source; 'Mr. Market'
    Wish You Green Trades !

    Warm Regards !

    Aenigma ..... :)

  8. #8
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    Most amateurs feel like geniuses after a few wins. Traders gain some knowledge, they win. Then the emotions kick in, and they self destruct. Most traders then give up their wins back to the market. The market is full of rags to riches to rags story. The mark of a successful trader is the ability to accumulate - Alexander Elder

    Are Traders Ready for these : What Makes a Successful Trader? By Nick Radge : [Only registered and activated users can see links. ]
    Last edited by aenigma; 10-10-2015 at 04:23 PM. Reason: Links Added
    Wish You Green Trades !

    Warm Regards !

    Aenigma ..... :)

  9. #9
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    Perhaps the most important rule is to hold on to your winners and cut your losers. Both are equally important. If you don’t stay with your winners, you are not going to be able to pay for the losers - Michael Marcus
    Wish You Green Trades !

    Warm Regards !

    Aenigma ..... :)

  10. #10
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    My losses have taught me that I must not begin to advance until I am sure I shall not have to retreat. But if I cannot advance I do not move at all. Losing money is the least of my troubles. A loss never bothers me after I take it. I forget it overnight. But being wrong — not taking the loss — that is what does damage to the pocketbook and to the soul. An old broker once said to me: 'If I am walking along a railroad track and I see a train coming toward me at sixty miles an hour, do I keep on walking on the ties? Friend, I sidestep. And I do not even pat myself on the back for being so wise and prudent.' - Reminiscences of a Stock Operator
    Wish You Green Trades !

    Warm Regards !

    Aenigma ..... :)

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