Best Thread Featured Quick reference for real trading profit. Tips that work
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Don't get lost on hundreds of stocks... lock yourself up in your office for a week and scan through the most important indexes and select 20 stocks that historically match and obey your set-ups... My list goes back 7 years, and i believe it was the turning point on my trading career.
Don't get lost on hundreds of stocks... lock yourself up in your office for a week and scan through the most important indexes and select 20 stocks that historically match and obey your set-ups... My list goes back 7 years, and i believe it was the turning point on my trading career.
RogerTheTrader
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Trading is Poetic
If direction is uncertain
and you sense a pop,
use a straddle or strangle,
and to the bank you'll hop.
If direction is uncertain
and you sense a pop,
use a straddle or strangle,
and to the bank you'll hop.
RogerTheTrader
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Phil Town wrote an excellent book by that title: Rule #1... Warren Buffet was his mentor. Phil turned $3,000 into over $1,000,000 in three or five years... quite amazing.
RogerTheTrader
Junior member
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Poetic Trading
If you make your pay
trading by day,
the 1 minute chart
will break your heart.
To stay alive,
stick with the five.
If you make your pay
trading by day,
the 1 minute chart
will break your heart.
To stay alive,
stick with the five.
SmartTrader
Newbie
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Words of Wisdom
You can have your Head in the Clouds
But keep your Feet on the Ground
You can have your Head in the Clouds
But keep your Feet on the Ground
D
Doneg
The patience of waiting for the right entry price is bitter, however the fruit of the perfect exit is sweet.
nkruger
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Quote from Mr Cassandra...
Found this piece of wisdom on another thread - I'm on holiday and getting bored - so I'm trying out my new phone with an internet link, looking at random threads......
"There is no holy grail of trading. Somewhere, somehow, a cruel illusion that it can be done perfectly was started. It does an incredible job diverting peoples attention from developing imperfectly profitable systems"
Well done mate - brilliant quote.
Nick
Found this piece of wisdom on another thread - I'm on holiday and getting bored - so I'm trying out my new phone with an internet link, looking at random threads......
"There is no holy grail of trading. Somewhere, somehow, a cruel illusion that it can be done perfectly was started. It does an incredible job diverting peoples attention from developing imperfectly profitable systems"
Well done mate - brilliant quote.
Nick
stockoperatr
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my 2 cents
Learn on your own that way you never forget
Learn on your own that way you never forget
Who are you when you trade?
Ive seena lot of posts about tips and tricks in the trade but few that relate to the biggest issue of all.. YOURSELF
Of far more importance than anything else it is YOU who are the focus of the markets. The markets dont like or dislike you they are just there and the markets exist to move monmey between accounts.
If you set stops too short, keep modifying your stop loss, feel that the market is against you or that you are in a fight with other people, or perhaps want revenge for the losses youve sufered... or you still take impulse sucker trades without any notion of the value of your entry/exit and total possible loss IN ADVANCE let me assure you you will oh yes YOU WILL LOSE!!!!
All the above issues are unresolved problems that YOU have to confront. The best way to deal with that is to have a written plan and EXECUTE EVERY signal to the letter like a machine..after which you can then test your results after 3-5- days and only then perhaps modify your apporach. If you arnt doint these things then I assure you you will lose!!!! PERIOD because you have no means of measurement, no means of control and your lack of discipline will kill your account.
You either approach the markets like a machine who measures plans and executes without emotion inc euphoria or you will LOSE!! It takes around 3 weeks minimum to learn this habit of discipline to trade as well as stopping completely any arbitrary entries that send your money to disciplined trader accounts until it begins to become ingrained in your Psych. Most traders dont get this far before they blow out because they thought the markets represented freedom to them but the paradox is they require diligence, discipline and a scientific approach which by the way can be helped greatly by using automated platforms if you know yourself to be weak at sticking to your executions and end up chasing the market...another sucker trade. Are we all getting the message? Traders are not born they are made..and those willing to commit to discipline during the learning phase will most likely end up winners.
Most people simply dont want to face that level of discipline thats why they lose by impulse trades...sucker trades that have no feedback value whatsoever .
you/we have bigger issues to confront and those are first a commitment to be aware of yourself and how and why you cut corners. You must always know how much you will lose before the trade begins... this also helps to keep emotion out of the market.
read Trading in the Zone by Mark Douglas and forget for now any intense study of the markets.. more knowledge of the markets is NOT what will make you successful.. Knowing yourself and why you do things and then committing to discipline is the path to success...
commit to consistency... this is what I have learned from my bitter experience to date..please please get this message.
Paul
Ive seena lot of posts about tips and tricks in the trade but few that relate to the biggest issue of all.. YOURSELF
Of far more importance than anything else it is YOU who are the focus of the markets. The markets dont like or dislike you they are just there and the markets exist to move monmey between accounts.
If you set stops too short, keep modifying your stop loss, feel that the market is against you or that you are in a fight with other people, or perhaps want revenge for the losses youve sufered... or you still take impulse sucker trades without any notion of the value of your entry/exit and total possible loss IN ADVANCE let me assure you you will oh yes YOU WILL LOSE!!!!
All the above issues are unresolved problems that YOU have to confront. The best way to deal with that is to have a written plan and EXECUTE EVERY signal to the letter like a machine..after which you can then test your results after 3-5- days and only then perhaps modify your apporach. If you arnt doint these things then I assure you you will lose!!!! PERIOD because you have no means of measurement, no means of control and your lack of discipline will kill your account.
You either approach the markets like a machine who measures plans and executes without emotion inc euphoria or you will LOSE!! It takes around 3 weeks minimum to learn this habit of discipline to trade as well as stopping completely any arbitrary entries that send your money to disciplined trader accounts until it begins to become ingrained in your Psych. Most traders dont get this far before they blow out because they thought the markets represented freedom to them but the paradox is they require diligence, discipline and a scientific approach which by the way can be helped greatly by using automated platforms if you know yourself to be weak at sticking to your executions and end up chasing the market...another sucker trade. Are we all getting the message? Traders are not born they are made..and those willing to commit to discipline during the learning phase will most likely end up winners.
Most people simply dont want to face that level of discipline thats why they lose by impulse trades...sucker trades that have no feedback value whatsoever .
you/we have bigger issues to confront and those are first a commitment to be aware of yourself and how and why you cut corners. You must always know how much you will lose before the trade begins... this also helps to keep emotion out of the market.
read Trading in the Zone by Mark Douglas and forget for now any intense study of the markets.. more knowledge of the markets is NOT what will make you successful.. Knowing yourself and why you do things and then committing to discipline is the path to success...
commit to consistency... this is what I have learned from my bitter experience to date..please please get this message.
Paul
RogerTheTrader
Junior member
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Disciplining and defining the YOU
Paul,
Excellent post! I've been a chaser, an impulse trader, a wild stop adjuster, a trader lacking clarity, and hence, a loser. But I did not feel undisciplined. I was ill defined.
When I went full-time as a trader in January, I did not understand what I was doing. I think many traders begin that way. They are drawn to the potential of wild financial gains that the markets offer, but do not have an understanding of how they really work. They don't know what to look for, and their trading rules have gaps.
The first quarter of the year, I was a dart thrower. Possibly even a blindfolded thrower. I lost a lot of money. I had rules, but they were wrong. The second quarter, I increased the number of trades, started to pay closer attention to the charts and made a ton of money, but also lost a ton of money - breaking even. My entry rules were better, but I was getting killed on stop losses and routinely entered trades with a less than 2:1 Reward to Risk ratio.
In May and June, I decided to focus on technical analysis. I drew hundreds of lines on charts, narrowed my watch lists, and really refined my rules. I could start to see a change near the end of June. In July and August, I've made phenomenal money, recouping all of my losses and eclipsing my annual goals for this year in just under two months. I'm trading far fewer trades with far less money. I've gained confidence without arrogance. I know that every Monday I become a mortal and I push into the seas of trading without a catch.
Trading is like tiling a floor. The tiles represent the strategies a trader uses. A novice trader spends all of their time selecting tiles - different colors, different sizes, different shapes. Or they have one tile and have no idea how to line it up. From week to week the floor has a different look. The result is usually hideous.
Find a strategy or two that fits your personality. Stick with those. Get good at them. You only need a couple strategies to create large gains.
The next step in tiling the floor is putting in the grout. That is where I was in June. I didn't need the big picture, I needed the grout, the nuance.
The fine tuning I did in my rules has made all the difference.
I trade US stocks and options. But the concepts can be applied to anything with a moving price. The key elements were:
1) Entry/Exit - Price is KING. I trade the chart. The chart reflects all the emotions, news, etc. I enter on bounces or breakouts - only. A bounce is a close above the high of the low day. When you get a dip to support (horizontal, diagonal or a Moving Average), look for an entry when the price closes above the high of the most recent low day - they do not have to be consecutive days. If I miss it, I won't chase the trade. I missed it. I look for the next opportunity. A breakout is when the price pierces a resistance line on 150% of normal volume. I'll enter intraday, if the breakout looks like it will hold. If the breakout is a large gap, it's generaly too late. Exit is based on a target. If the average move was $6 or the range between support and resistance was $6, don't expect the price to make a $10 move. Strength at understanding candlesticks, support and resistance and what they tell you will help with the hardest part of trading - when to get out. If you trade the chart and not Cramer or CNBC or the news or tips, and stick to your rules, you will no longer make impulse trades.
2) Reward to Risk MUST BE 2:1 or better - I was trading upside down for a long time. I followed my rules for stops, but the targets were not realistic and I was losing 3 times what I was making. Now, I can comfortably lose on a trade or two. My winners tend to be larger and push my balance higher. If the potential win is 1.9 and the risk is 1, I won't take the trade. Period. I thas to be at least 2:1 or BETTER. Over time, eliminating the gray areas will prove to be profitable. If your Reward to Risk is 1:1, even if your win ratio is 50%, your account will deplete over time. With a minimum of a 2:1 R:R, you can be right only 35-40% of the time and still make money.
3) Money Management - Fixed fractional risk: I never risk more than 1% of my account on a trade. (For smaller accounts you might go as high as 5%). Correct Position sizing: I divide that risk (loss incurred if stop is triggered) by the price of the stock or option and that give you the quantity. Look at the total cost of the trade. It should not exceed 10% or 20% of your account. You cannot make any money entering every trade with the same quantity. By properly managing your exposure in the market, you can weather the big reversal days. You may get stopped out but you won't be killed.
4) Trading with the trend - It's so simple. But I was diving into trades that I guessed were at a bottom or had peaked. Now, I focus on the overall trend, wait out the retracements and ride the larger trend. I know some traders trade channels up and down. I do that from time to time. But staying away from that "it's gonna go the other way" trade has saved me a lot of money.
5) Understanding Stops - On any instrument that has a BID/ASK spread, you need to be very aware of how and when a stop will fill. For example, I'll use an option. On an ITM option trade, I'll generally set a stop at 30%. For a 4.00 option, the stop would be at 2.80. Where I was losing a fortune was that I did not understand how stops worked. First, stops are triggered on the NEXT PRICE below the ASK and filled on the BID. That means the ASK has to get to the next price below 2.80 (generally about 2.70 or could be lower on a gap move) to even trigger. Since you're filling at the BID, you have to deduct the spread. Let's say the spread is .30 and your stop is triggered at 2.70, it will fill at 2.40. Instead of taking a 30% loss, you are now taking a 40% loss - 33% MORE than you had planned. I was routinely seeing loses of 40%-45% - up to 50% MORE than I had initially planned. This is a losing plan. Losses ARE PART OF THE GAME. Managing how much you lose is the single most important money management key to winning at trading. Plus, If the chart looks like it will not support the move I projected, I get the hell out. No need for a stop to PROVE that I was wrong.
6) Finding Strategies that worked for ME - I began as a day-trader. Didn't work for ME. It might be your bailiwick, though. I found day-trading to be like blackjack. You win, you lose, you win, you lose. It's tedious trying to get ahead. I got out of intraday and looked at the bigger picture and focused on swing trading. I switched from stocks to option trading. I could risk the same amount on an option trade as with a stock trade, but through leverage, make much more money on wins. I added spread trading. I use the spreads to create a base income each month, putting less pressure on my swing trading. I can afford to be more selective. I let the trades come to me, instead of chasing them.
7) Committing to education - I'll be trading until my last breath. Until that day, I will always label myself as a student of trading.
8) Forming a support group - I knew that trading was a solitary venture. You're at your computer alone, with only television commentary to break the silence. I sought other traders, I sought intelligent boards, I sought instructors. I have a nice group of online traders that span the North American continent, but also a nice group of local traders (in Las Vegas, Neveda) that I have daily exchange with. We meet every two weeks. I've found a few other groups that I join occassionally, but their goals are different than mine, so I focus on the traders that trade in a similar style to my own. I openly share my trades with the best of the group and listen intently to their commentaries and critiques. A tight group of us each selected a Top 10 list of stocks to track. We offer each other regular analysis. You only have two eyes. By forming a group, you exponentially expand your eyes on the market. Each person brings a unique set of strengths and weaknesses. You can't do this alone.
Trading is a personal quest. You have to find what works for you. I'm comfortable with $2,000 or $5,000 swings each day because I have confidence in taking what the chart gives me and where it might go. That might drive you to drink. Find strategies that fit you. Make rules and refine them. STICK TO THE RULES. Learn. Find Support... and most importantly - TRADE. If you're paper trading, trade like a maniac. In any sport, in practice sessions they will go over the plays of the game over and over and over. In a game, you only get so many chances. Make mistakes, lose money, analyze, move on. And Trade2Win!!!!
Paul,
Excellent post! I've been a chaser, an impulse trader, a wild stop adjuster, a trader lacking clarity, and hence, a loser. But I did not feel undisciplined. I was ill defined.
When I went full-time as a trader in January, I did not understand what I was doing. I think many traders begin that way. They are drawn to the potential of wild financial gains that the markets offer, but do not have an understanding of how they really work. They don't know what to look for, and their trading rules have gaps.
The first quarter of the year, I was a dart thrower. Possibly even a blindfolded thrower. I lost a lot of money. I had rules, but they were wrong. The second quarter, I increased the number of trades, started to pay closer attention to the charts and made a ton of money, but also lost a ton of money - breaking even. My entry rules were better, but I was getting killed on stop losses and routinely entered trades with a less than 2:1 Reward to Risk ratio.
In May and June, I decided to focus on technical analysis. I drew hundreds of lines on charts, narrowed my watch lists, and really refined my rules. I could start to see a change near the end of June. In July and August, I've made phenomenal money, recouping all of my losses and eclipsing my annual goals for this year in just under two months. I'm trading far fewer trades with far less money. I've gained confidence without arrogance. I know that every Monday I become a mortal and I push into the seas of trading without a catch.
Trading is like tiling a floor. The tiles represent the strategies a trader uses. A novice trader spends all of their time selecting tiles - different colors, different sizes, different shapes. Or they have one tile and have no idea how to line it up. From week to week the floor has a different look. The result is usually hideous.
Find a strategy or two that fits your personality. Stick with those. Get good at them. You only need a couple strategies to create large gains.
The next step in tiling the floor is putting in the grout. That is where I was in June. I didn't need the big picture, I needed the grout, the nuance.
The fine tuning I did in my rules has made all the difference.
I trade US stocks and options. But the concepts can be applied to anything with a moving price. The key elements were:
1) Entry/Exit - Price is KING. I trade the chart. The chart reflects all the emotions, news, etc. I enter on bounces or breakouts - only. A bounce is a close above the high of the low day. When you get a dip to support (horizontal, diagonal or a Moving Average), look for an entry when the price closes above the high of the most recent low day - they do not have to be consecutive days. If I miss it, I won't chase the trade. I missed it. I look for the next opportunity. A breakout is when the price pierces a resistance line on 150% of normal volume. I'll enter intraday, if the breakout looks like it will hold. If the breakout is a large gap, it's generaly too late. Exit is based on a target. If the average move was $6 or the range between support and resistance was $6, don't expect the price to make a $10 move. Strength at understanding candlesticks, support and resistance and what they tell you will help with the hardest part of trading - when to get out. If you trade the chart and not Cramer or CNBC or the news or tips, and stick to your rules, you will no longer make impulse trades.
2) Reward to Risk MUST BE 2:1 or better - I was trading upside down for a long time. I followed my rules for stops, but the targets were not realistic and I was losing 3 times what I was making. Now, I can comfortably lose on a trade or two. My winners tend to be larger and push my balance higher. If the potential win is 1.9 and the risk is 1, I won't take the trade. Period. I thas to be at least 2:1 or BETTER. Over time, eliminating the gray areas will prove to be profitable. If your Reward to Risk is 1:1, even if your win ratio is 50%, your account will deplete over time. With a minimum of a 2:1 R:R, you can be right only 35-40% of the time and still make money.
3) Money Management - Fixed fractional risk: I never risk more than 1% of my account on a trade. (For smaller accounts you might go as high as 5%). Correct Position sizing: I divide that risk (loss incurred if stop is triggered) by the price of the stock or option and that give you the quantity. Look at the total cost of the trade. It should not exceed 10% or 20% of your account. You cannot make any money entering every trade with the same quantity. By properly managing your exposure in the market, you can weather the big reversal days. You may get stopped out but you won't be killed.
4) Trading with the trend - It's so simple. But I was diving into trades that I guessed were at a bottom or had peaked. Now, I focus on the overall trend, wait out the retracements and ride the larger trend. I know some traders trade channels up and down. I do that from time to time. But staying away from that "it's gonna go the other way" trade has saved me a lot of money.
5) Understanding Stops - On any instrument that has a BID/ASK spread, you need to be very aware of how and when a stop will fill. For example, I'll use an option. On an ITM option trade, I'll generally set a stop at 30%. For a 4.00 option, the stop would be at 2.80. Where I was losing a fortune was that I did not understand how stops worked. First, stops are triggered on the NEXT PRICE below the ASK and filled on the BID. That means the ASK has to get to the next price below 2.80 (generally about 2.70 or could be lower on a gap move) to even trigger. Since you're filling at the BID, you have to deduct the spread. Let's say the spread is .30 and your stop is triggered at 2.70, it will fill at 2.40. Instead of taking a 30% loss, you are now taking a 40% loss - 33% MORE than you had planned. I was routinely seeing loses of 40%-45% - up to 50% MORE than I had initially planned. This is a losing plan. Losses ARE PART OF THE GAME. Managing how much you lose is the single most important money management key to winning at trading. Plus, If the chart looks like it will not support the move I projected, I get the hell out. No need for a stop to PROVE that I was wrong.
6) Finding Strategies that worked for ME - I began as a day-trader. Didn't work for ME. It might be your bailiwick, though. I found day-trading to be like blackjack. You win, you lose, you win, you lose. It's tedious trying to get ahead. I got out of intraday and looked at the bigger picture and focused on swing trading. I switched from stocks to option trading. I could risk the same amount on an option trade as with a stock trade, but through leverage, make much more money on wins. I added spread trading. I use the spreads to create a base income each month, putting less pressure on my swing trading. I can afford to be more selective. I let the trades come to me, instead of chasing them.
7) Committing to education - I'll be trading until my last breath. Until that day, I will always label myself as a student of trading.
8) Forming a support group - I knew that trading was a solitary venture. You're at your computer alone, with only television commentary to break the silence. I sought other traders, I sought intelligent boards, I sought instructors. I have a nice group of online traders that span the North American continent, but also a nice group of local traders (in Las Vegas, Neveda) that I have daily exchange with. We meet every two weeks. I've found a few other groups that I join occassionally, but their goals are different than mine, so I focus on the traders that trade in a similar style to my own. I openly share my trades with the best of the group and listen intently to their commentaries and critiques. A tight group of us each selected a Top 10 list of stocks to track. We offer each other regular analysis. You only have two eyes. By forming a group, you exponentially expand your eyes on the market. Each person brings a unique set of strengths and weaknesses. You can't do this alone.
Trading is a personal quest. You have to find what works for you. I'm comfortable with $2,000 or $5,000 swings each day because I have confidence in taking what the chart gives me and where it might go. That might drive you to drink. Find strategies that fit you. Make rules and refine them. STICK TO THE RULES. Learn. Find Support... and most importantly - TRADE. If you're paper trading, trade like a maniac. In any sport, in practice sessions they will go over the plays of the game over and over and over. In a game, you only get so many chances. Make mistakes, lose money, analyze, move on. And Trade2Win!!!!
shadowninja
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I heard some useful advice the other day: don't try to predict the market.
black bear
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The market makes many highs and many lows in a day but only one true high and one true low
black bear
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Your not going to get any better than this-NEVER
Hi Paul
Great Post
Advice to achieve it in 3 weeks - trade a demo account with method as per above at every signal no discretion at all and see how you did, apply a little common sense do it again a few times and you will be a winner for sure.
It won"t even need to be a good method, mines s...t, sorry very poor
Andy AKA
Hi Paul
Great Post
Advice to achieve it in 3 weeks - trade a demo account with method as per above at every signal no discretion at all and see how you did, apply a little common sense do it again a few times and you will be a winner for sure.
It won"t even need to be a good method, mines s...t, sorry very poor
Andy AKA
Im sorry to tell you, that you will have to develop your own strategies.
Dont trust strategies/algorithms broadcasted on the net - if all use them they dont work.
Do you really think people will publish their profitable strategies ?
But you can get idears and learn from strategies of others, to develop your own private strategies
Join all the mentor rooms you can find offering free trial memberships - and learn and get idears.
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