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Mentality

Where do you struggle?After my last couple of posts, I want to ask the question rather than just throwing ideas out there! What aspect of trading do you fear? Why? What do you think you could improve on? Anything!!! Be interesting to see comments. Personally, I can overanalyze and talk myself out of good setups. I've also been knowing to jump in trades too early. This could be anything from risk management, psychology, wrong entries, taking profits too early, too many indicators, following the crowd? Disclaimer This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years’ experience in stocks, ETF’s, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.
Education
by Mayfair_Ventures
15
while all people like to think bullish, Big Short will happenhi. we all ( even a 1-year old baby) know that we are in Bull market, for bitcoin as the big Leader and all altcoins.. but , who knows when the drop will start and what is the maximum ATH? can you control your mind only for an hour and think for possible big drop in bitcoin and price never ever hit its ATH ( ~ 56700 usd) again that happened already!? all indicators follow the channels , fibo and mostly moving average in different time frames,. but know one even the best TAs can't predict future, just ask your self why should Elon musk keep his bitcoin while he already made x2 profit , ( even over the profit of his company Tesla over a year) ?? you think Elon think about small traders/investors profit ? they just try to make money for their real-world projects.. nothing more. so : 1-dont think that this market can keep going up for ever, ( while alot of indicators show us overbought which is strong bearish signal) 2-save your profit, and just let a little portion of your coins stay for future taking profit. 3-be sure that market will give you chance to enter at a price that for sure will be better than ATH prices . what do you think? feel free to share with me your thinking
COINBASE:BTCUSDShort
by BitcoinMaster6012
4
BTC - How to survive the dropHere is a quick update on BTC to help you understand how to deal with these drops, which can be tough mentally! Whenever you see a big drop, ZOOM OUT! As simple as it may seem, it works wonders. As we can see here, we have had several dips, this dip, although this one being aggressive, it is nothing we haven't been through before. When the panic sets in, ZOOM OUT! These corrections are healthy and provide longevity to the bull run. Yes, this is a bull run!
BINANCE:BTCUSD
by TheicemanFX1
3
ETH - How to survive the drop Here is a quick update on ETH to help you understand how to deal with these drops, which can be tough mentally! Whenever you see a big drop, ZOOM OUT! As simple as it may seem, it works wonders. As we can see here, we have had several dips, this dip, although this one being aggressive, it is nothing we haven't been through before. When the panic sets in, ZOOM OUT! These corrections are healthy and provide longevity to the bull run. Yes, this is a bull run!
BITSTAMP:ETHUSD
by TheicemanFX1
1
Power of Investing lies in your Individual Method Everything can be thought. But not everything can be learnt. Developing a risky instinct in investing is not something you learn. It’s something you are born with. Then you are given the power to share it. Agree? Probably not. It’s understandable. I went into stock trading not because I dig and sturdy deeply into companies’ financial and books at first hand, or mastering the art of options trading, rather I went into it simply because of self possessed gift of intuition to make risky calls that contradicts the majority, which often turn out favorably. Investing is a game, not a gamble. Contrary to the general method of investing, I buy a stock based on instinct then I start digging further in its books and financials to justify the instinctive decisions. Yes, I often lose. But yes, I often gain more. The reward comes from balances and checks that falls in favor of more profits at the end of the day. Take an example, on a 3 day stretch Oct 25th-28th, we all witnessed over 95% of stocks thrown downwards to a darkening red (nearing all time lows). Meanwhile, calls on Ford, GE, and Kodak (I made back in July when the market downgraded them to “Strong Sell”) kept a shiny bright green of blocks (upwards momentum). Now that was some risky calls that paid off. So it begs to ask… What exactly is the rule in stock investing for winning profits? Are there standardized rules to follow? And are these rules created by the 10% of winners, and gets passed down for the mass to follow? There’s the old saying: Read all that works, but never follow them, there’s a reason it only works for the less than 10%. (OK I made that up, but its true). The power of investing lies in your individual method... not the market (standards).
NYSE:FEducation
by RiskyInstinct
1
Mental Tips of TradingIntroduction - To lower stress levels, trade less and get away from watching every single price chance. Day traders could trade only the open and closing hour, swing traders could just take opening and closing signals. You could go from every tick to just checking in every hour or so if you have options or hard stops in. Most of the days, trading is random noise, and randomness will cause stress. Focus on your timeframe, and only the quotes that really matter when they matter. How to not be stressed while trading? - Only trade when the odds are in your favor. It is much less stressful trading this way. - Do not blame yourself for losses if you followed all your rules. The market giveth and the market taketh, just keep taking your entries and exits. - If you don't know what to do, DO NOTHING. - Do not listen to any unsolicited advice about the trade you are in. Follow your own plan and shield yourself from distraction. - Know yourself as a trader, and only take your kind of trades. Take trades that will leave no regrets because they were good trades, regardless of the outcome. - Believe in your ability to follow your trading plan. You must have faith in yourself to lower your stress level. - Keep your EGO our of your trading, run it like a business, with the profits and losses as your focus and not your ego. Coherence - Your brain and heart works the best when there is synchronization between all systems, this is called 'coherence'. Researchers throughout the '90s established that with every beat of the heart, intricate messages are being sent to the entire body. - As people experience emotional reactions like frustration, irritation, anxiety, or anger, heart rhythms become chaotic, which interferes with communication between the heart and the brain. - If you are not in tune with yourself, you can cause DORMANT fears of failure to awaken, and you will undoubtedly miss good opportunities through making IRRATIONAL trading decisions. Emotional Intelligence in Trading - The Emotional Quotient (emotional intelligence) is our ability to recognize and assess our own emotions, to manage these emotions in order to achieve our purposes. - EQ is also the ability to discriminate between different emotions of the people and label them correctly, by using the emotional information to guide thoughts and behavior. @here How does this apply to trading? - Emotional intelligence makes a great part of a trader's performance. It has proven that the human brain has the power to increase EQ by effort (trying, being persistent, following rules, backtesting strategies) and education (studying, performing research). - Self-awareness: Every trader should be aware of his/her qualities, strengths and weaknesses so then he/she could manage better his emotions and take right decisions when trading. - Motivation: Very well motivated traders are more challenged and are more abled to take right decisions in the market. - Self-control: Controlling emotions is a crucial element of the trading process. It is important for a trader to regulate his emotions by targeting them to a proper and emotionally balanced activity. - Being able to monitor our own emotions is perhaps the greatest skill we can have. Traders who can handle their negative emotions are the most successful ones. How to stop being impulsive and over-trade - Did you know that there is an actual ANATOMY to 'Impulsive Emotional Hijacking'. Wang was prepared. After careful observation and charting, he planned his trade - and knew what he was looking to do. Now he is going to trade his plan. He brought his charts up and declared, "I'm going to make money today.", he said it with the confidence of his winning mindset as he glanced at the P/L of his trading account. Just sitting there watching the pre-market activity, Wang could feel the excitement building :vince: . So much opportunity, and it looked promising. Wang was ready to take advantage of it, this time he was going to build his account up -- not blow it up. As the market opened, he sees that TSLA FB SPY just taking off like a rocket. "Man, that was sweet. I could have rode that one!" He muttered to himself as his excitement grew. He IMAGINED what the money would look like in his trading account. It felt good, then he saw another potential trade. "There was real opportunity this morning." he thought. Wang sits on the sideline while others were taking advantage of the action, and that got his competitive JUICES flowing. Then another one came up, not willing to let another one get away from him, he jumped on this one. Almost immediately, it took off. "YEESSSSIRRRRRR" Then suddenly it turned against him, heading for his stop. He caught his P/L in the corner of his eye taking a nose dive. WANG felt a surge of energy and resolve flow through him, "It'll come back. I'll give it some more room, I can feel it." So he moved his stop to let this one play out. It crashed right through and stopped him out. Now, after this loss... He wanted to get even, so he quickly found another setup that looked good to him and jumped in ready to win and vindicate himself. That trade turned against him almost immediately and stopped him out, sounds familiar? Over-trading, or impulsive trading (to be more accurate), is a common problem. It blows up trading accounts too many times to be counted. It is common 'wisdom' that a trader needs to plan his/her trade and then trade his/her plan. But just like WANG in the example, traders end up jumping into trades that they have no business being in. They know what to do... They just cannot do it in the heat of the trade. It's perplexing. WangYesterday at 7:56 PM Notice, initially, WANG starts with the best of intentions. He does his homework, studies his charts, and planned his trade with the intention of trading his plan. We know that he did not do that in the heat of the trade, but we do know what he started out with a credible plan. Then something happened, but what? He started out by ATTUNING to the market so that he had a feel for it. Then he took the first step into his personal abyss - He declared "I'M GOING TO MAKE MONEY TODAY." This is an affirmation and visualization that many traders make as they prepare for their day and it is a mindset that they keep engaging in throughout the day. Their minds are focused on making money today, you can hear the urgency - TODAY. The problem with this line of thinking is that you DO NOT control whether you win or lose in trading. If you keep pushing that you are going to win, when you have ABSOLUTELY NO CONTROL over your declaration, what do you think is going to happen? Your survival brain eventually REBELS against you. Let me take you down the rabbit hole again --> WANG is an alpha personality, he believes that his will should prevail and that he can make winning happen. He came by that attitude honestly as he was a man who always strived for success, and now he has focused that energy on trading. In his other approach to life prior to trading, he knew how to win, to make things happen, and (especially) not to lose. It served him well, until now. WANG's identity is built around winning - not managing probability. His determined and forceful attitude molded his personality. The problem is that this mindset, forged by winning repeatedly, did not prepare him for trading environment where randomness of the markets prevails. The toughest part, though, was losing. WANG hated to lose, and that trait manifested when he revenge traded. His grit simply would not let him lose, he would attack even harder and determined to get his losses back no matter what. What I am asking YOU to see is the short fuse on the alpha's winning mindset. It happened so fast and the hijackings was so natural to him that he never noticed it - until after the damage was done. Yep, he done blew up his account. :cryroll: How do you fix this mentality in trading? It comes down to self-mastery, where winning becomes focused instead solely on landing on the right side of the probability and losing only means that you have landed on the wrong side probability. Are you ready? ---> - While trading, there is no thrill of winning, nor agony of defeat. It was only probability - either way. What matters is the mind you bring into the moment of performance. This is the game changer, it is the psychological edge where you are no longer PROVING yourself. - You are only performing, that is the mind that gives you the edge of what's possible. A new kind of mentality has to rise from the impulsive blunders of the past. This one is rooted in PATIENCE. - Instead of stalking opportunity, the new WANG waits in ambush for the opportunity to COME TO HIM. Like I always say, be a sniper and not a machinegunner. Trading is about embracing uncertainty, while the brain you brought to trading is wired for certainty, prediction, and control. Rewiring your brain begins with calming the emotions that coordinate action/behavior between the trader and the environments of the market. "I was doing so good, my mind was in the zone and it felt like a state of flow. I made $1200 in the morning and stopped for the day, just like my trading rules dictate. Couldn't have been happier. Wow, this was really working!" The very next morning ---> "I'm in a good mood and ready for the day, then I turned around and gave all my profits back - and then some. It's baffling, I thought I had my head together but before I knew it - I got stuck into a vortex that sucked capital right out of my wallet. Why does this keep happening? It's a common problem. - Most "students" of trading seek consistent profitability on a regular basis. You get some momentum going and begin to see your trading gel. Your confidence begins to grow, showing that you can, indeed, make consistent money by trading. Then it just blows up right in your face, not only do you lose the gain you made - you lost some more. Often a whole lot more, one minute you have a growing confidence that you can do this trading thing. The next minute, that confidence burns down and frustration grows from the ashes. So, what's behind the self-sabotage? - Winning makes you feel good, and you want to win - to make money. When the trader in the example "wins" $1200 in a single trade, it made him feel good. Why? Because winning triggers a hormone called 'dopamine' (at the center of the reward chemistry of the human brain), and that is the problem. - The euphoria of "feeling good" is an emotional state that causes thinking to become skewed into believing that the good times are going to roll on forever and that he/she (trader) has the power to control the outcome of the trade. However, winning (in this trader's understanding) produces this sense of power that is dangerous to the management of uncertainty. - The emotion of euphoria that appeared when the trader won also warped the kind of thinking and analysis that he/she was capable of producing as a trader. - The winning trade led not to power, rather, led to euphoria --> over-confidence --> then caused the trader to believe he was making the winning happen. - Factors that give rise to an effective trading mind are: Discipline ; risk management ; courage ; self-soothing ; and impartiality. Feeling GOOD has ABSOLUTELY NO PART in a profitable trader's mind. First thing to accept as a trader is that "feeling good" is not desirable as a trading emotion. - You have to be able to notice if and when "feeling good" has started contaminating your trading mind, and that is way easier said than done. Many traders believe that if they could get past their fear of loss, they would not have problems in trading. But you would then only be able to deal with losses, you need to learn how to deal with winning and the over-confidence that can easily develop when a trader starts winning. You have to learn how to deal with the euphoria associated with winning. It's just the evolution of the trader beginning to adapt to the demands of successful trading. Most impulsive trading is primarily rooted in the emotions of LUST, rather than 'greed'. Many traders experience the awakening of 'lust' (wanting more, more, and more) after winning and pocketing in money. Greed is about wanting more than your reasonable share, so there is a balance between lust's "wanting more, more, and more" and greed's wanting more than your reasonable share, which plays into the phenomena of "giving it all back and more". The potential of a successful trader's mind is in the balance and mastering the mind. You can be the designer of the mind you bring to the engagement of uncertainty and risk, rather than its hostage. No matter what you have been told, the brain/mind that you brought to trading CANNOT bring you success in trading. In fact, it will lock you into failure. Rebuild the brain/mind against the WILL of your survival brain, because it is built for SHORT TERM SURVIVAL and gives you the signal that you need to be in control which you cannot due to market's uncertainty. Your survival brain is freaked out by the uncertainty, risk, and speed of day trading. You experience this as fear or aggression in your trading that takes over rational thinking in moments of stress. This will not change with experience or trying harder or trying to exert control. -- Your brain has to be RE-TRAINED. If you can get your brain unstuck, your emotional part of the brain can be developed to engage uncertainty, risk, and the speed from a patient and disciplined response rather than the reactive response that is common among traders. 'Emotional Regulation' and 'Mindfulness' are the essential skills needed in order to adapt your brain/mind for performance in trading. When trading, focus on what you can control. Let your MIND manage your performance. We all understand that losses are hard. But the year is young, and there are lots of opportunities ahead to make it all back. The only thing is that the opportunities will ONLY appear to those that are PREPARED and able to MAINTAIN a sober mind. Train yourself to approach trading in a way that's sustainable as opposed to letting it be something that consistently plays with your emotions and wears you down. Meaning... 'Risk management and 'mindset management'. It is crucial that you understand the market is NOT A CASH COW you get to milk whenever you want. The market is its own beast, remember that. There comes a moment when a "struggling" trader has to acknowledge that what they are doing is not working. Your trading performance is not going to change until this realization humbles you to the core. You have no control over whether you win or lose - but most traders are consumed by winning and losing. They are possessed by something that they can never control. What you can learn, though, is to control the mind that you bring into trading performance. Let go of the illusion of 'control over outcome' and embrace building the mentality that you need to be managing uncertainty.
Editors' picks
AMEX:SPYEducation
by TradeAtEase
46
MAY 14th EURUSD BUY deserves a deep rewindIf you guys quickly check out the analysis/signal I put out on May 14, it turned out to be the perfect trade, reversing off the trendline and flying into kingdom come. What was the problem you ask? Short term vision blurred the long-term vison. Instead of capturing hundred of pips, I settled for a measely +55 pips because...I didn't trust my analysis. This was when I had countless losing trades and finally turned a loss for a week. Trading is an emotional rollercoaster. This is why I tell to almost everyone and preach on PSYCHOLOGY and MENTALITY as 70-80% of the trading GAME alone. www.tradingview.com
Long
by mrleh
Tired of Losing? "The Market cannot hurt Me. I can only hurt my Self!" - Josh Ridenour There is a Time for Losing - The 29th verse of the Tao Te Ching is about how there is a time for everything in life. A time for being ahead, a time for being behind. In the market, there is also a time for everything. A time for large profits, small profits, break even trades, losers, and consecutive losers which lead to a draw down. It is easy to get caught up in the heat of the moment depending on where you currently are. But it does not really matter what part of the cycle you are in, it is all part of a traders life and the cycle of a trading performance. Stop Predicting! It is a false belief to believe prices and markets can be predicted. If it were possible eventually the majority of market participants would figure it out and there would be no one left on the other side of the trade, and the market would cease to exist entirely. If it were possible to predict markets, you could avoid losing trades and only take winners. Anyone who has been trading for very long knows this is simply not the case. The problem with making predictions is you then shut your mind off from the information the market gives you. Instead of being open to what is happening, your mind becomes rigid and can only take in what confirms your beliefs. This prevents you from being able to flow with the market, and open your self to the opportunity in front of you. The best traders admit when they are wrong, get out, and even reverse if necessary. If you dont believe this - listen to a stock analyst on Mad Money or any other TV show about stocks. They are often so confident in what they say that they might even convince you! But there is a reason why he is on TV talking about markets, and not trading them. If he could trade the markets and make money he would have no reason to go on TV as the financial rewards are miles apart. In fact, analysts make the worst traders because they are so caught up in their thoughts and beliefs about market direction that they cannot trade effectively! Cease efforts "Wu Wei" In Eastern Philosophy there is a term "Wu Wei." It cannot be fully understood or explained in words, only experienced. At the essence of its meaning is to "Let be" to "allow" or "flow like water down a stream." The point is to stop resisting, and stop trying so hard. The harder you grasp at something, the harder you try to succeed, the more you fail. If you are constantly trying to make money, and constantly trading, you are probably not making a consistent return. Rather than trying so hard, let trading come naturally. Profitable trading is effortless. It does not require thought, only action. In fact, I try to do as little as possible, and trade as little as possible. My most profitable weeks I hardly trade at all! This has become a fundamental aspect of my trading system. Instead of constantly trying to make money all the time, I simply wait for a pot of gold to be in front of me before I do anything. Then, I take it. Again if you dont believe me; try as hard as you can tomorrow to make as much money as possible and see what happens! Stop Trying to Remove or Control Emotions - Most traders who have been trading for a while come to the idea that emotions prevent them from success and are standing in their way. I know, as I have been there. And so we try as hard as we can to remove emotions from our trading. There is a problem with this concept. You are a human right? As long as you are human, you will have emotions; no matter how hard you try to remove them. It is simply not possible. So removing emotions or attempting to do so is the wrong approach. Instead; use your emotions to your advantage! They are warning signs; listen to them. Then there is the negative internal dialogue which the market often brings out. After a series of losing trades, many traders get upset and feel bad. They blame the market for taking from them, and feel like a loser. How do you think a trader will perform after feeling this way for a few days or longer? His performance suffers as he tries to take back what was once his and he compounds his mistakes by trading out of a negative mindset. You have to learn to recognize and become aware of your internal dialogue. It is very important to your trading career, and your every day life. Most of us live our lives without the slightest idea as to what we are doing to our selves. Your mental structure is a choice. This is what I mean when I say "The Market cannot hurt me, I can only hurt my Self." My Trading Psychology book "A Traders Mentality - The Path of Self Discovery and Being a Trader" is all about these ideas and how to free your mind and better your trading performance. If you found this helpful, please like! Feel free to comment or ask questions.
SP:SPX
by tradersmentality
Tired of Losing?"The Market cannot hurt Me. I can only hurt my Self!" - Josh Ridenour There is a Time for Losing - The 29th verse of the Tao Te Ching is about how there is a time for everything in life. A time for being ahead, a time for being behind. In the market, there is also a time for everything. A time for large profits, small profits, break even trades, losers, and consecutive losers which lead to a draw down. It is easy to get caught up in the heat of the moment depending on where you currently are. But it does not really matter what part of the cycle you are in, it is all part of a traders life and the cycle of a trading performance. Stop Predicting! It is a false belief to believe prices and markets can be predicted. If it were possible eventually the majority of market participants would figure it out and there would be no one left on the other side of the trade, and the market would cease to exist entirely. If it were possible to predict markets, you could avoid losing trades and only take winners. Anyone who has been trading for very long knows this is simply not the case. The problem with making predictions is you then shut your mind off from the information the market gives you. Instead of being open to what is happening, your mind becomes rigid and can only take in what confirms your beliefs. This prevents you from being able to flow with the market, and open your self to the opportunity in front of you. The best traders admit when they are wrong, get out, and even reverse if necessary. If you dont believe this - listen to a stock analyst on Mad Money or any other TV show about stocks. They are often so confident in what they say that they might even convince you! But there is a reason why he is on TV talking about markets, and not trading them. If he could trade the markets and make money he would have no reason to go on TV as the financial rewards are miles apart. In fact, analysts make the worst traders because they are so caught up in their thoughts and beliefs about market direction that they cannot trade effectively! Cease efforts "Wu Wei" In Eastern Philosophy there is a term "Wu Wei." It cannot be fully understood or explained in words, only experienced. At the essence of its meaning is to "Let be" to "allow" or "flow like water down a stream." The point is to stop resisting, and stop trying so hard. The harder you grasp at something, the harder you try to succeed, the more you fail. If you are constantly trying to make money, and constantly trading, you are probably not making a consistent return. Rather than trying so hard, let trading come naturally. Profitable trading is effortless. It does not require thought, only action. In fact, I try to do as little as possible, and trade as little as possible. My most profitable weeks I hardly trade at all! This has become a fundamental aspect of my trading system. Instead of constantly trying to make money all the time, I simply wait for a pot of gold to be in front of me before I do anything. Then, I take it. Again if you dont believe me; try as hard as you can tomorrow to make as much money as possible and see what happens! Stop Trying to Remove or Control Emotions - Most traders who have been trading for a while come to the idea that emotions prevent them from success and are standing in their way. I know, as I have been there. And so we try as hard as we can to remove emotions from our trading. There is a problem with this concept. You are a human right? As long as you are human, you will have emotions; no matter how hard you try to remove them. It is simply not possible. So removing emotions or attempting to do so is the wrong approach. Instead; use your emotions to your advantage! They are warning signs; listen to them. Then there is the negative internal dialogue which the market often brings out. After a series of losing trades, many traders get upset and feel bad. They blame the market for taking from them, and feel like a loser. How do you think a trader will perform after feeling this way for a few days or longer? His performance suffers as he tries to take back what was once his and he compounds his mistakes by trading out of a negative mindset. You have to learn to recognize and become aware of your internal dialogue. It is very important to your trading career, and your every day life. Most of us live our lives without the slightest idea as to what we are doing to our selves. Your mental structure is a choice. This is what I mean when I say "The Market cannot hurt me, I can only hurt my Self." My Trading Psychology book "A Traders Mentality - The Path of Self Discovery and Being a Trader" is all about these ideas and how to free your mind and better your trading performance. If you found this helpful, please like! Feel free to comment or ask questions.
Education
by tradersmentality
The Top 3 Reasons Traders Lose and Give up1). Over-trading and Random trading. Most people and traders think in order to make money as a trader you have to be trading all the time. If you are simply watching the market, you are missing out, or not doing your job by not trading it. This leads to over trading, and trading randomly or outside of your edge. Any trades taken that are not apart of your trading plan and do not align with your clearly defined edge, should be considered random trading. This is common after losing, because the natural tendency to want to make back what you lost. This only compounds mistakes and adds to the losses, making it even harder to recover both emotionally and financially. Being excited or eager to trade is normal, especially for beginners who are drawn to the profit potential. We are all in the market to make money, and if you are not in the market you are not making money. But more often than not, being out of the market is the right thing to do. It is often better to not make any money, than to lose it! By understanding, developing, and only trading your edge you increase your likelihood of earning a consistent income. Remember, all edges have a failure rate between 40-60%. So it is important to not jump back into the market after losing, until the next time your edge sets up. If you do not know what your edge is, you should only trade SIM or not at all until you develop one. 2). Scalping or Not Allowing for Windfall Profits. There is an old saying on Wall Street "you cant go broke taking profits." But you absolutely can go broke by taking profits, primarily when your losses are bigger than your wins. It has become common these days for people to advocate scalping. But they do not understand that the math is against them. They think since the high frequency trading firms are scalping for ticks or a point, that they should too. But a retail trader cannot compete with these institutions. They have algorithms that can make 10 trades faster than you blink, pay minimal commissions, have direct access to the exchanges, hedge their trades, and often use wide stops and scale in to positions. A beginner should never scalp, and even those with experience are better off swing trading as it offers a less stressful and less difficult way to trade profitably. When swing trading it only takes 1 out of 10 trades to offset all the losers and provide a profit. This is the complete opposite of scalping, where it takes 10 winners to offset one large loss. Or if you are using a smaller stop like twice your target (1 point target and 2 point stop), it still takes 2 trades to make up a single loss and a third to make a minuscule profit after commissions. What happens when you lose again? This cycle repeats over and over, and the trader dies slowly but surely from 100 bee stings. 3). Wrong Mentality. There are many examples of the wrong traders mentality which prevents success for so many. One of which is losing. Most traders do not like to lose, they see losing as a problem. They do not understand that losers lead to winners, and that losing is the natural cycle of trading and is imperative to a consistent return. You cant win if you dont lose! Another example is emotions. Most traders see emotions as the enemy, that which stands between themselves and the market, and prevents them from succeeding. So they work to try and remove emotions. But this is not possible. As long as you are a human you will have emotions. You can never remove them. The key is to understand them, and use them to your advantage in the market. And when you are not in the right mental state, remove yourself from the market altogether. A third example is fighting the market. This relates back to the first topic, over trading and random trading. Many traders do not realize the market does not always offer what they are seeking. A trading range is a good example of this. In a trading range, the market goes sideways there are many failures, and the market does not get very far. What happens to a trader who does not realize this? He continues fighting the market, looking for a large gain when the market is not offering one. So it is important to understand your self and the market. Not just the market. You need to be able to realize when you should not be trading because your mind is not in the right state productive to trading. As well as knowing and understanding your edge, which also means the market context it works well in, and when it does not. For more understanding on these topics and more, including how to develop an edge and how to better your traders mentality, see website below. If you found this helpful please like! Feel free to comment or ask questions.
by tradersmentality
1
Top 3 Reasons Traders Lose or Give Up1). Over-trading and Random trading. Most people and traders think in order to make money as a trader you have to be trading all the time. If you are simply watching the market, you are missing out, or not doing your job by not trading it. This leads to over trading, and trading randomly or outside of your edge. Any trades taken that are not apart of your trading plan and do not align with your clearly defined edge, should be considered random trading. This is common after losing, because the natural tendency to want to make back what you lost. This only compounds mistakes and adds to the losses, making it even harder to recover both emotionally and financially. Being excited or eager to trade is normal, especially for beginners who are drawn to the profit potential. We are all in the market to make money, and if you are not in the market you are not making money. But more often than not, being out of the market is the right thing to do. It is often better to not make any money, than to lose it! By understanding, developing, and only trading your edge you increase your likelihood of earning a consistent income. Remember, all edges have a failure rate between 40-60%. So it is important to not jump back into the market after losing, until the next time your edge sets up. If you do not know what your edge is, you should only trade SIM or not at all until you develop one. 2). Scalping or Not Allowing for Windfall Profits. There is an old saying on Wall Street "you cant go broke taking profits." But you absolutely can go broke by taking profits, primarily when your losses are bigger than your wins. It has become common these days for people to advocate scalping. But they do not understand that the math is against them. They think since the high frequency trading firms are scalping for ticks or a point, that they should too. But a retail trader cannot compete with these institutions. They have algorithms that can make 10 trades faster than you blink, pay minimal commissions, have direct access to the exchanges, hedge their trades, and often use wide stops and scale in to positions. A beginner should never scalp, and even those with experience are better off swing trading as it offers a less stressful and less difficult way to trade profitably. When swing trading it only takes 1 out of 10 trades to offset all the losers and provide a profit. This is the complete opposite of scalping, where it takes 10 winners to offset one large loss. Or if you are using a smaller stop like twice your target (1 point target and 2 point stop), it still takes 2 trades to make up a single loss and a third to make a minuscule profit after commissions. What happens when you lose again? This cycle repeats over and over, and the trader dies slowly but surely from 100 bee stings. 3). Wrong Mentality. There are many examples of the wrong traders mentality which prevents success for so many. One of which is losing. Most traders do not like to lose, they see losing as a problem. They do not understand that losers lead to winners, and that losing is the natural cycle of trading and is imperative to a consistent return. You cant win if you dont lose! Another example is emotions. Most traders see emotions as the enemy, that which stands between themselves and the market, and prevents them from succeeding. So they work to try and remove emotions. But this is not possible. As long as you are a human you will have emotions. You can never remove them. The key is to understand them, and use them to your advantage in the market. And when you are not in the right mental state, remove yourself from the market altogether. A third example is fighting the market. This relates back to the first topic, over trading and random trading. Many traders do not realize the market does not always offer what they are seeking. A trading range is a good example of this. In a trading range, the market goes sideways there are many failures, and the market does not get very far. What happens to a trader who does not realize this? He continues fighting the market, looking for a large gain when the market is not offering one. So it is important to understand your self and the market. Not just the market. You need to be able to realize when you should not be trading because your mind is not in the right state productive to trading. As well as knowing and understanding your edge, which also means the market context it works well in, and when it does not. For more understanding on these topics and more, including how to develop an edge and how to better your traders mentality, see website below. If you found this helpful please like! Feel free to comment or ask questions.
COINBASE:BTCUSD
by tradersmentality
Trading - Only Strong Trend Markets Day Trading - Only Strong Trend Days (Can also be used on HTF for investing) There are generally only 2-5 strong trend days a month. The majority of trading days are some form of trading range days, either within a range or a weak channel which reverses and forms a trading range. On strong trend days the market offers what most traders want - a high probability of a large reward, with a tolerable risk. Usually the risk feels greater (and often is) on a strong trend day because there is a sense of urgency, and the bars are often bigger than normal. On trading range days the bars tend to be smaller, offering what appears to be a lower reward, but there are many more failures and reversals. This makes it very difficult to identify a good setup, and even when there is one the market does not make it very far before there is an opposite reversal. This lures unsuspecting traders in, who continue fighting the market taking every trade or only the losers. This type of market is like a boa constrictor. The more you fight, the more you struggle, the tighter its grip and the harder it is to overcome the draw downs and emotional fatigue. Because these types of days are hard to trade and do not offer what I want (a good chance at a large reward), I choose to sit these days out. Instead, I wait for a strong trend day, and then continue to wait some more for a pullback and my edge. Does this mean I miss out on some good moves? Sure. But I do not care. I trade to win, not to trade for fun. It does not matter what I miss, it only matters what I take and the actions I make in the market. So how does a trader know if the day is a trading range day or likely to become a strong trend day and should be traded? In order to help guide you, here are some common characteristics of a trend day. "......" After the above has been identified - it is still better to wait for a pullback and an edge like a "......." This increases the likelihood of a good trade with a strong traders equation. It also helps decrease stress of prices going against the position as it often does when you just enter at the market or without an edge. Of course, waiting is not easy. Just like Tom Petty said "Waiting is the hardest part!" Does this mean you are less likely to lose? Usually, but not always. Even with trend trades fail, although less often. It is absolutely possible to lose money selling in a bear trend or vice versa. The key is to continue onward, and enter the next with trend trade if there is one. If not, or it also fails, prices are more than likely in a trading range and you just haven't yet realized it. If this is the case, it is often better to stop trading and wait for a strong trend day, rather than continuing to fight the market when it is not offering what you expected. **These ideas and strategies can also be applied to higher time frames and long term investing. "..." = withheld material from original post (members only material). If you found this helpful please like! Feel free to comment or ask questions
A
by tradersmentality
MOST IMPORTANT TRADE LESSONS!Lesson 9 Trading Psychology is Important When you look at the market you should see your self. The market is a collection of buyers and sellers. You are a participant in that marketplace, and therefore you are the market. How can you understand the market without understanding yourself? The mental landscape of a trader is extremely important and very valuable to a profitable trader. Those that do not understand this, are likely not making money in the market. Most people wanting to be traders never stop to consider this, and they think it is more knowledge about markets they need to make money. Most of the time it is what is going on in their mind that needs work. If you think you are going to wake up one day and be a profitable trader without working on your self, you are mistaken. If you think you are going to read a few books or watch 100 videos on trading and walk into the market the following week and make money, the traders who know the value of internal work will thank you for your money! Of course you must first understand markets, price action, the traders equation, and how to read a chart. But after that you must move on and dive into your trading psychology . It is not understanding markets that brings money into your account. It is your understanding of your perceptions of the market, awareness of your internal dialogue, thoughts, and emotions, along with your knowledge of the market. Ultimately it is your actions that are generated from these that dictate whether or not you will make money. If you do not understand what is happening within your mind at any given time, you are unlikely to achieve consistency long term. Sure you may pick a few good trades. Anyone can find themselves in a winning trade, even those who know nothing about markets. But will they continue to perform well over a month or a year? It is very unlikely. Trading psychology is vital to trading, whether you choose to accept it or not. The market is a paradox, a contradiction. If your mind is tied up and you are unaware, you will make poor actions in the market. Your mind must be free. Free to flow with the market, regardless of what you want or expected. You must be able to bring your mind back to the market and the necessary action right now. If not, you will be stuck within thoughts of what happened 5 minutes ago, or held by anger and frustration for what the market should be doing. If you do not devote time to understanding your mental landscape you will never grow, and never escape the mental turmoil which the market can cause, no matter how much time you devote to understanding what markets do.. For more information on how to develop this awareness or understand your self on a deeper level, see trading psychology. Lesson 10 Allow for windfall profits Many traders believe they must hold for a reward of twice their risk or believe they have high probability and so exit at one times the risk before the market takes it back. These concepts and ideas are more likely to hurt your performance than benefit it. The truth is, the market offers what it offers, and that's it. Sure sometimes its exactly 1x the risk or twice the risk. Other times it is much more. Cutting a winning trade just because it is reasonable, does not make it the best choice. In fact, when you are in a position with exceptional follow through, you must allow it to flourish. In other words, you must allow it to grow into a windfall profit. It only takes 1 out of 10 of these types of trades to create a positive net result. If you cut this 1 trade short because the market has gone to twice your risk, you are only hurting yourself and your numbers. This is like cutting a flower when it is just starting to bud. You do not allow the flower to bloom , and prevent the beauty which will soon appear. Instead you must nourish the plant, give it water, and allow it to grow into what it can be. Cutting a winning trade short is a self inflicted wound. This is often due to fear such as fear of a reversal, or fear of giving back profits. Thoughts of getting back what you previously lost, or hanging on to what you have right now is what leads to these poor actions. Being unwilling to allow for a pullback against the position which is necessary to allow it to grow. So how do you know when to hold and when to exit? That takes experience. What is important is your willingness to learn, and openness to allow a great trade to flourish. However there are signs which can help you identify which trades are likely to turn into a windfall profit, and those that you should take what the market offers you. For clarity and more information on this see Investing Guide. *If you find this analysis helpful please like! Feel free to comment or ask questions.
COINBASE:BTCUSDEducation
by tradersmentality
Lessons from an Experienced Trader #3Lesson 7 Trade Outcome is Random The outcome of any given trade is random, no matter how strong your edge is. It is impossible to predict whether a trade will result in a loss, decent profit, or a windfall profit. Contrary to what most Price Action traders and price analysts believe, you cannot and will never be able to predict the market. Most amateur traders fail to recognize this fact, or deny this reality altogether. They believe eventually, they will be able to avoid losing trades and pick winners. They do not understand the outcome of any given trade is random, and therefore impossible to know before hand. Consider weather prediction as an example. Meteorologists have highly sophisticated weather models and algorithms to predict weather behavior, just like traders and institutions in the market. Yet the weathermen cannot accurately predict what will occur. They can say "There is a 60% chance of rain today if you live in X." But they cannot say exactly when or where rain will fall. It is the same in the market. You may have a good idea of what may occur, and even be right! However, there is still a reasonable chance (usually around 40%) that you are wrong, and the exact opposite will occur. The market is always right. It does not matter what you think or believe should or will happen. All that matters is what is happening. Just because a trade looks good or an edge is strong, does not mean it will result in a profit. There is still an opposing probability that it will fail. The point is that you will never know beyond a reasonable doubt what the market will do next. You may have a hunch, or a strong edge, but that will only get you so far. Therefore the only thing to do is to always take your edge, because you never know if this will be the windfall profit you are looking for, a small profit, or a loss. And quite frankly, it does not matter! Lesson 8 Market Outcome Does Not Matter The outcome of any single trade does not matter. It is very common for traders to become attached to the outcome of this individual trade. This is what leads to emotions, anger and frustration with trading and the market. We get stuck in the mindset that we have to win X amount of profit like 2X risk on this trade, or have to make money every day to be a profitable trader. This is not the case at all. In fact you only have to win one 1 or 2 really good trades out of 10 to maintain a consistent performance. Any single trade is irrelevant to a trading system or strategy. It is the cumulative result over a series of trades that results in a profit. This is why it is so important to know and only trade your edge, otherwise you introduce randomness into your performance, and are unable to produce consistency. *If you find this analysis helpful please like! Feel free to comment or ask questions.
AEducation
by tradersmentality
2
Lessons from an Experienced Trader #2Lesson 4 Know what you want in the market Contrary to what most believe, successful traders do not actually trade constantly. Attempting to trade constantly leads to increased commission costs, random trading, and compound mistakes. In fact, successful traders spend most of their time doing absolutely nothing! How long does it take to enter an order? A click of the button. A few seconds. Maybe a few minutes at most to create bracket orders. So what do Professional Traders do the rest of the time? They wait. They wait until the market offers what they want or are looking for. Then after entering they wait some more to see if they are right. They wait for the market to provide them with the information to either hold, or exit. They allow themselves to Be, the trade to Be, the market to Be and do what it is going to do. They do not force actions or attempt to make the market do what they want. They wait until the action comes about on its own, until it is natural, a reflex. If you do not know what it is in the market that you are looking for, you will fold under pressure and confusion. A Professional Trader knows exactly what he wants (not just to make money), he knows what he is looking for in the market, and is willingness to wait for it to arrive. By doing so, he is rewarded and paid by the market for his patience and willing to do nothing. Even if this means not trading for hours, days, or even weeks depending on the time frame. It is far better to do nothing and avoid unnecessary losses, than to try and create tensions, forced actions, and lose money. You have to ask yourself "What is more important? The actual act of trading, or making money?" Lesson 5 Define your edge An edge is what you have defined as being what you want from the market in the previous lesson. This can be anything from a specific setup, to just plain context like a strong market. If you do not know what your edge is, you will struggle to perform consistently due to randomness. Many new traders, especially those who follow price action, believe they should be able to trade the market no matter what the context is. If you think you are just going to walk in to the market, trade based on whatever the market is doing and make money; you are fooling yourself. Doing so will lead you to trade randomly, entering willy nilly at the market, and make many mistakes which will cost you your profitability. Do you walk into Walmart or Aldi's without knowing what you want to buy until you get there? No, you have a list of items, or at least an idea of what you need before you go. Do you start a business because you woke up this morning and thought it would be nice to own a car wash? Hopefully not. You first identify an opportunity, and then create a business model after a lot of research. Then finally you open the business. Of course everyone thinks or says "well so and so does this and that, and he seems to be making money." Sure, maybe he is, maybe not. If he is, he has defined his edge and is simply employing it. What someone else does has absolutely nothing to do with what you should be doing. Once you have defined your edge, you must wait for it to arrive. If the market is not offering what you want or what your edge calls for, you do nothing until it is. If your edge is a trend trading method and the market is in a trading range, you do not trade until the market is trending. If you have not clearly defined your edge, you should not trade. If you do not know what it is in the market you want and are looking for, you have no business in the market. Simple as that. If you chose to do so, you are putting yourself at unnecessary risk and trading randomly. Yes this sounds harsh, but it is the reality of the market. The market will not give you anything, especially if you don't even know what it is that you want!
COINBASE:BTCUSDEducation
by tradersmentality
Trading PsychologyMany traders seek consistency through the idea of mastering the markets. They consider them to be logical and therefore can be figured out. They believe with more knowledge of markets and how they operate, they will eventually make a consistent return. And so they continue searching in the markets for a reliable edge, or outside the market for a leader or guru to show them the way. They see their emotions as an enemy; something standing in their way of success, and so attempt to remove them completely; which is impossible. This idea, that the answer is out there somewhere, is a false belief. Most traders never stop to think that perhaps what they are seeking is already within themselves, right here. That all they actually need is to stop searching, and look within. In order to succeed long term you must first understand your self and the relationship between yourself and the market. Your emotions, thoughts, and perception of the market, and how these relate to actions taken in the market place. If you do not believe these are directly connected with your actions and therefore performance, you will likely struggle to maintain a consistent performance. Rather than viewing your emotions as an enemy, learn to use them to your advantage. Learn to understand the circle or cycle between you and the market.
by tradersmentality
This is what you need to know before tradingHi this is my approach to the market. Prepare this list for yourself before trading: - Good broker - Good mental books to help you (my recommendation Zen in the markets is a must) - Good trading idea - Good risk management - Good rules - And always learn new ideas and back test it - And learn to manage your life (you need no distractions so do the things you need to do before hand, it can be job or homework) As far as we know the market is quite unpredictable it is essential for you to prepare yourself or you will learn it the hard way. My advice : after you checked the list learn lot of trading ideas and choose the most profitable ones to back test it. - Follow your rule - Whatever you do, do not go against the trend always follow the trend FOLLOW THE MARKET - Always approach the market blank minded and do what the market is telling you. Good luck If you want to create new broker account i recommend this broker : lnd.easymarkets.com
Education
by BilegtGanbaatar
Trading Psychology 5 Edge ExecutionEdge Execution Trading is a numbers game, and markets are based on the mathematics of the traders equation. However, understanding this alone will not guarantee profits. The ability to apply and conform to the math of the current market context is what leads to consistent profits. Beginners often have a misconecption that they need to know what is going to happen over the period of the next X number of bars in order to make a profit. They believe they must enter at the exact right time and price in order to win on a trade. This could not be further from the truth, and anyone consistenly making money from the markets knows the reality. The reality is a trader does not need to know what is going to happen next in order to make a profit. In fact, a professional trader knows that any given trade is irrelevant to the bigger picture, and an income is generated over a series of trades; not any single trade. This menatlity is past the duality of winning and losing, which are simply accepted as part of the job. This can be called the "probability mindset." Profits are generated over a series of trades, not any single trade. Therefore, it is not necessary to make money on every trade, every day, or even every month to be a succesful trader. It takes time to build confidence, believe this is true and fully understand this concept. Perhaps this is why most traders fail, by giving up before coming to this realization. It has been said that professional traders have "Won the game before they started playing." (Jack Swagger). This confidence can only come from the probability mindset, when a trader accepts he may lose on this trade, the day, or even this year. But he accepts his risk, and trusts the math that over time he will generate a profit. Even if he takes a large loss, or several, it does not matter; he knows he will make it back up. The overall point of this is that losses are part of the trading process. If a trade is a loser, it does not matter; move on to the next trade. Dwelling on losses or a drawdown does not bring the money back, but continuing to trade does. In this sense it can be said that a successful trader "trades his way out of a drawdown." It is helpful to think of losses as the "cost of doing business" just like any other business would incur expenses while conducting its operations. There are very few (if any) businesses that do not require heavy start up costs, or capital to continue the business while generating profits. Ever heard the saying "It takes money to make money?" Trading is no different, although most traders fail to realize this, and focus solely on profits. In trading, our costs are commissions and losses, which are offset by gains, resulting in a net profit. Employing your Edge So what does this have to do with exeucting an edge? Well, it is necessary to understand not every trade is a guranteed success, and there is a random distribution between wins and losses, with any edge. Even the best setup or edge will result in a loss 30-40% of the time. It is virtually impossible to know in advance, which trade will win and which will lose. Therefore it is absolutely imperative to take every trade that meets a traders edge, regardless of how the trader feels, thinks, or any other variables unrelated to the edge. With this said, here are the basic steps to exeucting and employing an edge. 1). Identify edge. Pick a setup (second entry, wedge reversal, follow through bar, ect.) It is a good idea to start with one until familiar with reading prices. 2). Ask yourself at the close of every bar "Is my edge present?" If no, wait. If yes, enter the trade. 3). Execute the edge with a series of 10 or 20 trades, document every trade. At the end of the series analyze results and tweak. Wishing you the best of luck on your trading journey -Josh Ridenour
Education
by tradersmentality
1
Trading Psychology 2 How Strong is your Trading Mentality?How strong is your Trader Mentality? Signs of an "Amateur Mindset" If you identify with any of these characteristics while trading, you are suffering from an Amateur Mindset. These are normal when first learning how to trade, and even common in advanced traders who have not yet mastered their trading psychology. Very succesful traders may still occasionally experience some of these symptoms while increasing positions, but as far as day to day, do not. Hesitation to enter positions meeting edge criteria Fail to exit trades not performing to expectations Feelings of fear (missing out, failure, success, leaving money on the table, etc.) Upset/mad when prices go against you or happy / relief when prices go your way The market is too painful to watch (pain avoidance) Market actions led by emotions / feelings / stress Forms and applies rigid rules for entry / exiting market Afraid to make mistakes / upset after mistakes Signs of a "Probability mindset" or Professional Trader Enters or exits trades without hesitation Does not experience internal conflict while entering, or managing trades Willing to take a loss (accepts his risk) Flows with the market seemingly effortlessly Not attached to outcome of any trade Emotions / stress do not lead to market actions Enters / exits however necessary Accepts mistakes and moves on Interestingly, it is easy to separate a professional trader from an amateur, not based on profits or losses, or the amount of ticks he makes a day; but based on his actions in the market. By observing how a trader interacts and engages with the market it is obvious if his actions were led by emotions or intuitively based on what the market told him to do at the time. Professionals flow with the market, and do not fight or resist it in any way. As a result money seems to flow effortlessly into their accounts, and their equity curve is that of a healthy bull trend. Amateurs are constantly fighting the market and themselves, with actions led by what they think, perceive as a threat, or the false belief that they know what is going to happen next. The outcome is a slowly depreciating account balance, and an equity curve that is flat or in a bear trend. The later is a sign of trading errors made by the trader and not that of an edge being executed properly. Continued...
AMEX:SDSEducation
by tradersmentality
Mentality and Sticking to Your PlanDISCLAIMER: Hi everyone, I'm new to trading and this is just a log book for me on applying everything that I have learned and continue to learn as I go along. That being said, I do not advise you to base your trading on these "ideas". Last week I published a small "idea" for a quick scalp on the CADJPY. I noticed an uptrend that I didnt expect to go past a certain Resistance level from a few months back. I set my Take-Profits and Stop-Losses at fare prices, and hit my Take-Profit. I was happy with my trade but, being the amateur that I still am, I not only left money on the table but I didn't stick to my plan. I looked for what would have been another opening, which turned out to be a correction that hit my stop loss as soon as the market opened (thanks to a huge gap). Not only did I loose the profit from my previous trade, but the price rose up and came back to where I wanted it to be all along. I have yet to lean how to keep emotions out, and set myself into the right mentality. But I do know that it is something that we all must learn to be succesful traders.
Education
by EdwardFabianRamirez