Here is a video clip of Linda Raschke’s seminar. I thought it is good to refresh your mind. Same old trading wisdom, but do you practice it in your trading?
Learn Trading
About managing trades
I came across Tim Morge's articles on MoneyShow.com which he talked about how successful traders manage their trades. Though he quoted median line trades in the articles, he did point out some important tips for trade management. I thought it might be helpful for my readers as well. Check it out.
The clearest thoughts you'll have about a potential trade is before you enter it; once you enter the trade, the clarity of your focus declines for many reasons:
- You have been staring at the screen for some time, stalking the trade (and of course, once you enter the trade, you are watching the screen even more intently, so the longer you are in the trade, the more focus you have spent).
- Once you enter the trade, you have a financial interest in the trade; in many traders, that heightens their interest, but at a cost of burning their available focus at a faster rate.
- Once you have a financial interest in the trade, you feel the weight to make money (some call this the fear and greed factor). You feel elated with each tick in your favor and you feel depressed by each tick that goes against you.
- As a trade progresses, you are pulled by the price action to intervene and change your original idea; with each ebb and flow of price, a new way to improve your original trading plan pops into your head.
- If a trade heads towards your stop loss, you become more and more certain you have taken a losing trade and the internal pressure to intervene and cut the loss quicker increases. Even if you have learned to hide your stop loss orders behind market structure, you feel the pressure from these urges to exit these trades earlier, at a smaller loss, even though many of your trades that travel into losing territory often would have survived by a few ticks (because of your use of market structure as protection).
- As prices move in your favor, you feel the urge to lock in profits at the slightest slowing of price in your favor. You need a win and the thought that this trade may back up and turn into a loser weighs on your mind, clouding your judgment.
Barista technique and Trading
A busy Monday, at the non-trading side, a tired Tuesday, and not so impressive Wednesday this sum up half of my week. I am not writing this post to tell you how were my days going, I don’t see a point of doing so. I have passed that stage.
Anyway, here is my infamous coffee thought of the day.
I start my day with a cup of coffee, every day. A cup of freshly ground, and brew Espresso or Long Black is essential. I am not a coffee expert, but I am a coffee lover. I have my grinder and Espresso machine at home. Here is a snippet from Home barista
Barista technique breaks down into three-time scales and skill levels:
The first is the minute or so spent grinding and making the shot. The key here is acquiring the skills to make shots consistently. One should be able to turn out four or five in a row with virtually the same timing, volume, color, crema, and taste. This skill is a physical thing, that is, it’s a matter of training and practice rather than learning.
The second is the time spent carefully tasting espresso or series of espressos, identifying the flavor balance and defects, and making adjustments to one’s pull or machines to correct them. The “dialing-in” process for a new blend usually requires a series of shots to get a satisfactory result and can proceed over several days to fine-tune it. To do this well, one needs to have experience in tasting and analyzing good espresso. One also needs to know how changes in extraction variables and machine settings affect the espresso’s taste.
The third is acquiring experience and informed preferences with a wide range of coffees, blends, espresso equipment, and alternative techniques. If you or someone you’re serving wants an espresso with a specific palette of flavors; you will know how to provide it. Home roasting and blending help in this. So does visit good cafes and roasteries, and talking with the knowledgeable people there.
I see a lot of similarities to trading. What do you think? Start making coffee…
Trading Edge, Less is more
A couple of blog posts that I found it to be useful. Enjoy reading.
I am quoting this from Tremble Hand Trader.
you don’t need more stuff you just need to practice what you have. That the endless search for market knowledge is wasted time. You are better taking what you know and testing and practicing that to death. After you have the basics everything else is just another layer of wasted complexity. What’s required is working on your strengths – niche development.
Sometimes, we just forget. Again and again we spent time readings books, blogs, forums to search for new strategies, new systems or the worst, new indicators. Focusing on what we’ve already known, practise repeatedly, enhance it and develop it to become our unique edge. I like the term, niche development.
Here is another post from TraderFeed
It could be argued that the mechanical accuracy of the trading method would be less important to long-term success than the trader’s ability to adapt to market shifts with risk management that takes maximum advantage of periods of valid signals and minimizes risk during periods of invalid ones.
I fully agree with the importance of developing the ability to adapt to market shifts. Nothing is going to work forever, being able to see the change and develop a plan to work in the current environment is the way to go.
What do you really need to learn about trading
Lately, I have been spending my time working on my ATS (automated trading system), developing strategies and risk management models. I visited few forums, reading some brilliant ideas, and of course, unavoidable, some junks.
While reading the postings by some new/struggling traders, I have some thoughts.
What do you really need to learn about trading?
Technical analysis? Fundamental analysis? Risk management? trading psychology? Well, yes, yes, yes, I hear you. These are important. Very important. But, the essential skill one should really learn is the skill of learning. Learning the market condition.
Market is constantly changing. Or should I say market behaviour is consistently inconsistent. Your holy grail setup that works today might, or most likely, will fail later. Getting back to text books, forums trying to find new setups is just not the most effective route.
Learning to adjust your mindset, to accept the change, to really understand your battle field, with these, start to enhance or alter your strategies.
This is when your skills (technical analysis, fundamental analysis, etc) come into picture.
But bear in mind the fact: Technical analysis is a lagging tool, as it is based on what happened in the past, and forecast what is likely to happen in the future.
Fundamental analysis is a product of idealism. Ideally, the market should move according to its fundamentals. But, more often than not, the reality negates this. During bull markets, the high will get higher, regardless of how much the stock really worth. During the bear market like now, cheap can always get cheaper.
If you were to live trading the market, start developing a sense of market. Developing the ability to Know where you are, what you are facing, are far more valuable than watching MACD uptick and go Long(go wrong)… 🙂
Just another piece of rant from Trader Gav.
Coffee thought of the day….Patience is part of trading?
I was in a trading chat room. Most of the participants were waiting for trading call from a signal provider. While I don’t trade on these calls, it is really interesting to see how new or struggling traders or so-called busy trader-wanna-be waiting for calls desperately. Well, it is absolutely OK with subscribing to trading signal service . I am not arguing that.
Here is a short conversation I have found it to be interesting.
[ABC] Any one has any idea about trade alert today?
[123] apparently not
[DEF] no one????
[456] are you asking us to speculate on what will happen?
[ABC] guess we’ll just need to think for ourselves…
[Master] Patience its part of trading
Ah…”Patience is part of trading! “..Well said. But, to disappoint you, waiting for trading calls is not trading… face the fact, you are not trading if you are still spending your time waiting for the signal service provider to feed you with something…uhmm..something..
I am out for my morning coffee now…
