FROM AN EXPERIENCE
1. THE TRADING PLAN
Trying to win in the markets without a trading plan is like trying to
build a house without blueprints-costly (and avoidable) mistakes are
virtually inevitable. A trading plan simply requires combining a
per-sonal trading method with specific money management and
trade entry rules. Krausz considers the absence of a trading plan the
root of all the principal difficulties traders encounter in the markets.
Driehaus stresses that a trading plan should reflect a personal core
philosophy. He explains that without a core philosophy, you are not
going to be able to hold on to your positions or stick with your
trading plan during really difficult times.
2. DISCIPLINE
Discipline was probably the most frequent word used by the
exceptional traders that I interviewed. Often, it was mentioned
in an almost apologetic tone:
“I know you've heard this a million times before, but believe me,
it’s really important.”
There are two basic reasons why discipline is critical.
First, it is a prerequisite for maintaining effective risk control.
Second, you need discipline to apply your method without
second-guessing and choosing which trades to take. I guarantee
that you will almost always pick the wrong ones.
Why? Because you will tend to pick the comfortable trades,
and as Eckhardt explained, “What feels good is often the wrong
thing to do.” As a final word on this subject, remember that you
are never immune to bad trading habits-the best you can do is to
keep them latent. As soon as you get lazy or sloppy, they will
return.
3. UNDERSTAND THAT YOU ARE RESPONSIBLE
Whether you win or lose, you are responsible for your own results.
Even if you lost on your broker’s tip, an advisory service
recommenda-tion, or a bad signal from the system you bought,
you are responsible because you made the decision to listen and act.
I have never met a suc-cessful trader who blamed others for his
losses.
4. THE NEED FOR INDEPENDENCE
You need to do your own thinking. Don’t get caught up in mass
hysteria. As Ed Seykota pointed out, by the time a story is making
the cover of the national periodicals, the trend is probably near an
end. Independence
Never listen to other opinions. Even if it occasionally helps on a
trade or two, listening to others invariably seems to end up costing
you money-not to mention confusing your own market view.
As Michael Marcus stated in Market Wizards, “You need to follow
your own light. If you combine two traders, you will get the worst
of each.”
A related personal anecdote concerns another trader I interviewed in
Market Wizards. Although he could trade better than I if he were
blindfolded and placed in a trunk at the bottom of a pool, he still was
interested in my view of the markets. One day he called and asked,
“What do you think of the yen?” The yen was one of the few
markets about which I had a strong opinion at the time. It had
formed a particular chart pattern that made me very bearish.
“I think the yen is going straight down, and I’m short,” I replied.
He preceded to give me fifty-one reasons why the yen was
oversold and due for a rally. After he hung up, I thought:
“I’m leaving on a busi-ness trip tomorrow. My trading has
not been going very well during the last few weeks.
The short yen trade is one of the only positions in my account.
Do I really want to fade one of the world’s best traders given
these considerations?” I decided to close out the trade.
By the time I returned from my trip several days later, the yen
had fallen 150 points. As luck would have it, that afternoon the
same trader called. When the conversation rolled around to the
yen, I couldn’t resist asking,
“By the way, are you still long the yen?” “Oh no,” he replied,
“I’m short.”
The point is not that this trader was trying to mislead me.
On the contrary, he firmly believed each market opinion at the time
he expressed it. However, his timing was good enough so that he
probably made money on both sides of the trade. In contrast,
I ended up with nothing, even though I had the original move
pegged exactly right. The moral is that even advice from a much
better trader can lead to detri-mental results.
5. CONFIDENCE
An unwavering confidence in their ability to continue to win in the
markets was a nearly universal characteristic among the traders I
inter-viewed. Dr. Van Tharp, a psychologist who has done a great
deal of research on traders and was interviewed in Market Wizards,
claims that one of the basic traits of winning traders is that they
believe “they’ve won the game before the start.”
6. LOSING IS PART OF THE GAME
The great traders fully realize that losing is an intrinsic element in the
game of trading. This attitude seems linked to confidence. Because
exceptional traders are confident that they will win over the long run,
individual losing trades no longer seem horrible; they simply appear
inevitable-which is what they are. As Linda Raschke explained,
“It never bothered me to lose, because I always knew that I would
make it right back.”
There is no more certain recipe for losing than having a fear of
losing. If you can’t stand taking losses, you will either end up
taking large losses or missing great trading opportunities-either flaw
is sufficient to sink any chance for success.
7. LACK OF CONFIDENCE AND TIME-OUTS
Trade only when you feel confident and optimistic. I have often
heard traders say: “I just can’t seem to do anything right.” Or,
“I bet I get stopped out right near the low again.” If you find yourself
thinking in such negative terms, it is a sure sign that it is time to
take a break from trading. Get back into trading slowly.
Think of trading as a cold ocean. Test the water before plunging in.
8. THE URGE TO SEEK ADVICE
The urge to seek advice betrays a lack of confidence. As Linda
Raschke said, “If you ever find yourself tempted to seek out
someone else’s opinion on a trade, that’s usually a sure sign that
you should get out of your position.”
9. THE VIRTUE OF PATIENCE
Waiting for the right opportunity increases the probability of success.
You don’t always have to be in the market. As Edwin Lefevre put it
in his classic Reminiscences of a Stock Operator, “There is the plain
fool who does the wrong thing at all times anywhere, but there is the
Wall Street fool who thinks he must trade all the time.”
One of the more colorful descriptions of patience in trading was
offered by Jim Rogers in Market Wizards: “I just wait until there is
money lying in the comer, and all I have to do is go over there and
pick it up.” In other words, until he is so sure of a trade that it seems
as easy as picking money off the floor, he does nothing.
Mark Weinstein (also interviewed in Market Wizards) provided the
following apt analogy: “Although the cheetah is the fastest animal in
the world and can catch any animal on the plains, it will wait until it
is absolutely sure it can catch its prey. It may hide in the bush for a
week, waiting for Just the right moment. It will wait for a baby
antelope, and not Just any baby antelope, but preferably one that is
also sick or lame. Only then, when there is no chance it can lose its
prey, does it attack. That, to me, is the epitome of professional
trading.”
As a final bit of advice on the subject of patience, guard particularly
against being overeager to trade in order to win back prior losses.
Vengeance trading is a sure recipe for failure.
10. THE IMPORTANCE OF SITTING
Patience is important not only in waiting for the right trades, but also
in staying with trades that are working. The failure to adequately
profit from correct trades is a key profit-limiting factor. Quoting
again from Lefevre in Reminiscences, “It never was my thinking
that made big money for me. It was always my sitting. Got that?
My sitting tight!” Also, recall Eckhardt’s comment on the subject:
“One common adage … that is completely wrongheaded is:
You can’t go broke taking profits. That’s precisely how many
traders do go broke. While amateurs go broke by taking large losses,
professionals go broke by taking small profits.”
(to be contd)
TODAY’S TRADING STRATEGY
OF NIFTY FUTURES – JULY 11
Strong resistance (overall) @ 5755
and after that @ 5781 and @
5839-74 and final resistance @ 5968
If trades above 5674 and cuts 5679 decisively today
see a hike upto 5698-5710-22
Suppose if trades below 5679 or 5673 an intraday slide upto
5650 is possible
Strong support @ 5650 is seen today
More chances of taking U-turn from 5650
SHARE TIPS TODAY (JULY 11)
1) Sell AUTOIND @ 157.90
T – 154.50
2) Sell GTL @ 90.20
T – 88.10
3) Sell COALINDIA @ 360.80
T – 356.25
4) Sell SAIL @ 136.10
T – 134.10
5) Sell LICHSGFIN @ 215.80
T – 213.75
6) Sell ICICIBANK @ 1056.05
T – 1046.25
7) Sell GESHIP @ 274.10
T – 271.50
Disclosure:
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TRADERS MINDSET
“Many traders start out using a state of mind that focuses on
“having.” Rather than focus on how to trade in concert with the
markets, they are obsessed with profits, and what they can purchase
with those profits.”
“The main goal is to make money, money that can be used to
purchase objects of desire, such as a shiny red sports car, a spacious,
luxurious home, or a large wardrobe of fine clothes. They believe
that great financial success will be the solution to all their problems.
Trading isn’t just a job; it’s their salvation. Although many traders
are motivated by money, there’s a downside to focusing on what you
can have as a result of your profits. When traders focus solely on
accumulating wealth, on “having,” they tend to act greedy and may
take risks in an effort to win. There is a blind and unrealistic focus
on trading at a high level of performance. Unless they trade at a high
level of performance, they can’t possibly “have” what they desire.
But a novice trader can’t achieve a high level of performance,
and so, there is a mismatch between skills and goals. Traders in a
“having” state of mind often feel frustrated that their trading efforts
fall short of their expectations. And when they feel frustrated,
they have difficulty concentrating on their ongoing experience.
They tend to make trading errors, which intensify their feelings of
anger and frustration. In addition, they are tempted to give up easily
and avoid putting in their best effort. They tend to think,
“Why should l even try? I’ll never achieve the level of success I
desire.” At some point, a trader’s state of mind moves from
“having” to “doing.” In a “doing” state of mind, a trader focuses on
learning trading methods, and on when these methods work and when they don’t. According to Dr. Tharp, however, traders in the “doing” state of mind still tend to focus on performance issues. They ask the question, “What can this trading method do for me?” They are concerned with how the method can make them rich. Rather than become engaged with the markets, trading in the “doing” state of mind is about evaluating the method, wondering if it is “working.” Trading, however, is not a simple matter of choosing a particular method and arbitrarily applying it. Becoming a winning trader requires honing your trading skills. It is vital that you develop your intuition by trading with a variety of methods under a wide range of market conditions, and finding ways that the proper method dovetails with optimal market conditions. Although it doesn’t tend to lead to enduring profitability, trading in a “doing” state of mind is a vital step on the way to mastery of the markets. During this stage, you gain the experience you need to trade intuitively and in a peak performance mindset. The ultimate state of mind for profitable trading is the “being” state of mind. Rather than focusing on outcomes, a trader in the “being” state of mind is fully in tune with the markets. He or she trades in synchrony with the market action. A firm commitment is made to trading the market and accepting it on its own terms. When a trader works to trade in the moment, he or she intuitively sees profitable setups and effortlessly trades them. It may not happen over night, but with enough practice and experience, you can trade with a “being” state of mind.
lingering pressure, with the consumer price index (CPI), the main gauge of inflation, jumping 6.4 percent year-on-year in June, the National Bureau of Statistics (NBS) said Saturday.
The June inflation rate accelerated 0.9 percentage points from May’s 5.5 percent which stood at a 34-month high, both far exceeding the government’s annual inflation control target of 4 percent.
Of the 6.4-percent CPI growth in June, 3.7 percentage points were contributed by the carryover effect of price increases last year, the NBS said in a statement on its website.
“We don’t have to panic about the June CPI figure,” said Zhang Liqun, a macroeconomic analyst with the State Council Development Research Center, China’s top government think-tank.
“A CPI growth above 6 percent doesn’t mean the inflation situation is worsening in China, because 3.7 percentage points of the increase were contributed by the carryover effect,” Zhang said.
He said the carryover effect had peaked in June and new factors that push up prices have been under the government’s control, adding that the supplies of food are improving, except pork, and will help ease inflation pressure.
Food prices, which account for nearly one third of the basket of goods in the nation’s CPI calculation, continued to rise 14.4 percent in June from the same month last year, a pace faster than May’s 11.7 percent.
Growth in non-food prices also accelerated to 3 percent in June, up from a year-on-year increase of 2.9 percent in May.
In terms of regions, the CPI rose 6.2 percent year-on-year in China’s urban areas, and the growth in the rural areas was 7.0 percent, according to the NBS.
On a month-on-month basis, food prices added 0.9 percent from May, with the pork prices jumping 11.4 percent from previous month. Month-on-month price declines were reported in vegetables and fruits. Non-food prices were flat in June as compared with May.
Calling the June CPI figure “within the market’s expectation,” Zuo Xiaolei, chief economist for the Galaxy Securities, said the inflation rate would remain high in the future because “it takes a while to release the inflation pressure gradually.”
Zuo said under such great inflationary pressure, she foresees no change in the country’s monetary policy, which will be kept in a reasonable range to maintain a steady economic growth.
To cool down soaring prices, the People’s Bank of China (PBOC), the central bank, has so far raised the benchmark interest rates three times this year, including a latest rate hike of 25 basis points announced just three days ahead of the release of the June CPI data.
The central bank also raised the reserve requirement ratio six times in the first half of 2011, ordering banks to keep a record high of 21.5 percent of their deposits in reserve to rein in excess lending.
Professor Cao Fengqi, director of the Research Center for Finance & Securities of the Peking University, said the CPI growth this year peaked in June.
Cao said adjustment of monetary policy is likely, at least the central bank will stop raising interest rates frequently.
Liu Shucheng, a senior economic research fellow with the Chinese Academy of Social Sciences, said China has had an inflation rate around 6 percent many times in the past.
According to the NBS data, China has seen a monthly CPI growth above 6 percent eight times since 2007.
“Our country has experience to battle an inflation rate around 6 percent, but of course we should manage inflation, particularly the inflationary expectation,” Liu said.
Regarding the outlook of inflation, Liu expects CPI growth to weaken starting July due to the government’s anti-inflation measures, tighter liquidity in the market and falling commodity prices in global market.
OPTIMAL THINKING
Rosalene Glickman, Ph.D. offers views on “Optimal Thinking”:
“The quality of the questions you ask determines the quality
of your life. When you ask the best questions of yourself
and others, you invite the best answers. You can discover what
“the best” means in whichever context you choose.
You simply create the best path to your most desired outcomes.”
Most Profitable Questions:
* What’s my most profitable activity?
* How can I maximize the profitability of this activity?
* What’s the most profitable use of my time right now?
* How can I maximize the profitability of this activity?
* What’s the most profitable use of my time right now?
Optimal WHAT Questions
* What is my most important goal right now?
* What is the best action I can take toward it now?
* What is the best use of my time now/next week?
* What can I do to bring out the best in you?
* What is the best action I can take toward it now?
* What is the best use of my time now/next week?
* What can I do to bring out the best in you?
Optimal WHY Questions
* Why is this my greatest asset?
* Why is this my most important goal?
* Why is this our most profitable product?
* Why is this the best solution?
* Why is this my most important goal?
* Why is this our most profitable product?
* Why is this the best solution?
Optimal HOW Questions
* How can I bring out the best in myself and others?
* How can I best utilize my greatest talents and abilities?
* How can we be of greatest service to our customers?
* How can we maximize profits?
* How can I best utilize my greatest talents and abilities?
* How can we be of greatest service to our customers?
* How can we maximize profits?
Optimal WHEN Questions
* When is the best time to take this action?
* When am I most productive?
* When am I at my best?
* When am I most productive?
* When am I at my best?
Optimal WHERE Questions
* Where is your favorite city/beach/ski resort/location?
* Where is the best place for us to talk privately?
* Where is my best source of inspiration?
* Where is the best location to work?
* Where is the best place for us to talk privately?
* Where is my best source of inspiration?
* Where is the best location to work?
Imagine yourself starting each day with five Optimal questions,
such as:
1. What is supremely important to me?
2. What are my most important goals today?
3. Which actions will be most beneficial for my self-confidence
2. What are my most important goals today?
3. Which actions will be most beneficial for my self-confidence
and self-respect today?
4. What will make each task today
4. What will make each task today
most profitable/beneficial/enjoyable?
5. What is the most constructive use of my time right now?
MESSAGE TODAY
Father, O father! what do we here
In this land of unbelief and fear?
-WILLIAM BLAKE
RELAX CORNER
Taxman asks an Indian…
*1) Qus.: What are you doing?*
*Ans.: **Business.*
*Tax : **PAY PROFESSIONAL TAX*
*2) Qus.: What are you doing in Business?*
*Ans.: **Selling the Goods**.*
*Tax : **PAY SALES TAX*
*3) Qus.: From where are you getting Goods?*
*Ans.: **From other State/Abroad*
*Tax : **PAY CENTRAL SALES TAX, CUSTOM DUTY & OCTROI*
*4) Qus.: What are you getting in Selling Goods?*
*Ans.: **Profit.*
*Tax : **PAY INCOME TAX*
*5) Qus.: How do you distribute profit ?*
*Ans : **By way of dividend*
*Tax : **PAY DIVIDEND DISTRIBUTION TAX*
*6) Qus.: Where you Manufacturing the Goods?*
*Ans.: **Factory.*
*Tax : **PAY EXCISE DUTY*
*7) Qus.: Do you have Staff?*
*Ans.: **Yes*
*Tax: **PAY STAFF PROFESSIONAL TAX*
*8) Qus.: Doing business in Millions?*
*Ans.: **Yes*
*Tax : **PAY TURNOVER TAX* * * *?*
*Ans : **No*
*Tax : **Then pay Minimum Alternate Tax*
*9) Qus.: Are you taking out over 25,000 Cash from Bank?*
*Ans.: **Yes, for Salary.*
*Tax : **PAY CASH HANDLING TAX*
*10) Qus.: Where are you taking your client for Lunch & Dinner?*
*Ans.: **Hotel*
*Tax : **PAY FOOD & ENTERTAINMENT TAX*
*11) Qus.: Are you going Out of Station for Business?*
*Ans.: **Yes*
*Tax :* *PAY FRINGE BENEFIT TAX*
*12) Qus.: Have you taken or given any Service/s?*
*Ans.: **Yes*
*Tax : **PAY SERVICE TAX*
*13) Qus.: How come you got such a Big Amount?*
*Ans.: **Gift on birthday.*
*Tax : **PAY GIFT TAX*
*14) Qus.: Do you have any Wealth?*
*Ans.: **Yes*
*Tax : **PAY WEALTH TAX*
*15) Qus.: To reduce Tension, for entertainment, where are you going?*
*Ans.: **Cinema or Resort.*
*Tax : **PAY ENTERTAINMENT TAX*
*16) Qus.: Have you purchased House?*
*Ans.: **Yes*
*Tax : **PAY STAMP DUTY & REGISTRATION FEE*
*17) Qus.: How you Travel?*
*Ans.: **Bus*
*Tax : **PAY SURCHARGE*
*18) Qus.: Any Additional Tax?*
*Ans.: **Yes*
*Tax : **PAY EDUCATIONAL, ADDITIONAL EDUCATIONAL &*
*SURCHARGE ON ALL THE CENTRAL GOVT.’s TAX !!!*
*19) Qus.: Delayed any time Paying Any Tax?*
*Ans.: **Yes*
*Tax : **PAY INTEREST & PENALTY*
*20) INDIAN : Can I die now??*
*Ans :* *No, * *wait we are about to launch the FUNERAL TAX*JUST SMS TO YOUR PAL
Wood Chuck
If a wood chuck could chuck wood,
How much wood would a woodchuck chuck,
If a woodchuck could chuck wood.
A wood chuck would chuck as much wood
as a wood chuck could chuck if a wood chuck could chuck wood.
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