FROM AN EXPERIENCE
My pride did not let me act. The prestige of my theory was at stake.
I just kept saying this stock cannot go down any further. I did not
know what I learned later, that there is no such thing as cannot
in the market. Any stock can do anything. -- Nicolas Darvas
1. FIRST THINGS FIRST
First, be sure that you really want to trade. As both Krausz and
Faulkner confirmed,based on their experience in working with
traders, it is common for people who think they want to trade to
discover that they really don’t.
2. EXAMINE YOUR MOTIVES
Think about why you really want to trade. If you want to trade for
the excitement, you might be better off riding a roller coaster or
taking up hang gliding. In my own case, I found that the underlying
motive for trading was serenity or peace of mind-hardly the
emotional state typi-cal of trading. Another personal motive for
trading was that I loved puzzle solving-and the markets provided
the ultimate puzzle. How-ever, while I enjoyed the cerebral aspects
of market analysis, I didn’t particularly like the visceral
characteristics of trading itself. The con-trast between my motives
and the activity resulted in very obvious con-flicts. You need to
examine your own motives very carefully for any such conflicts.
The market is a stem master. You need to do almost everything right
to win. If parts of you are pulling in opposite direc-tions, the game
is lost before you start.
How did I resolve my own conflict? I decided to focus completely
on mechanical trading approaches in order to eliminate the
emotionalism in trading. Equally important, focusing on the design
of mechanical systems directed my energies to the part of trading
I did enjoy-the puzzle-solving aspects. Although I had devoted some
energy to mechanical systems for these reasons for a number of
years, I eventu-ally came to the realization that I wanted to move in
this direction exclusively. (This is not intended as an advocacy for
mechanical sys-tems over human-decision-oriented approaches.
I am only providing a personal example. The appropriate answer
for another trader could well be very different.)
3. MATCH THE TRADING METHOD TO YOUR
PERSONALITY
It is critical to choose a method that is consistent with your own
person-ality and comfort level. If you can’t stand to give back
significant prof-its, then a long-term trend-following approach-even
a very good one-will be a disaster, because you will never be able to
follow it. If you don’t want to watch the quote screen all day
(or can’t), don’t try a day-trading method. If you can’t stand the
emotional strain of making trading decisions, then try to develop a
mechanical system for trading the markets. The approach you use
must be right for you; it must feel comfortable. The importance of
this cannot be overemphasized. Remember Randy McKay’s
assertion:
“Virtually every successful trader I know ultimately ended up with a
trading style suited to his per-sonality.” Incidentally, the mismatch
of trading style and personality is one of the key reasons why
purchased trading systems rarely make profits for those who buy
them, even if the system is a good one. While the odds of getting a
winning system are small-certainly less than 50/50-the odds of
getting a system that fits your personality are smaller still.
I’U leave it to your imagination to decide on the odds of buying a
prof-itable/moderate risk system and using it effectively.
4. IT IS ABSOLUTELY NECESSARY TO HAVE AN EDGE
You can’t win without an edge, even with the world’s greatest
discipline and money management skills. If you could, then it would
be possible to win at roulette (over the long run) using perfect
discipline and risk con-trol. Of course, that is an impossible task
because of the laws of probabil-ity. If you don’t have an edge,
all that money management and discipline will do for you is to
guarantee that you will gradually bleed to death. Inci-dentally,
if you don’t know what your edge is, you don’t have one.
5. DERIVE A METHOD
To have an edge, you must have a method. The type of method is
irrele-vant. Some of the supertraders are pure fundamentalists;
some are pure technicians; and some are hybrids. Even within
each group, there are tremendous variations. For example, within
the group of technicians, there are tape readers (or their modem-day
equivalent-screen watch-ers), chartists, mechanical system traders,
Elliott Wave analysts, Gann analysts, and so on. The type of method
is not important, but having one is critical-and, of course,
the method must have an edge.
6. DEVELOPING A METHOD IS HARD WORK
Shortcuts rarely lead to trading success. Developing your own
approach requires research, observation, and thought.
Expect the process to take lots of time and hard work.
Expect many dead ends and multiple fail-ures before you find a
successful trading approach that is right for you. Remember that
you are playing against tens of thousands of profession-als.
Why should you be any better? If it were that easy, there would
be a lot more millionaire traders.
7. SKILL VERSUS HARD WORK
Is trading success dependent on innate skills? Or is hard work
suffi-cient? There is no question in my mmd that many of the
supertraders have a special talent for trading. Marathon running
provides an appro-priate analogy. Virtually anyone can run a
marathon, given sufficient commitment and hard work.
Yet, regardless of the effort and desire, only a small fraction of the
population will ever be able to run a 2:12 marathon. Similarly,
anyone can learn to play a musical instrument. But again,
regardless of work and dedication, only a handful of individuals
possess the natural talent to become concert soloists. The general
rule is that exceptional performance requires both natural talent
and hard work to realize its potential. If the innate skill is lacking,
hard work may pro-vide proficiency, but not excellence.
In my opinion, the same principles apply to trading. Virtually
any-one can become a net profitable trader, but only a few have
the inborn talent to become supertraders. For this reason, it may
be possible to teach trading success, but only up to a point.
Be realistic in your goals.
8. GOOD TRADING SHOULD BE EFFORTLESS
Wait a minute. Didn’t I just list hard work as an ingredient to
successful trading? How can good trading require hard work and
yet be effortless?
There is no contradiction. Hard work refers to the preparatory
pro-cess-the research and observation necessary to become a good
trader-not to the trading itself. In this respect, hard work is
associated with such qualities as vision, creativity, persistence,
drive, desire, and commitment. Hard work certainly does not mean
that the process of trading itself should be filled with exertion.
It certainly does not imply struggling with or fighting against the
markets. On the contrary, the more effortless and natural the trading
process, the better the chances for success. As the anonymous
trader in Zen and the Art of Trading put it, “In trading, just as in
archery, whenever there is effort, force, strain-ing, struggling,
or trying, it’s wrong. You’re out of sync; you’re out of harmony
with the market. The perfect trade is one that requires no effort.”
Visualize a world-class distance runner, clicking off mile after mile
at a five-minute pace. Now picture an out-of-shape, 250-pound
couch potato trying to run a mile at a ten-minute pace.
The professional run-ner glides along gracefully-almost
effortlessly-despite the long dis-tance and fast pace.
The out-of-shape runner, however, is likely to struggle, huffing
and puffing like a Yugo going up a 1 percent grade.
Who is putting in more work and effort? Who is more successful?
Of course, the world-class runner puts in his hard work during
training, and this prior effort and commitment are essential to his
success.
9. MONEY MANAGEMENT AND RISK CONTROL
Almost every person I interviewed felt that money management
was even more important than the trading method. Many potentially
suc-cessful systems or trading approaches have led to disaster
because the trader applying the strategy lacked a method of
controlling risk. You don’t have to be a mathematician or
understand portfolio theory to manage risk.
Risk control can be as easy as the following three-step approach:
1. Never risk more than 1 to 2 percent of your capital on any trade.
(Depending on your approach, a modestly higher number might still
be reasonable. However, I would strongly advise against anything
over 5 percent.)
2. Predetermine your exit point before you get into a trade.
Many of the traders I interviewed cited exactly this rule.
3. If you lose a certain predetermined amount of your starting
capital (e.g., 10 percent to 20 percent), take a breather, analyze
what went wrong, and wait until you feel confident and have a
high-probability idea before you begin trading again. For traders
with large accounts, trading very small is a reasonable alternative
to a complete trading hia-tus. The strategy of cutting trading size
down sharply during losing streaks is one mentioned by many of
the traders interviewed.
(to be contd)
OF NIFTY FUTURES – JULY 4th
TURNING POINT IS POSSIBLE @ 5784
Strong resistance (overall) @ 5689-5739 (for the whole month)
and after that @ 5767-84 and @ 5817-38
What shall we expect today ?
Generally below 5642 will favour bears
Above 5627 for 15 minutes means
Good resistance between 5668-78 today
If cuts 5620 and trades below for 10 minutes,
sure slide upto 5584 and after that 5561 is possible
Strong Intraday Support @ 5584 & 5561
FREE TIPS OF INDIVIDUAL SHARES ARE STOPPED
TODAY– SUBSCRIBE US TO EARN MORE
FASCINATING JULY 2011
This year, July has 5 Fridays, 5 Saturdays and 5 Sundays.
EXTRA TIP
The month is referred to as ‘money bags’ in Chinese culture
and is considered a lucky month from a financial standpoint.
TRADING IS SIMPLE - NOT JUST EASY
I believe that good
traders are able to
trade the markets
effortlessly –
it’s simple to them.
But getting to the
point of doing
anything
effortlessly is not
easy.In fact,
it’s really hard.
A good analogy
would be describing
an athletes ability to perform his or her skill.
If we took two people – one being a person who runs two miles
everyday versus a person who hasn’t ran for the past two months,
who will have the easier time running one mile?
The answer is simple of course. The person who runs everyday will
be able to run one mile easily – it will be effortless to them.
However, the person who hasn’t ran in two months will find it
extremely hard to and likely have to take breaks in-between so
that he or she can finish.
In order for trading to become simple, there are some crucial and
necessary steps that need to be taken. There needs to be consistency
in the traders approach to the markets. It’s unfortunate, but we are
in a day and age where traders are obsessed with just “trading for
the fun of it”, and they aren’t realizing that that’s what’s preventing
them from being consistent and successful. Again, if we go back to
our analogy, does a great athlete deter from their routine?
No. In fact, they have routines that boil down to eating, and sleeping
habits in order to keep themselves moving in the right direction.
It’s really not a mystery, but for whatever reason most traders seem
to fail that this approach is what’s needed if you want to be good.
There really is a direct correlation between traders who are good
and traders who are not. There is a direct correlation between traders
who are consistent and traders who ride the roller coaster.
That difference is preparation. Preparation and repetition is what
makes anyone great at what they do. But preparing is not easy.
It takes focus, will, and a lot of discipline. In trading that translates
to having a very specific trading plan, with specific rules and the
discipline to do it every single day. And as you prepare yourself
everyday in your approach to the markets, you’ll find that trading
becomes simple. It becomes effortless.
So if you want to be a good trader, scratch that – if you want to
become a great trader, step back and think about what it really takes,
and prepare yourself. It won’t be easy, but sooner or later you’ll
realize how simple it really is.
WHO IS A TEACHER ??
Who is a teacher?? This is a very good one !very moving !
From A School Principal's speech at a graduation.. He said Doctor
wants his child to become a doctor......... Engineer wants his child to
become engineer...... Businessman wants his ward to become
CEO..... BUT a teacher also wants his child to become one of them..!
Nobody wants to become a teacher BY CHOICE ....
Very sad but that's the truth.....!!! The dinner guests were sitting
around the table discussing life.One man, a CEO, decided to explain
the problem with education. He argued, What's a kid going to learn
from someone who decided his best option in life was to become a
teacher? To stress his point he said to another guest; You're a
teacher, Bonnie. Be honest. What do you make? Teacher Bonnie,
who had a reputation for honesty and frankness replied, You want
to know what I make?(She paused for a second, then began...)
Well, I make kids work harder than they ever thought they could.
I make a C+ feel like the Congressional Medal of Honor winner.
I make kids sit through 40 minutes of class time when their parents
can't make them sit for 5 min. without an I Pod, Game Cube or
movie rental.You want to know what I make?
(She paused again and looked at each and every person at the table)
I make kids wonder.I make them question.I make them apologize
and mean it.I make them have respect and take responsibility for
their actions.I teach them how to write and then I make them write.
Keyboarding isn't everything.I make them read, read, read.
I make them show all their work in math. They use their God given
brain, not the man-made calculator.I make my students from other
countries learn everything they need to know about English while
preserving their unique cultural identity.I make my classroom a
place where all my students feel safe.Finally, I make them
understand that if they use the gifts they were given, work hard,
and follow their hearts, they can succeed in life
(Bonnie paused one last time and then continued.)
Then, when people try to judge me by what I make, with me
knowing money isn't everything, I can hold my head up high and
pay no attention because they are ignorant. You want to know
what I make?
I MAKE A DIFFERENCE IN ALL YOUR LIVES,
EDUCATING KIDS AND PREPARING THEM TO BECOME
CEO's , DOCTORS AND ENGINEERS......
What do you make Mr. CEO?
His jaw dropped; he went silent.
MESSAGE TODAY
The concessions of the weak are the concessions of fear.
-EDMUND BURKE, speech on conciliation with America
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