Skip to main content

Live to Play Another Day

If you can just find a way to hang in there, then the good times will come. If you can find a way to stay in the game, then you can become an experienced trader. But you have to survive. And some just can’t.

DON’T FOCUS ON MAKING PREDICTIONS

Mark Douglas in The Disciplined Trader wrote, “If you believe it likely to have a definite bullish or bearish effect marketwise, do not back your judgment until the action of the market itself confirms your opinion.” If I get caught long, spot an overly aggressive seller, the stock hits my exit prices, then I sell. I do not hold because I think that this overly aggressive seller is a putz. If I did, I would have blown up my trading account on multiple occasions by now. Once a stock hits my exit price, then I exit. I live to play another day.

New traders sometimes make the error of believing that trading is about making predictions and that they can move the market with their 1,000 shares, or worse yet, their young opinions.

 How Predictions Harm the New Trader

As a trader, even if you develop the correct bias about the direction of the market, stock, or sector, you still must possess the trading skills to capture these moves. Wasting your time on predictions is energy and time lost for what will truly make all the difference, skill development.

Derek Jeter does not spend time working on his fastball (he is not a pitcher), and you should not sharpen your skills as an analyst (you are a trader!).

Also, as a trader, you must sit and process the data the market offers with an open mind. Too many traders color the data the market offers with their own biases.

traders ask where we thought the price of oil would be in the next six months. Frankly, we had no idea and didn’t care. We were too busy making money. It’s called trading, not predicting.

traders ask where we thought the price of oil would be in the next six months. Frankly, we had no idea and didn’t care. We were too busy making money. It’s called trading, not predicting.

The Market Doesn’t Care What You Think

Trade what the market is doing, not what you’d like it to do in your nihilistic fantasies.” No one cares where you think a stock is headed.

When it’s apparent that something isn’t working out, just move out. That means just sell it and redeploy capital elsewhere. Just don’t marry a position.

if no one cares what you think about a stock, then you shouldn’t. Just trade. Watch the price action. If your stock confirms your bullish bias, then get long. If your stock confirms you were wrong, then trade your stock from the short side. Too many new prop traders never embrace this philosophy and as a result never experience the best markets.

As traders, we develop theories daily. And those are great. But our P&L is not dictated by our predictions but our trading skill. And when you develop trading skills, it does not matter whether you accurately predict the top in a sector. It just matters that that sector is active. As long as it moves.

Comments

Post a Comment

Popular posts from this blog

Maximizing Your Profits with Scoring

SETTING YOUR MAXIMUM INTRADAY TRADING LOSS First things first: set a max intraday trading loss. There will be days when you just do not have it. Why do you think coaches pull their players when they are not playing well? They are more harmful on the field than off. When you are underperforming, you are hurting your team and your trading business. You need a system to yank yourself over to the bench. A stop loss is your answer. TRADING BASED UPON THE TIME OF DAY A good trader makes note of what time of day it is, when he trades most profitably, and adjusts his trading to fit such times. Your numbers at the end of the month will not reflect your true trading potential. Make the most trades with the most size during the trading periods that statistically are most profitable for you. Money saved during your weaker trading periods is money earned. Consistency The fact is that most trades you make will start working for you right away. But the new traders also hold stocks that are trading ag...
Post a Comment
Read more

So what is your money blueprint set for?

Are you programmed for managing your money well or mismanaging it? Are you a spender or a saver ? Wealth principle: The only way to permanently change the temperature in the room is to reset the thermostat. In the same way, the only way to change your level of financial success "permanently" is to reset your financial thermostat. You can become an expert in real estate or the stock market. All of these are tremendous "tools." But in the end, without an inner "tool-box" that is big enough and strong enough for you to create and hold on to large amounts of money, all the tools in the world will be useless to you. Your income can grow only to the extent that you do. Remember that the first element of all change is awareness.Watch yourself, become conscious, observe your thoughts, your fears, your beliefs, your habits, your actions, and even your inactions. Put yourself under a microscope. Study yourself. Wealth principle: Consciousness is observin...
Post a Comment
Read more

Wealth File #4 Rich people think big. Poor people think small

Wealth principle: The law of Income: You will be paid in direct proportion to the value you deliver according to the marketplace. The keyword is value. It's important to know that four factors determine your value in the marketplace: supply,demand,quality and quantity. The factor that presents the biggest challenge for most people is the quantity. The quantity factor simply means, how much of your value do you actually deliver to the marketplace? Another way of stating this is, how many people do you actually serve or affect? Most people choose to play small. Why? First, because of fear. They're scared to death of failure and they're even more frightened of success. Second, people play small because they feel small. They feel unworthy. They don't feel they're good enough or important enough to make a real difference in people's lives. But hear this: your life is not just about you. It's also about contributing to others. It's about living true...
Post a Comment
Read more