1. Thinking that trading the FOREX is a get-rich-quick scheme.
2. Reacting emotionally to market movement instead of assessing the market rationally using proven methods for high probability trades.
3. Chasing the Market.
4. Lack of preparation - entering the market with little or no understanding of what the probabilities are and how to handle them. Being unaware of special events or announcements that may be big marketmovers.
5. Poor Equity management.
6. Butterfly Trading. Trying one method after another without mastering any.
7. "Go-it-alone" Syndrome, hoping to discover the 'secret code' for trading. Most successful traders have learned from other successful traders. This can eliminate years of trial and error, and some very painful trading losses.
Author: Mr Don Schellenberg E-mail: don@thenextview.com
Sunday, December 16, 2007
Friday, December 14, 2007
My Trading Philosophy
I base my trading philosophy on three M’s:
M: MIND
M: METHOD
M: MONEY
Out of the three M’s, I find that the Mind component to be the most crucial to trading success.
Mind: The key to winning is inside the Mind. As Master of your mind, you have to manage and understand your emotions very well. It is extremely important to understand not just the individual’s psychology, but also the crowd psychology of the markets. To become a successful trader, you must have sheer perseverance and discipline.
Method: There is no Holy Grail in the search for the perfect method to trade. Follow the wisdom of 'Plan your Trade and Trade your Plan'. A good trading plan should cover your entry, exit and position sizing requirements. My method consists of discretionary trading techniques that combine both fundamental and technical analysis, in addition to my own proprietary automated trading system. Coming up with a good trading plan requires lots of market experience, as you modify, conquer and solidify your trading techniques. Don't be duped by charming salesmen selling get-rich-quick-without-effort secret recipes.
Money: Overall profit/loss depends on money management. The first goal of money management is capital preservation. If you lose 10% of your capital, you have to make 11% just to break even. If you lose 40%, you need to make 67%, and if you lose 50%, guess what? You have to make 100% just to recover! So before you think about making big money, first you got to think about not risking your capital unnecessarily. Money management is too important to be overlooked.
Source : Grace Cheng
M: MIND
M: METHOD
M: MONEY
Out of the three M’s, I find that the Mind component to be the most crucial to trading success.
Mind: The key to winning is inside the Mind. As Master of your mind, you have to manage and understand your emotions very well. It is extremely important to understand not just the individual’s psychology, but also the crowd psychology of the markets. To become a successful trader, you must have sheer perseverance and discipline.
Method: There is no Holy Grail in the search for the perfect method to trade. Follow the wisdom of 'Plan your Trade and Trade your Plan'. A good trading plan should cover your entry, exit and position sizing requirements. My method consists of discretionary trading techniques that combine both fundamental and technical analysis, in addition to my own proprietary automated trading system. Coming up with a good trading plan requires lots of market experience, as you modify, conquer and solidify your trading techniques. Don't be duped by charming salesmen selling get-rich-quick-without-effort secret recipes. 
Money: Overall profit/loss depends on money management. The first goal of money management is capital preservation. If you lose 10% of your capital, you have to make 11% just to break even. If you lose 40%, you need to make 67%, and if you lose 50%, guess what? You have to make 100% just to recover! So before you think about making big money, first you got to think about not risking your capital unnecessarily. Money management is too important to be overlooked.Source : Grace Cheng
Monday, July 9, 2007
Forex trading strategy
(EUR/USD simple system)
As we move forward we discover a strategy that fits only chosen currency pairs.
Take a look at the next Forex trading system:
Currency pair: EUR/USD.
Time frame: 30 min.
Indicators: MACD (12, 26, 9), Parabolic SAR default settings (0.02, 0.2)
Entry rules: When Parabolic SAR gives buy signal and MACD lines crossed upwards – buy.
When Parabolic SAR gives sell signal and MACD lines crossed downwards – sell.
Exit rules: exit at the next MACD lines crossover or if the market starts trading sideways for some time.
Source: forex-strategies-revealed
(EUR/USD simple system)
As we move forward we discover a strategy that fits only chosen currency pairs.
Take a look at the next Forex trading system:
Currency pair: EUR/USD.
Time frame: 30 min.
Indicators: MACD (12, 26, 9), Parabolic SAR default settings (0.02, 0.2)
Entry rules: When Parabolic SAR gives buy signal and MACD lines crossed upwards – buy.
When Parabolic SAR gives sell signal and MACD lines crossed downwards – sell.
Exit rules: exit at the next MACD lines crossover or if the market starts trading sideways for some time.
Source: forex-strategies-revealed
Sunday, July 8, 2007
Common Indicators and Simple Trading Rules
There are a number of simple strategies we can create with the use of two or three common technical indicators. The (1-hour) chart below shows the EURJPY over the course of around 1-week’s trading period. The market initially broke to the downside, as the candlestick activity remained below the 20-SMA (Simple Moving Average) and steadily following the lower Bollinger Band to new lows. Once the market reversed direction back to the upside, trading then emerged above the 20-SMA, following the upper band to recent highs. This brief example provides us with the basis for a few simple trading rules:
We should make every attempt to trade only in the same direction as the current trend.
The trend can be defined by studying the market’s position in regards to the Bollinger Bands and 20-SMA.
Protective stops should be placed below the lower band in uptrend’s, and above the upper band in downtrends.
Finally, we may initiate a trade at or below the 20-SMA, while taking profits at the upper band; in up trending markets. The opposite holds true in down trending markets.
This strategy may have to be adjusted depending on the currency pair and market condition, however by analyzing a segment of our charts; we can begin to isolate specific conditions telling us when to trade, and when to simply wait…
Source:
dailyfx.com
There are a number of simple strategies we can create with the use of two or three common technical indicators. The (1-hour) chart below shows the EURJPY over the course of around 1-week’s trading period. The market initially broke to the downside, as the candlestick activity remained below the 20-SMA (Simple Moving Average) and steadily following the lower Bollinger Band to new lows. Once the market reversed direction back to the upside, trading then emerged above the 20-SMA, following the upper band to recent highs. This brief example provides us with the basis for a few simple trading rules:
We should make every attempt to trade only in the same direction as the current trend.
The trend can be defined by studying the market’s position in regards to the Bollinger Bands and 20-SMA.
Protective stops should be placed below the lower band in uptrend’s, and above the upper band in downtrends.
Finally, we may initiate a trade at or below the 20-SMA, while taking profits at the upper band; in up trending markets. The opposite holds true in down trending markets.
This strategy may have to be adjusted depending on the currency pair and market condition, however by analyzing a segment of our charts; we can begin to isolate specific conditions telling us when to trade, and when to simply wait…
Source:
dailyfx.com
Sunday, January 28, 2007
Proper Mind Control For High Performance Trading
Many professional athletes and traders can turn these state of mind on and off on a dime...
The negative state of mind can be a subtle but deadly self-destructive machine to ruining our day, either trading or relations with coworkers, friends and family. It's not pretty watching ourselves get all caught up in our struggle in our head and seeing yourself tearing up other people for little or no reason. Lucky that these people are sympathetic and civic enough to stay cool and ignore your state of mind. But walk into trading with that and you'll get crushed in minutes. Why? The other traders don't know how and don't care, cannot sympathize with your problems because everyone there is doing one thing and one thing only: taking money from your pocketbook.
The market is a cold and unforgiving place when you make mistakes or trade for wrong reasons. It'll take that reason and turn it against you. It may teach you to do it properly or don't do it at all. There are many traders who use their trading as a therapy unknowingly. How? They reflect their emotions and behavior from their real life into trading. If a trader is angry that day (or an angry by nature), chances are he'll trade like the person he is: aggressive and unreasonable. Being aggressive is not a bad attribute in trading but it needs to used in certain conditions (i.e. the market is trending smooth and stepping up size in the right direction is acceptable aggressiveness). But being aggressive randomly is sure to take your account down and out. Unreasonable is even worst, that throwing dice without thought and reason leaving to chance to decide about your money. Each personality has a weakness and the market will point out that weakness quickly. Unless we hide it away and put forward our strength, it'll be a bloodbath.
Whatever happens outside the trading room (trading hours) should be left outside. It's not an easy task to turn off a feeling or state of mind since we're all humans and we can't manage ourselves as well as we'd like. But if we can't turn it off, better not to trade that day.
But some traders have to trade every day as a way of making a living. How does one go about to overcome this deadly state of mind or put into a proper trading mindset to trade with high performance and consistency? There are several tricks or methods to change it quickly. Here are a few:
1. Using a physical cue to engage that emotion or state of mind. Many times a physical action we take change our state of being, such as sports. When we practice sports, the physical activity clears our mind and takes us to another level, mainly state of less stress, worry and anxiety. This cue can be learned. For example, you can practice smiling at the same time thinking of the wonderful time you had in the past. Or by pulling out a cue, the body fools the mind into thinking and feeling something else. This will quickly flushes out the bad emotion unwanted for trading.
2. Using verbal cues to go into a desire state of mind. This may sound mediocre or cliché but the effect speaks for itself. Sport athletes use these cue every time before a major game or meet. Examples would be, “I´m ready to win today, my mind is clear and focused,” or “I’m thinking of a nice sunny sandy beach in Hawaii with a nice drink in the hand and am relax and ready to enjoy the session.” Practicing positive words with focus and concentration will eventually cue the mind to automatically go into that state when it hears these words.
3. Turn the trading environment into a sanctuary where a state of mind is turned on immediately. Many traders trade at home or trade at the office so it's a difficult to get a place where distractions are the norm. This can only create more stress than necessary. Learn how to cope with it or build a set of rules where limits (such as time limits or no trespassing in the office, etc) are set for others.
Many professional athletes and traders can turn these state of mind on and off on a dime by having practicing these over and over along with the real practicing (physical training or trading knowledge building). It is an essential training to go into the "zone" instantaneously. Without doing, it may take hours or days to get rid of this state of mind before that right state of mind back to be ready to trade. This is a waste of productive time.
Author: Larry Swing
Webs: mrswing.com
The negative state of mind can be a subtle but deadly self-destructive machine to ruining our day, either trading or relations with coworkers, friends and family. It's not pretty watching ourselves get all caught up in our struggle in our head and seeing yourself tearing up other people for little or no reason. Lucky that these people are sympathetic and civic enough to stay cool and ignore your state of mind. But walk into trading with that and you'll get crushed in minutes. Why? The other traders don't know how and don't care, cannot sympathize with your problems because everyone there is doing one thing and one thing only: taking money from your pocketbook.
The market is a cold and unforgiving place when you make mistakes or trade for wrong reasons. It'll take that reason and turn it against you. It may teach you to do it properly or don't do it at all. There are many traders who use their trading as a therapy unknowingly. How? They reflect their emotions and behavior from their real life into trading. If a trader is angry that day (or an angry by nature), chances are he'll trade like the person he is: aggressive and unreasonable. Being aggressive is not a bad attribute in trading but it needs to used in certain conditions (i.e. the market is trending smooth and stepping up size in the right direction is acceptable aggressiveness). But being aggressive randomly is sure to take your account down and out. Unreasonable is even worst, that throwing dice without thought and reason leaving to chance to decide about your money. Each personality has a weakness and the market will point out that weakness quickly. Unless we hide it away and put forward our strength, it'll be a bloodbath.
Whatever happens outside the trading room (trading hours) should be left outside. It's not an easy task to turn off a feeling or state of mind since we're all humans and we can't manage ourselves as well as we'd like. But if we can't turn it off, better not to trade that day.
But some traders have to trade every day as a way of making a living. How does one go about to overcome this deadly state of mind or put into a proper trading mindset to trade with high performance and consistency? There are several tricks or methods to change it quickly. Here are a few:
1. Using a physical cue to engage that emotion or state of mind. Many times a physical action we take change our state of being, such as sports. When we practice sports, the physical activity clears our mind and takes us to another level, mainly state of less stress, worry and anxiety. This cue can be learned. For example, you can practice smiling at the same time thinking of the wonderful time you had in the past. Or by pulling out a cue, the body fools the mind into thinking and feeling something else. This will quickly flushes out the bad emotion unwanted for trading.
2. Using verbal cues to go into a desire state of mind. This may sound mediocre or cliché but the effect speaks for itself. Sport athletes use these cue every time before a major game or meet. Examples would be, “I´m ready to win today, my mind is clear and focused,” or “I’m thinking of a nice sunny sandy beach in Hawaii with a nice drink in the hand and am relax and ready to enjoy the session.” Practicing positive words with focus and concentration will eventually cue the mind to automatically go into that state when it hears these words.
3. Turn the trading environment into a sanctuary where a state of mind is turned on immediately. Many traders trade at home or trade at the office so it's a difficult to get a place where distractions are the norm. This can only create more stress than necessary. Learn how to cope with it or build a set of rules where limits (such as time limits or no trespassing in the office, etc) are set for others.
Many professional athletes and traders can turn these state of mind on and off on a dime by having practicing these over and over along with the real practicing (physical training or trading knowledge building). It is an essential training to go into the "zone" instantaneously. Without doing, it may take hours or days to get rid of this state of mind before that right state of mind back to be ready to trade. This is a waste of productive time.
Author: Larry Swing
Webs: mrswing.com
Saturday, January 27, 2007
Discipline
Discipline is the soul of an army. It makes small numbers formidable; procures success to the weak, and esteem to all.
- George Washington -
Discipline in Everyday Life
The winning trader is the disciplined trader. Disciplined traders devise very detailed trading plans. And they use them. They don't prematurely abandon trading plans. Once a trade is executed, the disciplined trader patiently waits to see the outcome.
The more you trade with discipline, the more profitably you will trade. How disciplined are you? If you have a problem with discipline, it is worth building up this skill.
Some people are highly disciplined and very self-controlled. Others are more impulsive. Extremely disciplined people scrupulously follow rules. They are careful to control their impulses, and may even have trouble letting lose. You know the type. They pay off their credit card bills every month, and are never late for an appointment. They carefully plan every detail of their lives. Although these characteristics may be ideal for trading, there's a downside: Overly disciplined people tend to have trouble taking risks. They prefer a sure thing, but trading outcomes are rarely sure things. People who are overly disciplined don't make the best traders because they crave certainty, a kind of certainty that just doesn't exist when trading the markets in the short term.
Winning traders are the kind of people who tend to prefer living a little on the wild side. They may not recklessly seek out risk, but they don't mind it. Relatively speaking, they tend to lack discipline and self-control. Perhaps that's why so many trading books and coaches find it necessary to remind novice traders to practice discipline and self-control. How is your discipline and self-control? Do you have trouble sticking to your trading plan? Do you long for more discipline and self-control when it comes to your trading?
If you have trouble with discipline, you may want to try a stimulating exercise to increase your awareness: Observe your level of self-control in your everyday life and try to gain more control. How much discipline and self-control do you practice in your everyday life? Are you late for appointments? Do you spend more money each month than your budget allows? Do you frequently find yourself breaking promises? It's not necessarily the case that a disciplined trader is disciplined in all aspects of his or her life, but it helps. The life strategies we use in everyday life may bleed over into our trading life. If you often overspend, overeat, or have an unrestrained need for pleasure, you may find maintaining self-control and discipline while trading a little more difficult than others.
So try this exercise: spend a few weeks trying to control as much of your life as possible.
Pick specific areas where you can gain more self-control. Control your caloric intake, the money you spend, and time spent in leisure activities. See how well you do. It may change your reference point. You may soon discover that you rarely control your impulses, and can do much better. And this in turn may positively influence your ability to stick with your trading plan. It's worth trying. Discipline is the key to trading success. The disciplined trader is the winning trader. It's a skill worth honing.
- George Washington -
Discipline in Everyday Life
The winning trader is the disciplined trader. Disciplined traders devise very detailed trading plans. And they use them. They don't prematurely abandon trading plans. Once a trade is executed, the disciplined trader patiently waits to see the outcome.
The more you trade with discipline, the more profitably you will trade. How disciplined are you? If you have a problem with discipline, it is worth building up this skill.
Some people are highly disciplined and very self-controlled. Others are more impulsive. Extremely disciplined people scrupulously follow rules. They are careful to control their impulses, and may even have trouble letting lose. You know the type. They pay off their credit card bills every month, and are never late for an appointment. They carefully plan every detail of their lives. Although these characteristics may be ideal for trading, there's a downside: Overly disciplined people tend to have trouble taking risks. They prefer a sure thing, but trading outcomes are rarely sure things. People who are overly disciplined don't make the best traders because they crave certainty, a kind of certainty that just doesn't exist when trading the markets in the short term.
Winning traders are the kind of people who tend to prefer living a little on the wild side. They may not recklessly seek out risk, but they don't mind it. Relatively speaking, they tend to lack discipline and self-control. Perhaps that's why so many trading books and coaches find it necessary to remind novice traders to practice discipline and self-control. How is your discipline and self-control? Do you have trouble sticking to your trading plan? Do you long for more discipline and self-control when it comes to your trading?
If you have trouble with discipline, you may want to try a stimulating exercise to increase your awareness: Observe your level of self-control in your everyday life and try to gain more control. How much discipline and self-control do you practice in your everyday life? Are you late for appointments? Do you spend more money each month than your budget allows? Do you frequently find yourself breaking promises? It's not necessarily the case that a disciplined trader is disciplined in all aspects of his or her life, but it helps. The life strategies we use in everyday life may bleed over into our trading life. If you often overspend, overeat, or have an unrestrained need for pleasure, you may find maintaining self-control and discipline while trading a little more difficult than others.
So try this exercise: spend a few weeks trying to control as much of your life as possible.
Pick specific areas where you can gain more self-control. Control your caloric intake, the money you spend, and time spent in leisure activities. See how well you do. It may change your reference point. You may soon discover that you rarely control your impulses, and can do much better. And this in turn may positively influence your ability to stick with your trading plan. It's worth trying. Discipline is the key to trading success. The disciplined trader is the winning trader. It's a skill worth honing.
Monday, January 1, 2007
Mind Power for Traders: The Power of Visualization
"When an object or purpose is clearly held in thought, its precipitation, in tangible and visible form, is merely a question of time. The vision always precedes the realization." Lillian Whiting
Sounds like magic, doesn't it? Picture something in your mind, and magic presto! There it is! A lot of our thought processes do work like magic. We're somehow not aware that we are the ones creating the magic. We think it just happened.
As you think about your trading, do you picture success? Or do you picture disaster? Or something in between?
We all of us make pictures in our minds of things and events. We may do it so quickly we're not aware of it. Remember a picture is worth a thousand words. If we're making pictures of success, we move towards it.
To succeed at any activity, whether it be athletics or trading, you need to have a clear mental picture of what you want. Through visualization, you imagine yourself successfully having or doing what you want even though it hasn't happened yet. Often unwittingly we do just the opposite-imagine ourselves having or doing what we don't want. This too works like a magnet.
Whenever I work with a client who has trouble pulling the trigger, I ask two questions. What are you saying to yourself when you see the signal? What are you imagining (imaging/picturing)? If they're having trouble pulling the trigger, you can be sure they are imagining the trade taking out their protective stop and giving them a loss.
Whenever I work with a client who overtrades in terms of size or frequency, or a client who continually jumps into the market before his signal matures, I ask the same two questions. You can be sure they are imagining the trade going the way they think it will. They want to get there early or fully. They do not entertain the possibility of loss, and therefore fail to take precaution.
Once again, what we need to picture is ourselves doing the right thing, following our methods and maintaining clarity about price action. Since we do not know and cannot know what will happen, it's best to maintain an attitude of not knowing with an openness to probabilities.
Imagine yourself replicating your methods in the markets. Imagine yourself being consistent and successful. Make a picture of it. Enter the picture so you're looking out of your own eyes. Adjust the qualities of the picture so that it is most impactful. Try making it larger, brighter, more focused.
Take time each day to visualize yourself trading the way you want to trade. Relax. Imagine yourself doing it right now. Make it real in your mind. Make it rich with vivid detail. Enter the role of successful trader and become it in your thoughts.
Do it repeatedly. Visualize your goal at least once a day, every day. The power is in the repetition. Any thought placed in your mind and nourished repeatedly will manifest results in your life. The magic is yours.
Author: Ruth Barrons Roosevelt
Website: RuthRoosevelt.com
Source: MarketMavens.com
Sounds like magic, doesn't it? Picture something in your mind, and magic presto! There it is! A lot of our thought processes do work like magic. We're somehow not aware that we are the ones creating the magic. We think it just happened.
As you think about your trading, do you picture success? Or do you picture disaster? Or something in between?
We all of us make pictures in our minds of things and events. We may do it so quickly we're not aware of it. Remember a picture is worth a thousand words. If we're making pictures of success, we move towards it.
To succeed at any activity, whether it be athletics or trading, you need to have a clear mental picture of what you want. Through visualization, you imagine yourself successfully having or doing what you want even though it hasn't happened yet. Often unwittingly we do just the opposite-imagine ourselves having or doing what we don't want. This too works like a magnet.
Whenever I work with a client who has trouble pulling the trigger, I ask two questions. What are you saying to yourself when you see the signal? What are you imagining (imaging/picturing)? If they're having trouble pulling the trigger, you can be sure they are imagining the trade taking out their protective stop and giving them a loss.
Whenever I work with a client who overtrades in terms of size or frequency, or a client who continually jumps into the market before his signal matures, I ask the same two questions. You can be sure they are imagining the trade going the way they think it will. They want to get there early or fully. They do not entertain the possibility of loss, and therefore fail to take precaution.
Once again, what we need to picture is ourselves doing the right thing, following our methods and maintaining clarity about price action. Since we do not know and cannot know what will happen, it's best to maintain an attitude of not knowing with an openness to probabilities.
Imagine yourself replicating your methods in the markets. Imagine yourself being consistent and successful. Make a picture of it. Enter the picture so you're looking out of your own eyes. Adjust the qualities of the picture so that it is most impactful. Try making it larger, brighter, more focused.
Take time each day to visualize yourself trading the way you want to trade. Relax. Imagine yourself doing it right now. Make it real in your mind. Make it rich with vivid detail. Enter the role of successful trader and become it in your thoughts.
Do it repeatedly. Visualize your goal at least once a day, every day. The power is in the repetition. Any thought placed in your mind and nourished repeatedly will manifest results in your life. The magic is yours.
Author: Ruth Barrons Roosevelt
Website: RuthRoosevelt.com
Source: MarketMavens.com
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