Life relates to trading and trading relates to life. Constantly revealing, unfolding before us as we trade and live, so I write about how my life relates to trading and how I trade the markets. Along the way I share my opinions on anything that evokes my passion or tickles my funny bone trying not to forget that enjoying life is the best part of living.
Charts? Reading charts? Everyone knows how to read a chart don't they? It's simple, just look at the price, time and candles or lines or dots or whatever. Add to that Stochastics, Moving Averages, Volume, and about a 100-1000 different combinations of strategies and what most people end up with is confusion. Of course with enough time devoted, we can all become master chart readers, but what is probably more important to bring into focus is just how much of it is really necessary for you.
In order to find out which tools work the best for you, you must devote time. Some traders are more technical than others and some use many indicators, signals, bells and whistles to trust a pattern. Some just like all that "stuff" and more importantly some like to play with all the possibilities. Where it becomes a problem is when the playing with the tools is more fun than learning to use them properly in order to enhance trading ability.
Using technical tools can also confuse someone new to TA; especially when trying to use too many at once and not giving each one a chance to be examined on it's own. It takes time to get to know each one's abilities and limits and how each indicator fits your style. Some may enhance some may distract or even mislead your view of the charts.
The best way to start, in my opinion, is with what I call "Naked Charts". In other words, learn to read the sticks first, recognize patterns, repetitions, and rhythms in the way they line up from week to week, day to day, hour by hour, minute by minute. The longer you spend with candles the easier it becomes to dress them up with trend-lines and other indicators to assist your trades and you'll be better able to decipher which ones suit your needs the best.
At this time, there is turmoil everywhere around the world. At home in the USA there is no exception Debt, Deficit, & Inflation worries, Bank failures, Tax worries with no cooperation from leadership so far, we are not looking very secure despite the gropings of the TSA. Coupled with International manipulations via IMF, UN, NATO and overseas failures of Greece, Ireland and possibly Spain and Portugal, and advice from Germany and France, it gets more precarious. Add to it war threats from No.Korea and Iran with continued problems in Afghanistan, Pakistan, Iraq and Israel, we have certainly enough on our plate. So, why add a turkey?
Perhaps one of the most challenging for those who trade regularly and especially daily, are the holidays. Getting ready to the different time frames intra day and then day frames around the the holidays will assist traders, but the biggest effect in trading is the reduced volume causing more volatile prices and spreads.
Most money managers and professional traders will take vacation or holiday this time of the year and what's more, many will liquidate days prior to departure or hold until the beginning of the year. Those of you who follow me and are members know that I've talked about the positioning that actually begins in October for both tax reasons and for rotating in/out of positions in order to get ready for the end as well as the beginning of the year. For many who have not adjusted their portfolios, by this time, it can be more difficult as the year wears to the end.
What we need to add to this problem this year is the fact that we have no idea what this lame-duck Congress will do. The coming year will depend largely on the budget and taxation that they will pass and publicize and pass under the radar. So positioning becomes even more difficult and perhaps short term traders will hold back from trading positions that they may need to close early next year.
For traders entry and exits can be more difficult as less shares are available and the spreads get wider so the requisite number may not be available for the trades. Today, Monday, was the first day that this pattern actually emerged. Notice that no matter what the news, or time of day, the traders popped and dropped more often, also notice on the minute chart, the volume evidence of trades. Many looked on the 5 minute chart what normally would show on the 1 minute. All evidence of lack of trading interest causing lack of momentum.
Those receiving great news may look like they are trading better than usual, but those lacking news become dead or whipped. Also, especially at the beginning of this type of activity, traders are more likely to sell off rather than accumulate. Which may change at the beginning of December prior to the Christmas holiday as many may position into next year as witnessed the last few years of the DJIA . Look at the lows in November and accumulation in December.
Of course, nothing is perfectly scripted, and although so far, it looks to be shaping up in much the same way, be sure to allow for differences due to news and financial woes both here and abroad.
In a nutshell, rather than being more relaxed trading becomes more intense due to the volatility, so if you are new, you may wish to take a lesson from those around longer. Take a vacation and have a Happy Holidays around family and loved ones. To those who simply can't stop or get away, try paper trading or at the very least, reduce your size, expect the unexpected and place fewer trades.
When trades trip you up, and they will, what do you do? How are you prepared. Being stopped out is never easy for ego or for pocketbook, but I feel the most damage is that we lose confidence. And the loss of confidence is what most wish to avoid, therefore, I think it adds to the reason why many traders do not put in stops. Yep, a stopped trade only reinforces the feeling of failing.
There is nothing worse a trader may think at the time it happens, than to reveal a bad trade.
It may help you to know why you don't place your stops and rather suffer through losses. Of course, sometimes those too have a way revealing themselves but perhaps not as badly since it can be stirred into overall returns. And the term "loss" has much less of an impact on ones psyche as being "stopped".
"Stopped" is like being caught. Like for being on the wrong side of the road. You know, the cop with red lights behind you feeling. Have you been drinking? What are you doing going driving the wrong way? Take a test, are you on drugs? In other words a feeling of somehow being wrong; as in "What's WRONG with you?" This is a blame; it's all your fault.
A loss is easier on the ego, psychology being what it is, everyone loses sometimes and everyone loses a lot sometimes. You can justify it easier. After all, you lose your job for many reasons or you can lose at a game of chance against the odds. "Bad luck, chap!", go to welfare and get help. People will feel sorry for you and give you help, hold your hand, sympathize and even help you lick your wounds. This way you don't have to admit to being wrong. This way you can save face; and rather than being wrong, you are "POOR". Poor you, too bad.
It's important to know that this way you can continue your way and end up broke. 90+% of traders fail, this way.
So then what? Well it depends on how much you rely on other people's approval to be honest. How important is it to you to be judged by others and how much do you rely on their judgement. I am not speaking business wise, because that is different, but speaking on your personality and how much other people's thinking influences your behavior.
Some of us were raised by influences in our environment that relied more on what other's think than what we think. These influences emphasized our blending in rather than sticking out. Some of us were raised by influences that allowed us to question and not necessarily accept what was told us and to rely on our instincts and our knowledge. One creates dependence the other independence. I think we all have both but which one dominates you and your life only you can assess. Knowing which will help you to overcome your bad trading behavior and can help you to survive to trade another day.
Survivors breed confidence, and confidence breeds success.
Much is said/ written about how we trade, how we should trade, and there's always a discrepancy when we actually trade. There is a reason for that; namely, fear.
No matter how much we practice on paper, discuss, analyze and philosophize or imagine and visualize our trades, the one factor non of those will include is the actual feeling of fear when the trade involves real money.
It is important to note here that this fear is not only real, it is realistic because once the money is gone, it is really gone. There are no redo's or oopses or I didn't mean its. It's gone as if you put a match to it and watched it poof in flames. So if you do not feel fear as I described that, I did a poor job of writing, or you have ice in your blood and money to burn so this article is not needed by you.
The fact is we all feel it no matter how much experience we have had trading. If not, you lie because the reality is that we know the potential of loss. But the real question to put here is not will we lose, but HOW MUCH are we going to lose. When you start turning the question around, and examine the possibilities within it, you shall see that you have control of the fear and that you are the sole controller, not some other trader out there who is your nemesis.
In order to accomplish fearless trading you need to accomplish loss control. Along the way of your trading education you have learned a style and a strategy and a boldness with which you approach the trading day, yet what many and most traders I speak with lack with all that knowledge is the same boldness with which they follow their stop loss rules; if they have one even. Most stuffed that somewhere in the last place of order forgotten immediately after entering the trade therefore unwittingly making their fear factor increase by x strength.
Do you doubt me? Try this on a live trade: Buy 2 small lots (100) shares of xyz stock; let's pick one that can whip you about just for a snack. Using your usual strategy and rules for entry, place your stop and 1st target in immediately in on one trade and not the other.
Now, observe yourself and your reaction as you watch the chart, ticker or whatever method you follow to track the trade. Which gets most of your attention? Which gets most of your trepidation? Which gets your finger twitching over the mouse at each tick? Which do you take sooner when a profit is available? The point here is that fear not only gives you stress over the loss of money, but also stress over the potential gain of it; leaving you to be unable to run the gain to further profit.
So, trading fearless does not mean you do not trade without fear, but that you control it to the point where it becomes a non-issue. Fear is a friend when you can control the cause and an enemy when it's allowed to go unchecked. No soldier goes into battle without fear, but it's controlled with ammunition, training and the knowledge that one does not jump up and down in front of the enemy and shout "here I am!" . Know that when you trade without calculating and setting your stop, you are not only doing that but also putting down your weapon of defense.
Much is said/ written about how we trade, how we should trade, and there's always a discrepancy when we actually trade. There is a reason for that; namely, fear.
No matter how much we practice on paper, discuss, analyze and philosophize or imagine and visualize our trades, the one factor non of those will include is the actual feeling of fear when the trade involves real money.
It is important to note here that this fear is not only real, it is realistic because once the money is gone, it is really gone. There are no redo's or oopses or I didn't mean its. It's gone as if you put a match to it and watched it poof in flames. So if you do not feel fear as I described that, I did a poor job of writing, or you have ice in your blood and money to burn so this article is not needed by you.
The fact is we all feel it no matter how much experience we have had trading. If not, you lie because the reality is that we know the potential of loss. But the real question to put here is not will we lose, but HOW MUCH are we going to lose. When you start turning the question around, and examine the possibilities within it, you shall see that you have control of the fear and that you are the sole controller, not some other trader out there who is your nemesis.
In order to accomplish fearless trading you need to accomplish loss control. Along the way of your trading education you have learned a style and a strategy and a boldness with which you approach the trading day, yet what many and most traders I speak with lack with all that knowledge is the same boldness with which they follow their stop loss rules; if they have one even. Most stuffed that somewhere in the last place of order forgotten immediately after entering the trade therefore unwittingly making their fear factor increase by x strength.
Do you doubt me? Try this on a live trade: Buy 2 small lots (100) shares of xyz stock; let's pick one that can whip you about just for a snack. Using your usual strategy and rules for entry, place your stop and 1st target in immediately in on one trade and not the other.
Now, observe yourself and your reaction as you watch the chart, ticker or whatever method you follow to track the trade. Which gets most of your attention? Which gets most of your trepidation? Which gets your finger twitching over the mouse at each tick? Which do you take sooner when a profit is available? The point here is that fear not only gives you stress over the loss of money, but also stress over the potential gain of it; leaving you to be unable to run the gain to further profit.
So, trading fearless does not mean you do not trade without fear, but that you control it to the point where it becomes a non-issue. Fear is a friend when you can control the cause and an enemy when it's allowed to go unchecked. No soldier goes into battle without fear, but it's controlled with ammunition, training and the knowledge that one does not jump up and down in front of the enemy and shout "here I am!" . Know that when you trade without calculating and setting your stop, you are not only doing that but also putting down your weapon of defense.
If there is any symbol of freedom more evident, I know it not; the ballot and your vote is most precious. If you have any doubt, look at the evidence demonstrated by those who for lifetimes could not express their choice via the ballot. The most recent, Iraq, where many in defiance voted and proudly displayed their stained finger as proof.
When is the last time that you proudly wore the little sticker given to you after you voted? When is the last time you really felt exalted at the privilege of being able to mark your ballot? When is the last time that you realized that voting meant responsibility? When is the last time you owned your freedom; not as a privilege, not as a right, but as responsibility.
Freedom is not an entitlement, freedom is life's essence. Without it you're a fish without water; a bird without sky. Something you don't know until it's gone.
