Friday, September 14, 2012

Learn Not To Trade

I used to be a day trader for two years. Two years experience taught me very important things that may become the key to your successful tradings. And I deeply believe this one is a very important key and reason why lot of day traders failed.

Learn how to stay at the sideways....

Seemed easy but hard to do, especially if your income solely depends on your trading profit. As futures trader, we may stay not to trade for days, even weeks. Just stay at sideline. How convenient...this is true. For example price didn't move much if there will be big economy news or meeting coming. Price may stall 2-3 days before the big day. So why you wanna trade the obvious whipsawed price? Better just go to the beach and enjoy the vacation...But No!..we continue to trade because if we don't trade then we don't make money. Maybe your subconscious mind told you to take action, waiting make you look like a worthless lazy being. Then you get this brilliant idea to trade this whipsawed for the sake of trading. 

Professional trader only trade when there are trades, no need to attend every day, interpret all ticks coming, up and down, hoping become the master of tick reading. Some traders have dreams to mastering one type maybe S&P, Dow, and believe that's their ATM. Every single day try to crack the ATM, instead the opposite happens.

Honestly this is the worst finding..dull market is not suitable for trading, especially day trading. Few traders realize it. You can make more money just trading 3 months in a year than trading full 12 months. That is the fact, been there.

How is the solution? Create a filter to identify to trade or not. This is the key. You can use the volatility index, important release news, or ticker speed, volumes, anything that suits you.Before I used a surging fast volume to identify the good to trade or not. But too bad that my price feed service is bad so sometimes give wrong signal. Or you can use incoming news and see if result worth moving the price. And then stick with it..If there is no trade for two weeks, stick with it. Easy to say, difficult to do.

Saturday, September 1, 2012

What kind of traders are you? Bet it is No.2

Contrary to general beliefs, trading is the most stress free, big income, less work job in the world. We need to set the mind straight, enter the zen state about money. Some people collecting hard earned money to trade so a lot of emotional attachment in it. Let it out. Don't treat trading like a business or office work like we did before. Treat it more like smart gambling. If you start traditional business, you expect to become bigger in long term. Quite impossible for business to grow have breakeven in one week while trading may reach 100% return in 3 days. It is different.

 I will classified the types of people into 3 categories:

 1. Impulsive Gambler, they treat trading like a casino. Trading only for fun, or try their lucks. Just like casino player, they are not afraid to lose. Doing it over and over again with no method whatsoever. Risk management is nil. This traders will reach fame or shame result. Rich or Die.

2. Management Trader.. traders in this category usually make blog about their trade, willing to learn how to trade. Have desire and dream to trade for a living. They use methods and rules to trade. They logged their trades, Analyze anything. Seem a good type of trader to success. Problem is in the end, this kind of trader will end up like gambler. Only longer pain and more hard work. They think they can crack the market with their method. They embrace the risk but actually it just illusion. The biggest problem here is they still have attachment to their money. Emotional cling that even the slightest breakdown will ruin your years hard work. I bet people will profit from demo account than real account because of this problems. Even with the exact same methods, I will bet my life in the end demo will have better results. The answer is attached of the money.

Some said they will discipline only allowed max losses at certain amount. Well take that 7 days in a row and see what happened to this guy. Physical pain, emotional pain, surely affect their next trades. We are human being, cannot kill those emotions fault. Embrace it and get ready anytime.

3. Smart gambler. This is what ideal traders should do. The attachment to money zero percent, but still trade with discipline and methods. What if they lose 7 days in a row? No effect. What if they win 100k? Maybe just smile. They enjoy lives, money for them is just tools. Sometime gained, sometime gone. Trading world is a big playground for them. They never calculated their floating profit, never watched the price tick by tick, they trust themselves, and managing trade with the let it go mindset. Don't care what the market will do. In their minds, there are no overprice or overbought. No cheap or expensive. All just numbers. They always trade the high odds chance. They knew market is not the same every time. They only trade when condition is good. They patiently wait their moment. While still enjoying their lives. The way they manage trading are different with others. They never wanted to be a hero to buy at lowest price and sell at highest price. If it happened, they considered it lucky guess and never want to analyze the lucky shot. Treat the money like bullets to shoot target. They never regret the bullet they spend if miss. They forget it. They are not focusing on how many bullets they wasted. They focus on how to hit the targets. And they are the winner in this trading world.

Most of us stuck in number 2 and despised the number 1 type of trader. Well we are not better than them. Only die longer and more pain accumulated. All the trading book not setting your mind right. Only insane people can trade profitable consistently in first place.Our mind is not set to trade since we are born. We must tweaked our brain myself and it took time, confidence, and humbles. I already become the smart gambler, I can set my mind straight. I am not discipline every time but I can set my mind straight. Sometimes I fell to gambler area but I still limit my risk. One important key is not treat your profit as your money, unless you are quit trading forever. And trade never been so easy