Archive for: February 2007

I spoke with one of the traders who read my trading blog. It was a good communication and also served as a reminder for me to stay focused in what I am currently trading. This trader was talking about few markets that he wanted to trade …

I tried doing the same idea when I first started my trading journey. Later I realized that each market had its own “personality” which is shaped , to a great extent , not only by the inherent characteristics of the market , but by the combined personalities and mass psychology of the major players who were involved in the market , both from the speculative as well as the hedge standpoint.

Staying focused and seeing the markets and ourselves from the psychological point of view is the key to success in trading. We have lots to learn about our own psychology as a trader.

I am sure most of us had came across what we once thought was a “perfect system”. Every trading seminar we attended , or every …

Almost everyone who gets involved in trading does so with the objective of making money. Most people also have the dream of becoming such a great trader that they can purchase or have anything their heart desires. Some of these folks dream of managing money and collecting 20% of the profits on hundreds of millions of bucks of capital. Others dream of breaking Larry Williams’ record of turning ten thousands into over one million in twelve months. Still others dream of taking their small amount of capital and , over the years , turning it into tens or even hundreds of millions of dollars. Sounds familiar ? You could also be one of those dreamers , like me before …

Whatever the dreams , the question becomes : What separate those who reach that dream from those who fail ? Believe it or not , it is the same thing that separates the successful people from the masses in other fields. The successful ones have a plan for success and they follow it. Another …

Online trading attracts us with the promise of financial freedom. If you can trade , you can live and work anywhere in the world. You have no boss to answer to , no necessity to answer to customer complaints , and no reports to write. Isn’t that wonderful ?

If you are currently employed , think of this … Are you making a living out of your job , or are you making a dying ?

Consider the average working class , the alarm clock rings at 6:30am and our working man is up and running. Shower and wash up. Dress up in your professional attire or overalls. Breakfast if there is time , otherwise grab your laptop carrying case and join the rush hour and traffic jam. This is a daily punishment for the working people , unless you commute by helicopter , if you are the CEO of a large corporation.

On the job from nine to five - deal with the boss , deal with colleagues , and exercise a little bit of office politics , if necessary. Deal …

Another sign that the Forex market has come of age is that everyone’s talking about it - investors , financial gurus , and world leaders.

Warren Buffet , , whose Berkshire Hathaway fund has realized an average 22 percent increase in book value annually since 1965 , announced in his 2003 letter to shareholders that he had , for the first time , entered the foreign exchange market on a large scale in 2002 and that he had increased his position in 2003.

Buffet attributed his move to the alarming increase in U.S. trade and government deficits. Buffet , one of the most successful investors in history , knows that weakness in the U.S. dollar could undermine the billions of dollars worth of assets he owns. ” I feel more comfortable owning foreign exchange contracts that are at least a partial offset to that position, ” he concluded.

In 2003 , Morgan Stanley told its clients that they should take advantage of stock opportunities in Japan and Europe. The firm took that position because it believes stocks …

When Foreign Exchange was deregulated in 1997 , independent traders finally had access to the biggest trading market of the world - forex. But to win profits at this game you have to go up in line with the biggest financial institutions of the global economy. These big guys - we call them Big Dogs …

Unlike other traded markets , the Forex market has no physical location and no central exchange. There are no pit traders to gun your stops , and no insiders to step on your toes. But it is a huge arena with huge players ! It operates through a global network of national banks , commercial banks , global corporations and individuals trading one currency for another. The lack of a physical exchange enables the Forex market to operate around the clock , spanning the world from one major financial center to the next.

The Forex market is driven by real need and real economic forces between countries and the economic sectors of the world. National banks act to protect …

Money has been around in one form or another since ancient times , during which money changers exchanged coins from one culture to another. However , during the middle ages , the demand for another form of currency other than coins emerged as the method of choice. The Babylonians are credited with the first use of paper bills and receipts. These paper bills represented transferable third-party payments of funds , making foreign currency exchange trading ( also known as Forex or FX ) much easier for merchants and traders.

From the infantile stages of foreign currency exchange during the Middle Ages to World War 1 , the Forex Markets were relatively stable and without much speculative activity. After the war , the Forex Markets became very volatile and speculative activity increased tremendously.

From 1931 until 1973 , the Forex Market went through a series of changes - many of which have paved the way for the road ahead. The Forex Market , as we know it today , originated in 1973. Today , everyone is talking …

In my previous post , I quoted this :

” The first rule of trading is to survive ; the second rule is that all rules can be broken if that supports the first rule. ”

The Stock Market is a complex environment. Market condition changes every second , sometimes you know the reason , sometimes you don’t. Trading systems and trading rules are meant to guide us during our execution of trades.

Trading Rules are not carved on solid rock. At times we need to review and edit some of the rules that do not work anymore.

I would like to quote a driving example here …

Imagine if you are driving along the road and an oncoming truck is heading towards you in your lane , do you stay in that lane or swerve across to the empty lane ( assuming no vehicles there ) where you are not supposed to be ? The rules are clear , you are not supposed to be over there in the wrong lane. The system says not to do it , but reality …

Not many people define their trading rules. Worst still , many beginners traders have a beautiful set of trading rules written on paper , which they do not follow.

” The first rule of trading is to survive ; the second rule is that all rules can be broken if that supports the first rule ”

Life is a judgment call , but that call is based on having data and systems to make life work better ; so is with trading. We need a systematic approach to enter and exit trades. There is no holy grail in trading. A perfect system or perfect strategy does not exist. Never has , never will . Stop searching and work hard on other trading topics …

We need some form of judgment when we use our trading system , supported by your own set of trading rules and your own trading behavior or psychology.

Successful trading is an Art of using knowledge and systems at the right time. We do need systems and rules …

I came across this article about weight loss …

” It seems that overweight people never reach their goals of becoming thin , and that many thin people eventually become overweight. The diet industry and the medical care providers profit greatly from this problem.

There are many people who lose weight permanently through dieting , but they have to continue doing what made them thin for the rest of their lives. Most of us cannot imagine being on a permanent diet or extreme exercise program. That is why the diet industry is so huge - it’s a big merry-go-round. People finish one diet , gain back all the weight they lost , and jump onto the next diet fad.

We are all searching for the diet that will give us permanent weight loss. There is only one problem with that - it doesn’t exist ! There are only permanent diets ! It only makes sense that if you lost weight on low fat , low carbohydrate or low calorie diet , that you are going to …

Online trading is a risky business. Many of us were lured into this venture with promises of overnight richness and success. Yes , some made it big time. Seminars and gurus will tell you that they will reveal their trading secrets. As such , you bought a “trading system” , with the hope of making it rich one day. I bought many of these dreams too , one after another … ( Not any more now , of course ) Bottom line , I lost money during that education stage.

Bet you thought you didn’t need help in learning how to drop your hard-earned money trading. My bet is that you have no idea how to lose ; hence , you lose …

Anyone can win , and it takes no great feat to win in the stock market. Trading gurus will tell you how simple it is to win. Winning is a glorious feeling , hence something you can pretty well control , handle , or take care of in your own fashion. In the winning mode , everything seems beautiful.

But …