Archive for: March 2007

Not long ago , my wife bought a high pressure cooker during our trip to China. This cooker can do the job at less than half the time needed for a normal cooker. Many countries banned this item , probably due to safety reason. I had advised my wife not to use it , after seeing how the pressure builds up inside the cooker. My blood pressure builds up too when I see her using this device. If you do not see any new update in this trading blog for months , you probably can imagine what happened to me .. touch WOOD !!!! …. I have another 50 thousands blog posts to share with you , and I need to live long to tell you my whole trading journey …

I am seeing the price we may need to pay for speeding up job. Many traders friends of mine like to think that ” trading is a get rich overnight job “. I always like to reverse this …

When we face defeat in trading we traditionally encounter grief. This is natural. This emotion is unavoidable and can be handled like all other emotions. It merely requires the undertaking of appropriate mindset and strategies.

The first stage in dealing with grief is to simply acknowledge that something has gone wrong. When things go wrong - Deal with it …

If we possess the rationality to be a trader then we will not be able to hide from what has happened. Denial is part of the arsenal of the amateur trader , not the professional. A loss is a loss and there is nothing we can do to alter this. Acceptance is the key to this first stage.

In the amateur trader , denial will give way to anger. This anger will be directed at almost any inappropriate source. Amateurs become angry at their system , the advice that was taken or at the black box sitting on the desk. They will blame almost anything , including their dogs …
Anger gives way to personal recrimination which in …

We all understand this simple word ” ALWAYS ” in English , I believe.

However , during trading this may turned into an alien word. Many of us probably have ” Always use Stop Loss ” written somewhere in our trading rules. Some perhaps feel it is just good enough to mentally record this key phrase in their mind.

Regardless you have it written on paper or have it recorded into your head , the reality during trading can be a totally different matter. Do you agree ?
Probably you can remember some of the common phrases that either you yourself mentioned before , or that you heard from fellow traders …

The followings are some of the common phrases that might sound familiar to you …

I always got stopped-out , so I won’t use them.
Everyone is putting their stop-loss at the same price , and that will make the market makers take out my stop , that’s why I don’t use stop this time.
I don’t use stop this time because I am watching the market very closely …

What creates loneliness in a trader ? The answer is in these 2 four-letter words - Draw Down.

As human , we tend to talk more about our winnings than losers. That is quite natural , probably we want to maintain face value. This “keeping to ourselves” behavior is stressful and may be a time bomb to our health and psychology …

The loneliness of trading is a painful reality for traders , regardless of their level of success , their experience or their personal relationships. Trading is the most lonely job in the world , probably. The stresses built into the profession of trading isolate traders from their natural , emotional supports and outlets.

Large losses , competition , and the built-in psychological and physical demands of trading create a perfect climate for traders to learn how to repress their day-to-day feelings of fear , guilt , sadness , isolation and boredom in order to keep going.

Unfortunately , it is this survival pattern of blocking and not communicating feelings which can make a trader feel …

One of my good friend , Adwin , wrote this article …

The United States of America has its fair share of misfortunes in recent years: From the dramatic tragedies of September 11, to the ongoing battles its armed forces had to bear for the past four years since American troops first stepped onto Afghan soil (and subsequently, the invasion, ouster of Saddam Hussein), the US military has, for the first time since its withdrawal from the Vietnam debacle (a serious, major loss of face after two decades of fighting the Vietcong’s army of farmers and peasants), the American public has begun to feel towards the Bush Administration. This was reflected, no less, when the Republicans lost their mid-term elections for the Senate Committee, and as a result, the Republicans have faced formidable opposition with regards to its war policies.

Indeed, the mounting casualties inflicted on a daily basis on American troops, plus seemingly insurmountable difficulties that American and Allied troops have to face in Iraq, clearly indicates an error of judgment on the Bush Administration’s part. The so-called “war on …

The following are some of the common ” I should have … ” syndrome.

I should have gone short when I wanted to. My analysis was correct that the market was topping.

I should have gone long when I wanted to. My analysis was correct that the market was bottoming.

I should have used a stop loss …

I should have added few more contracts to my position …

I should have done what my charts indicated …

I should have listened to the rumors …

I should have gone golfing …

Be honest to yourself and admit if any of these in their stated form or in other variations happened to you before …

Hindsight is easy , correct ?

Trading is a psychological game. After all the research and back testing is done , and , after all the trading systems have had their turn at bat and after all the market experts have given their forecasts , the fact remains that what traders actually do in comparison to what they should do are two very different things.

Many traders are overloaded with …

I love watching Formula One racing. This is the highest class of Grand Prix racing , I guess. The ” formula ” in the name is a set of rules which all racing participants and cars must meet.

I am trying to relate Formula One or F1 , to our trading world. That is right - we have Rules to follow in trading too. We set our own trading rules. We need only One Formula ( correct one ) to be successful in trading.

I am not sure how many of my fellow traders would agree or disagree with me …

Trading is all about focus. We cannot do anything well without being totally focused. Focus means you must first get rid of distractions , and annoyances to your goal or lifestyle. Then you need to continually define and redefine your formula so that you can work on focus to and fro for that formula.

As traders this means we need to identify what our personal market focus is. We need to define what our formula is …

There is no shame in not trading when you should not be trading. This concept is one that you should cozy up to if your objective is to reach the next level of trading mastery and success. We have ups days and downs days , as far as level of energy and personal emotion goes. There are many traders who are convinced that they can trade regardless of how they feel. Those traders who have the discipline to take themselves out of the game when they are not up to par have fewer days they have to do so because they figure out ways to prevent occurrences.

The shame is in doing something that you are not prepared to do while putting yourself and your capital at risk. The best way to insure that you answer the question of whether or not you should trade today is to be disciplined. The routines of self-discipline that address your physical and emotional well being are your best defense against bad trading days. They are also the means to insure that you follow …