11/05/2008

Institutional Trading Strategies: Money Management 101

Expert: Andrei Pehar, Sr. Currency Strategist at fxKnight.com
Moderator: Maud Gilson, Conference Manager

Summary:

Most trading systems fall short because they focus solely on entry and exit signals.  Here's your chance to learn about the "other 90%" of trading success - money management, position sizing, risk:reward ratios & more!  Join fund manager and trading coach Andrei Pehar for this special webinar which can have instant and lasting effects on your account's bottom line.  Learn exactly why 95% of traders fail, and how you can join the elite 5%.
 

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10/21/2008

Facts, Fiction and Truth About Day Trading

Expert: Markus Heitkoetter, CEO at Rockwell Trading Inc
Moderator: Maud Gilson, Conference Manager

Summary:
Only 11.5% of traders are actually trading profitably. How do you fit into this picture? If you are making money, welcome to the elite few! If you are like most traders and are losing money, isn’t it time you learned what you need to do in order to position yourself for success?

The TRUTH is, unless so start getting serious about how to day trade, you will never know what it
In this webinar, you're going to learn the truth about what it takes to position yourself as a SUCCESSFUL DAY TRADER and the straightforward steps it takes to get there.  You will hear:

- Why some traders always seem to make money - while others are struggling
- The real problem of traders that lose money in the markets
- A good trading strategy - is it the key to trading success?
- The six mistakes of traders and how to avoid them
- Three easy steps to day trading success
- Why the old approach to trading doesn't work any more
- A new approach to day trading
- The right mindset - and how it can make all the difference in your trading
- The three fundamentals of trading success
- What are the essential skills for day traders and how to obtain them.
- An easy to learn day trading strategy that you can implement in your trading right away.

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09/29/2008

Risk Management

Expert: Valeria Bednarik, Analyst at MolFX - Management
Moderator: Maud Gilson, Conference Manager

Summary:

  1. Why waiting for stop hunting and margin calls?
  2. Caution trading could be worthy too
  3. How to manage your capital in order to become profitable?

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07/17/2008

MONTHLY WEBINAR: Trading Plan: Rules and tools - Part 1

Expert: Valeria Bednarik, Analyst at MolFX - Management
Moderator: Maud Gilson, Conference Manager

Summary:
Part 1: How to create your trading plan

Join Valeria Bednarik for her first Monthly webinar at FXstreet.com!

During the first part of the "Trading Plan: Rules and Tools" session, she will present you a step-by-step plan to become a good trader: understand the market, charts and indicators, have a precise trading strategy and define a working plan. We will talk about all the things that you must now before even opening a demo account, from different points of view: technical and fundamental, emotional and rational.

We will also review the external factors that could affect the currency markets, when and why, including economic policies that could change or define long term trends. Finally, the relationship between commodities and market will be studied.

Continue reading "MONTHLY WEBINAR: Trading Plan: Rules and tools - Part 1" »

07/16/2008

Trading the Summer Months

Expert: Adam Rosen, CEO and Co-Founder at 4xLounge
Moderator: Maud Gilson, Conference Manager

Summary:
A look forward to the quite markets that often times develop over the hot summer months, and the appropriate trading strategies we may employ

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07/10/2008

Short term Forex Trading Strategies, Breakouts and Reversals

Expert: Sam Seiden, Stocks and Commodities Instructor, Author and Mentor at Online Trading Academy
Moderator: Maud Gilson, Conference Manager

Summary:
In a market where prices turn fast and trend for hours at a time, it is very important to be an expert short term trader. The Forex markets tend to offer the short term trader quality opportunities every few hours which is certainly not that common in other markets. During this FXstreet.com learning session, we will cover market direction timing tools that help give you the short term trading edge.

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06/17/2008

The Day Trading Coach - Tips, Tricks and Strategies for Day Traders

Expert: Markus Heitkoetter, CEO at Rockwell Trading Inc
Moderator: Maud Gilson, Conference Manager

Summary:
In our Premium Sessions we talk about specific trading strategies that you can use in your trading right away. But as you know, there's more to trading than just having a strategy, and therefore we will also talk about a trader's mindset. In addition, you will get practical tips how to maintain your discipline, deal with your emotions and avoid overtrading. In short: in these sessions you will learn everything you need to know to make money with day trading.

Continue reading "The Day Trading Coach - Tips, Tricks and Strategies for Day Traders" »

06/10/2008

Longer-term Support and Resistance Trading: Setups and Rules

Expert: Rob Booker, Currency Analyst at Piptopia
Moderator: Maud Gilson, Conference Manager

Summary:
In this monthly webinar, Rob will show you how to plan trades that last (generally) between 1-3 days, and that do not require constant monitoring. While short-term trading can be profitable, many traders want to learn to trade in a more relaxed, patient manner, and this is where you can learn to do that. We'll cover:

1.  Specific rules for support and resistance trading
2.  Real trades that Rob is planning to take
3.  How to set stop losses and profit targets for longer term trades (even if you are trading an account with less than $5,000)

Continue reading "Longer-term Support and Resistance Trading: Setups and Rules" »

01/24/2008

Creating and Using a Powerful Trading Plan - Part 2

Expert: Rob Booker, Currency Analyst at Piptopia
Moderator: Maud Gilson, Conference Manager

Summary:
Most people know that they should have some type of trading plan. But what kind of plan? Is a trading plan something you use on a daily basis, or a weekly basis, or that you write one time and put away in a drawer? Most people never write a plan. Most people who write a plan never look at it again.

In this special Monthly Webinar, Rob argues that having a plan is critically important for your day to day trading -- and much less important for the "big picture". This goes against much of what we are taught as traders. In the presentation, Rob will include a description of what a trading plan can include, how a trading plan can boost your trading to a higher level, how you can keep track of your progress and implementation of your plan, and much more.

Topics of Part 2:

  • What a Trading Plan Is NOT: Common Misconceptions
  • The Essentials of a Powerful Trading Plan

Part 1 is available here.

Continue reading "Creating and Using a Powerful Trading Plan - Part 2" »

Creating and Using a Powerful Trading Plan - Part 1

Expert: Rob Booker, Currency Analyst at Piptopia
Moderator: Maud Gilson, Conference Manager

Summary:
Most people know that they should have some type of trading plan. But what kind of plan? Is a trading plan something you use on a daily basis, or a weekly basis, or that you write one time and put away in a drawer? Most people never write a plan. Most people who write a plan never look at it again.

In this special Monthly Webinar, Rob argues that having a plan is critically important for your day to day trading -- and much less important for the "big picture". This goes against much of what we are taught as traders. In the presentation, Rob will include a description of what a trading plan can include, how a trading plan can boost your trading to a higher level, how you can keep track of your progress and implementation of your plan, and much more.

Topics of Part 1:
- How to Share Your Plan with Others
- How to Use a Trading Plan Every Day, Week, and Month

Part 2 is available here.

Continue reading "Creating and Using a Powerful Trading Plan - Part 1" »

03/13/2006

W.D.Gann Trading Physchology

Expert:  David Burton, CEO & Founder of School of Gann 
Start:    March 14, 2006 - 7:30GMT 02:30EST 
End:      approx. 08:30GMT 03:30EST 

   
Topics that will be covered for above session are: 

  •    Human Element: The Greatest Weakness
  •    You can never go broke if your trading account is less than 5%
  •    Gann didn’t believe in debt

Who is David Burton?

DAVID BURTON has been studying and trading the methods of the most famous trader of all time, W.D.Gann.Gann was a financial astrology up until his death in 1955. David has been studying astrology since 1980, not modern day astrology, the astrology of the ancients. David uses both helio-centric and geo-centric in his studies. In June 2002 on Gann’s birthday David ran the first four day workshop teaching the methods of Gann. Only running a few workshops a year to a limited number, he discovered that the basis, chart reading, money management,seasonal patterns etc were not under stood even by people that have been trading for a number of years,this lead to the home study course for the beginner completed in march 2005. To understand the methods
of Gann you have to have a strong foundation otherwise you will never keep your money. David hasjust set up a new website THE SCHOOL OF GANN
to keep Gann’s methods alive, hoping that people will study Gann and enjoy the journey and success David has had with Gann. David publicly forecasted
in advance the 130 high in cotton in 1995, the 737 high in wheat in 1996, the major low in cotton in 2001as well as many others which are on his website
www.schoolofgann.com

Speech Material:

There is a different phycology between people who have money, and those that don’t. Only poor people want money, the rich people don’t. They make more money because it’s a product of having passion for what they enjoy. Bill Gates has given away over 50 Billion dollars, if was interested money he would keep it. W.D.Gann study astrology etc because it was his passion, money was a bi-product of his studies. People who have money don’t have to rush into things as they can wait for opportunities (these people are not day traders!).

People who don’t have money panic as mounting bills force them to make untimely decisions.

People with money are usually more casual than those without. People with no money usually take big risks by borrowing and then speculate wildly.

As I have mentioned in previous articles, Gann didn’t believe in debt – either personal or national and always suggested to save money for times of panic. This puts you in a completely different mindset to someone who has debt. The U.S government and the people will panic over the coming years as they run out of money and become a third world country.(See the US Debt Clock at http://zfacts.com/p1461.html).

People like Jessie Livermore and Larry Williams (See the book “Winner take all”) have gone broke or lost a lot of money trading commodities because their positions were too big for their net worth.

Gann always recommended to have double your initial margin and divide your capital into 10 equal parts. The markets were at much lower levels when Gann was trading, and I’m sure if he was alive today he would do what I recommend which is to have three times the initial margin.

Going Broke

You can never go broke if your trading account is less than 5% of your net worth, therefore in the examples to follow of having a trading account of say $60,000.00 US ($58,146.00 in initial margins) you need to be worth $1.2 million US. If not, your trading account is too big.

Initial Margins  Gann’s Recommendations  My Recommendations

Corn                        $338            $676        $1,014 
Soybeans                $1,148         $2,296     $3,444 
Wheat                     $506            $1,012     $1,518 
10 Year T-Notes       $1,350          $2,700     $4,050 
Dow Jones               $4,875          $9,750    $14,625 
Sugar                     $1,260          $2,520     $3,780 
Cocoa                    $980             $1,960     $2,940 
Coffee                   $2,800          $5,600     $8,400 
Cotton                   $1,400          $2,800     $4,200 
Crude Oil               $4,725          $9,450     $14,175 
         
       Total  $58,146 
         

These are per/Contract, therefore you could only trade one contract of each of theses markets on a $60,000.00 U.S account.

The best book ever written was Gann’s book “How to make Profits in Commodities”.

He has 28 rules to be followed on page 43. Outlined below I copy the rules and in italic expand on the meanings of these rules.

1.  Amount of capital to use: Divide your capital into 10 equal parts and never risk more than one-tenth of your capital on any one trade.

This means your trading capital, not your total capital. Have money for 10 different markets.

2.  Use stop loss orders. Always protect a trade when you make it with a stop loss order 1 to 3 cents, never more than 5 cents away, cotton 20 to 40, never more than 60 points away.

In today’s market, this represents 1 to 3% never more than 5%.

3.  Never overtrade. This would be violating your capital rules.

Don’t day trade, you are too close to the market.

4.  Never let a profit run into a loss. After you once have a profit of 3 cents or more, raise your stop loss order so that you will have no loss of capital. For cotton when the profits are 60 points or more place stop where there will be no loss.

Always protect your capital!

5. Do not buck the trend. Never buy or sell if you are not sure of the trend according to your charts and rules.

Trade with the trend, if an up trend and you get out, wait until the market corrects to go long again. Do the opposite in a bearish market.

6.  When in doubt, get out, and don't get in when in doubt.

If there is no trend, leave your money in the bank or look for another market that is trending.

7.  Trade only in active markets. Keep out of slow, dead ones.

Self explanatory.

8. Equal distribution of risk. Trade in 2 or 3 different commodities, if possible. Avoid tying up all your capital in any one commodity.

Chart about 15 different commodities or currencies. The reason you don’t place all your $60,000.00 in one commodity is that the other markets may start to move and you won’t be able to trade them. Also you will become impatient if you have all your money in only one or two markets.

9.  Never limit your orders or fix a buying or selling price.  Trade at the market.

Self explanatory.

10. Don't close your trades without a good reason. Follow up with a stop loss order to protect your profits.

Don’t close a trade just because you need the money, follow up with a stop loss order.

11.  Accumulate a surplus. After you have made a series of successful trades, put some money into a surplus account to be used only in emergency or in times of panic.

You can only accumulate a surplus if you have no debt. Only a very small percentage of the population has no debt. I trade to save and no other reason.

12.  Never buy or sell just to get a scalping profit.

Don’t day trade, there is more money in the longer swings.

13.  Never average a loss. This is one of the worst mistakes a trader can make.

Self explanatory.

14.  Never get out of the market just because you have lost patience or get into the market because you are anxious from waiting.

Self explanatory.

15.  Avoid taking small profits and big losses.

Self explanatory.

16. Never cancel a stop loss order after you have placed it at the time you make a trade.

Self explanatory.

17.  Avoid getting in and out of the market too often.

Getting in and out of the market too often only creates brokerage for your broker.

18.  Be just as willing to sell short as you are to buy. Let your object be to keep with the trend and make money.

You can’t do this with all stocks, so trading commodities and currencies have a bigger advantage.

19.  Never buy just because the price of a commodity is low or sell short just because the price is high.

Have a look at Long Term charts (more than 30 years) to see where old support and resistance levels are.

20.  Be careful about pyramiding at the wrong time. Wait until the commodity is very active and has crossed Resistance Levels before buying more and until it has broken out of the zone of distribution before selling more.

Self explanatory.

21.  Select the commodities that show strong uptrend to pyramid on the buying side and the ones that show definite downtrend to sell short.

Self explanatory.

22.  Never hedge. If you are long of one commodity and it starts to go down, do not sell another commodity short to hedge it. Get out at the market; take your loss and wait for another opportunity.

Self explanatory.

23.  Never change your position in the market without a good reason. When you make a trade, let it be for some good reason or according to some definite rule; then do not get out without a definite indication of a change in trend.

Change your position according to the charts.

24.  Avoid increasing your trading after a long period of success or a period of profitable trades.

Be aware that you too have bad cycles. Just like the markets, you will have bullish and bearish times in your life. If you have 3 losses in a row stop trading, your cycle has changed.

25.  Don't guess when the market is top. Let the market prove it is top. Don't guess when the market is bottom. Let the market prove it is bottom. By following definite rules, you can do this.

Self explanatory.

26.  Do not follow another man's advice unless you know that he knows more than you do.

Learn to be independent.

27. Reduce trading after first loss; never increase.

Self explanatory.

28. Avoid getting in wrong and out wrong; getting in right and out wrong; this is making double mistakes.

Self explanatory.

Human Element – The Greatest Weakness (excerpt from How to Make Profits in Commodities)

When a trader makes a profit, he gives himself credit and feels that his judgement is good and that he did it all himself. When he makes losses, he takes a different attitude and seldom ever blames himself or tries to find the cause within himself for the losses. He finds excuses; he reasons with himself that the unexpected happened, and that if he had not listened to someone else’s advice, he would have made a profit. He finds a lot of ifs, ands and buts, which he imagines were no fault of him. This is why he makes mistakes and losses the second time.

The investor and trader must work out his own salvation and should blame himself and no one else for his losses, for unless he does, he will never be able to correct his weaknesses. After all, it is his own acts that cause his losses, because he did the buying and the selling. You must look for the trouble within and correct it. Then you will make a success, and not before.

One of the main reasons why traders make losses is because they do not think for themselves. They allow others whose advice and judgement is no better than their own to think for them and advise them. To make a success, you must study and investigate for yourself. Unless you change from a “lamb” to a thinker and seek knowledge, you will go the way of all lambs, - to slaughter under the margin caller’s axe. Others can only help you when you help yourself.

I can give you the best rules in the world and the best methods for determining the position of a commodity, and then you can lose money on account of the human element, which is your greatest weakness. You will fail to follow rules. You will work on hope or fear instead of facts. You will delay. You will become impatient. You will act too quickly or you will delay too long in acting, thus beating yourself on account of your human weakness, then blaming it on the market. Remember that is your mistake that causes losses and not the action of the market or the manipulators. Therefore, strive to follow rules, or keep out of speculation, for you are doomed to failure.

If you will only study the weakness of human nature and see what fools these mortals be, you will find it easy to make profits by understanding the weakness of human nature and going against the public and doing opposite of what other people do. In other words, you buy the near bottom on knowledge and sell near the top on knowledge, while other people who just guess do the opposite. Time spent in study of price, time and past market movements, will give you a rich reward.

Outcomes

Gann was completely right. A high percentage of students I have taught in my workshops have failed or given up, some have gone broke because they failed to follow the rules Gann set out. Others have made hundreds of thousands of dollars. They all have the same information, but not the same disciplines or passion as Gann or I. They think they are smarter than Gann who traded for 50 years. Ego will always send you broke.

Benjamin Franklin said “an ounce of prevention is worth a pound of cure”, and “he that lives upon hope will die fasting” and “People that are wrapped up in themselves make small packages”.

Continue reading "W.D.Gann Trading Physchology " »

02/01/2006

Trader psychology

Expert:  Adrian Aquaro, Head of Trader College LLC and True Market LLC 
Start:    February 1, 2006 - 15:00GMT 10EST 
End:      approx. 16:00GMT 11EST

Topics that will be covered for above session are:
 

  • Self control techniques
  • Mood frames regulation
  • Find your trader profile?
  • Trading mistakes
  • Physical activation vs Stress

Who is Adrian Aquaro?

Adrian Aquaro has been a trader for the last 3 years, specializing in the International Foreign Exchange Market and acting as an Introducing Broker for the Latin America market. He heads True Market Services LLC and is also the director of Trader College LLC. He has vaste experience in forex education, making of him a leader in this particular part of the financial services industry.

Speech Material:

Self control techniques

Today, we are going to cover the hard and controversial matter of the emotional control in trading. This seminar objective is to provide a help matrix for the everyday trader’s work. Is t he result of an empirical investigation, and its objective in not to get into medical research, but to clarify the most usual behaviors and deflections, and then define models for s   suitable performance.

We based this material in different studies about Emotional Intelligence, developed by masters like Dr. Miller, Dr. Daniel Goleman, and overall, we thank the invaluable help of Lic. Abel Cortese, leading figure  in Emotional Intelligence, also a Trader College graduated, promotion 24.

We are going to detail a number of the intellect functions that does not come from any rational thought

Emotional Conscience

We always hear our students say:

- “I will start trading Forex as soon as I’m ready”

But the real question is: When someone is ready, when a trader is qualified to start trading?

The answers can be:

  1. When he/she has enough knowledge.
  2. When he/she is really aware of what was learned and of the sensation the application of this knowledge produce.

No doubts, the second answer is much more complete. A Trader needs, not only knowledge, but the awareness of this emotions when applying his/her techniques and really practicing the learned matters, to become a successful trader.

That’s what we really need: Self conscience and of the activity we are about to develop; awareness of our states of mind, resources and intuitions.

Still, there is something else: the right valuation of our own strengths and weakness as a trader that will finally give us SELF CONFIDENCE, meaning the real appreciation of our technical and emotional abilities 

Now you are wondering how to do this; well first of all you need a training plan to get into a trading one; a lot of patience and all you can get of your INTELLECTUAL HONESTY, witch do not mean criticize or praise yourself constantly, but to objective   analyze your behavior as a trader.

For a better comprehension, ask yourself this:

  1. What I want to accomplish hit this activity?
  2. Do I invest enough time in my studies?
  3. Do I have a training plan and so on, a trading one?
  4. What I feel when I fail?
  5. How far am I of my objective as a trader?
  6. Witch are my best virtues and abilities?
  7. What would I change of my trader profile?
  8. How am I going to do it?

Side note: You can ask for a qualified opinion sending the answer to these questions to Trader College: cursos@tcollegeweb.com.

Mood frames regulation

What it takes to regulate your own mood frames?

Self regulation: meaning take control of you mind states, feelings, resources and impulses.

The emotional functions that depend on self regulations are:

  1. Self control: you must keep an eye on disturbing emotions such as extreme fear, or lake of if, and of impulses that do not respond to your trading plan.
  2. Confidence: keep appropriate standards of intellectual honesty and integrity, based in a suitable  training and in the previous knowledge of what are you going to do in a winning or loosing situation, how long are you going to stay in the market, when are you coming out, act.
  3. Conscience: Take responsibility of your own business, do not trade because “someone says so”. Take full responsibility of your trades destiny. Believe in casualty Law , because you are the one getting results, and no one else.
  4. Adaptability: meaning flexibility while handling changing situations; if your position is not a winning one, what would you do? Keep of thinking braves do not run away? Or assume your loss, assume that is possible and forgetting about it, go chase a new opportunity?
  5. Innovations: feeling comfortable with new information, with different ways to see the reality, or new ideas that fit better into new situations.
    A friend of mine use to say: “Head is round so ideas can circulate. Do not try to have a square head, because your ideas will crash with each other”

Find your trading profile among this models, and correct trading mistakes:

According you experience:

Rookie Trader: has been between 3 and 6 months in the market, believes in high returns with a few trades, doesn’t close losing trades quickly, and trades with the heart. Does not have a plan or doesn’t follow it.  Works only with his/her own money and feels immune to failure. Takes high leverage, has read less than two trading books, and probably take an on line course, without testing results. Has lost among the 25% to the 50 % of his/ her capital in less than 3 months.

Intermediate Trader: Has been more than 6 months and is aware of his/her own knowledge and above all, has felt the weight of the activity. Start to anticipate movements using fundamental or technical analysis. Doesn’t have a coming into the market plan: knows HOW, but not WHEN. Is still ruled by his/her emotions.  Have a strategy but doesn’t follow it methodically.  Is open to guru’s opinions. Has  very little confidence in his/her analysis and spent too much time in front of the pc, without producing any efficient work.

Advanced Trader: has been more than 6 months but less than 1 year in the market. The difference with an intermediate trader is that he/she finally has a bit more specialization thanks to an organized work, and has been professional help.  Still doesn’t have an efficient work plan, but do have a working method and a sharp strategy. Has learned to assume losses although sometimes emotions rules and let negative trades run. Has started working with own and managed accounts, is more responsible and has more trust in his/her trades. He/she has monthly regular incomes, and star living of this job. Good leverage handling, taking risks among 2/1 – 3/1 (the first number is the expected win. The second the assumed risk in pips).

Professional Trader:  Has been more than 1 year trading, with an average of 3, 3.5% of returns for the last 3 months in the managed accounts. Makes professional research. Has a medium and long term working plan; had organized method, strategy and tactic. Trades with no emotions because he/she executes the plan without emotions, defining entry, stop and limit at the beginning of the trade. Know the mathematical hope of his/her own trading system, and applies the Big Numbers law. Keeps a commercial area for his/her business. He/she is reaching a better life status  by managing his/her Forex portfolio. Good leverage handling, taking risks among 2/1 – 3/1 (the first number is the expected win. The second the assumed risk in pips).

Physical activation vs. stress

This activity, being a trader, demands not only a fresh mind, but a good physical state. Let’s check out how good it could be to pay attention to some simple details:

Breathing and oxygen
Is very important to control your breathing, slow and deep, in every working hour, not only when trading, this, will bring you benefits such as:

  • An improvement in your neural system, including column, brain  and nerves. This is caused by a good oxygenation, and then a better feeding of the neural system, that gives health to all your body, and besides, a great clarity to the logical thought process.
  • Mental  and physical relax. Rhythmic slow, deep breath stimulates the neural parasympatic system. This slows down the heart beatings, and a muscle relaxation. As mind and body are deeply involved with each other, this automatically produce a mind relax.

Besides, a good oxygenation of the brains, tend to normalize it’s functions, reducing anxiety levels.

Physical activity:

  • Our brains activate when we exercise. Physical activity frees endorphins, hormones know as the “happiness hormones” that gave our body a pleasure sensation. They activate our metabolism ( some physical and chemical reactions that happened in our bodies),  our cardiac activity improves, we felt less anxious, more optimistic and more tolerant. With more strength to face the trading  day, the organism  revitalize , with an open, fresh mind and a positive attitude.
  • We recommend making at least 30 minutes of physical activity before you start your working day each morning, at least take a work to your job.

View Q&A Session Schedule here

Continue reading "Trader psychology" »

10/27/2005

Psychology of Trading: To Trade or Not to Trade

Date: October 27, 2005 14:00GMT 10EST

Expert: Jerry Chin, Currency Analyst Fxsolution's

Topics:
- Should you trade.
- Do you have what it takes to trade
- If you dont have what it takes, how to build yourself into a trader.

Who is Jerry Chin?
Jerry Chin has over fours years of experience trading futures and forex. He is currently a currency dealer at FX Solutions. As a dealer, He has a lot of interaction with FXSolutions diverse trader clientele. Many of the traders I interact with are day traders. Prior to joining FX Solutions, I was a trader with Goldenberg, Heyehmeyer & Co. one of the largest clearing firms on the CBOT. He electronically day trades firm capital in US Treasury futures.Having had experience in the largest financial market in the world, and the most liquid respectively, He has a detailed knowledge of the markets and how to trade them on a short term basis, with a successful strategy.

Speech Material:

To paraphrase the tortured young Prince of Denmark, “To trade or not to trade, that is the question.” This is the question I would like to tackle in this session on the psychology of trading. Whether you are thinking of opening a trading account or you are ambivalent as to continuing trading your account, or are thinking about re-entering the market after an absence, I hope my thoughts on the psychological decisions you have to make to answer this question will be helpful to you.

Why should a person trade? There are many psychological reasons why people follow the path to trading. Sometimes trading offers a thrill and exhilaration that a person does not experience in his normal routine. Excitement is a major marketing point many in the industry point towards as an enticement to enter the markets. Some people engage in trading because they want to be proven right on their opinions regarding the economy, political situation, or the weather. Everyone talks about these topics, and some people want to put their money where their mouth is. People want their opinions validated and there is none greater validation than cold hard cash. Others feel a certain prestige attached to being a participant in the financial markets. Others are never comfortable with certainty and actively seek out the uncertain to gratify their psychological cravings.

Prior to opening a trading account, you need to honestly answer the question, why am I trading? If you are trading for the excitement, the adrenaline rush, to be proven right, or any other reason, you might be able to attain those things through trading, but you most likely will not make money while attaining those goals. The decision to lose money trading while satisfying your other needs is yours to make. But do not be under the impression that you can satisfy your wants and needs and make money at the same time. It simply cannot be done. The reason is because when you have your psychological baggage attached to a trade, you cannot think through clearly the critical decisions necessary to cut losses and let profits ride. Your mind, whether consciously or unconsciously, will be clouded by the urges that need to be satisfied, whereas the trader who’s only urge is to make money has more than a fighting chance to do so because he is not consciously or unconsciously seeking ulterior goals.

After you find your true motivation to trade, you will be able to decide whether you can attempt to attain those goals through trading. If you want to trade to feel the rush, you probably will feel the rush in fast market conditions, as there is peril and shelter from the storm with every tick along the way. If you want to trade because you have an opinion on the direction of the economy, you might be proven right 50% of the time, eventually. If you want to trade because you want to have good cocktail party conversation material, you will be the life of the party talking about the United States twin deficits forcing the value of the dollar down versus its major trading partners. If your true motivation to trade is to employ risk capital in a productive fashion in order to grow your equity, then you just might have a chance of making money trading in the financial markets.

After you have made your decision whether to trade or not, whether you might be able to attain your goals by becoming a participant in the market, you must now figure out do you have what it takes to trade? Do you have the personality traits that will allow you to survive and thrive in the markets? Although there are a million ways to make a million dollars in the markets and there are a million personalities in the market, there are certain traits that help people and there are certain traits that hurt people. You need to be resilient. You will suffer many setbacks and disappointments with your successes. The nature of trading is that no matter how many setbacks you have, you must continue to strive for a good trade. If you are resilient, you will continue to be in the market no matter how many times you suffered losses, or strings of losses. You need to be resilient in trading because you need to be in it to win it, and the only way to be in it all the time is to be resilient in the face of setbacks.

In addition to being resilient, you also need to have the humility to admit your mistakes, and learn from then. No one will make the right decision 100% of the time. When you don’t make the right decision, and in fact even when you do make the right decision, you must analyze what went right and what went wrong so that next time, you do it right. Being humble and having an appropriate sense of self will allow you to be egoless and recognize when you are right and when you are wrong. Ego will prevent you from admitting your mistakes. Ego will prevent you from admitting mistakes and ego will prevent you from finding better ways of doing things.

The markets constantly change. What drives price action today, this week, or this year, will be quickly forgotten, next year, next week, or tomorrow. As a trader you must be just as flexible and adaptive. You must adapt to changing trading environments, either ranging markets or trending markets. You must adapt your opinions on the direction of prices as new economic or political events occur. A short term memory and a lack of stubbornness leads to flexibility in trading. Do not relive yesterday’s trades during today’s trading session. The decisions or opinions you had yesterday that lead to success yesterday can lead to failure today. Short term memory means that you start every trade fresh without any preconceived notions of what will lead to success or failure. Lack of stubbornness means you are open to change and changing your opinions as necessary. The flexibility to adapt not only leads to survival in nature, but in the markets as well. A single individual animal is not stronger than the forces of nature. A single trader is not stronger than all the aggregate forces in the market. Don’t ever think you can stick to your outdated opinions and views, when the market tells you are obviously wrong and are about to be extinct.

I have found that the most important personality trait to be able to participate in the markets is resiliency of purpose and personal flexibility. Although some people are just born more flexible and resilient than others, these character traits can also be developed and attained through experience. People who have gone through tribulations and failures in their life experience and come through successfully are usually more resilient than those who are never challenged and are equally successful. To become a resilient individual, test yourself, push yourself, expand your envelope of comfort everyday. You can do so with small steps, running faster at the gym, attaining a higher score in school, being a better parent to your children. As long as you are pushing yourself to improve, no matter you succeed or fail in reaching your goals, you will build up your resilience.

To increase your flexibility, learn to live with uncertainty. You need to face the uncertain in your everyday life. Be creative when confronted with uncertain situations. Do not look at them as obstacles and a source of frustration, but rather as problems to be solved and tasks to be conquered. If you take this attitude towards uncertainty, then you will develop the skills necessary to adapt and adjust to changing conditions in the market.

Deciding whether one should trade is a very personal decision that in addition to financial considerations, there are also many psychological considerations. You need to take into consideration what needs are you trying to satisfy in the market and whether you are likely to fulfill it through trading. You also need to consider whether you have the necessary character traits to be able to survive and thrive in the markets. Are you adaptable, are you flexible, are you resilient? And lastly do you want to put yourself in situations where you will have to be all those things? These are the questions you need to ask yourself before you are even ready to amass the necessary risk capital to open a trading account, let alone to open a trade.

Continue reading "Psychology of Trading: To Trade or Not to Trade" »

10/11/2005

Naked Trading: Exposing the Secrets of Successful Traders

Date: October 11, 2005 14:00GMT 10EST

Expert: Rob Booker, Currency Analyst

Topics:
- Get Naked
- Get Some Naked Backup
- Make a Naked Plan

Who is Rob Booker?
Rob Booker trades profitably for his own account and manages money for others. Rob has trained hundreds of fx traders around the world. He has helped them develop their own trading systems, but more importantly, Rob focuses on helping traders deal with the mental, psychological, and discipline issues related to training. For Rob, successful trading is more mental than anything else.

Speech Material:

It was not long after my big loss that I realized that in order to trade successfully, I needed to have an edge. Without some kind of informational advantage, I was not going to be successful. And you know what?

Without an edge, you’re not going to be successful either.

Perhaps you are a profitable trader. It’s possible that you already have some ferocious trading skills. One time there was this dog in my neighborhood, and he was really, really ferocious, like he could bite your leg off in one bite, and then as he was chewing on your leg while you were screaming, he would be grinning and stuff. Maybe that’s how ferocious you are as a trader.

Booker3

Maybe that’s you. Maybe you’re not so confident in your trading right now, or you have a bunch of winners and then you lose big. I know how that feels. I want to help you become a better trader. The best trader you can be.

Getting naked is the first step.

Step 1: Get Naked
Ok, I don’t mean that you should actually take off all your clothes. But if you are not yet successful in trading, you must strip down all of your pretenses, your pride, and your previous knowledge. Dump it all. Start over. Take a deep breath.

Let me give you an example. I once worked with a trader who had studied technical analysis for 5 months previous to hiring me as a mentor. He was fascinated by many different indicators, including the MACD, moving averages, Bollinger bands, Relative Strength Index, and a few others. He was using all of these indicators on his charts when he first started with me. He asked if we could work together to put those indicators into a system for him. A profitable system that he could use every day.

I encouraged him to delete all but 2 indicators from his charts. This would help him to focus. No longer would he be confused by the conflicting messages that all of the indicators were giving him.

Instead of being excited about the prospect of reducing the information overload, he protested. What about all those months of study that he had done? All of that would be lost if he deleted the other indicators!

Two months later, he relented. After crippling losses to his account, he was ready to get naked. He humbled himself. He agreed that he was taking in too much information. He was willing to admit that he needed to reduce the amount of information he was studying every day – even if this meant that he had wasted 7 months of his trading life.

He deleted the other indicators, focused exclusively on MACD and moving averages, and has been trading profitably ever since.

Step 2: Get Some Naked Backup
I trade with a team. Granted, my team consists of me and just one other person – Maxwell Fox – but that helps me trade better than I could on my own.

Team trading is a concept that I introduced in my training, because traders seemed to do better when they could bounce ideas off one another. They don’t necessarily all take the same trades, but they at least can voice their trade ideas, get feedback, plan trades together, and keep each other honest.

I found that when I first started, it helped me to have another person to whom I would be accountable for all of my trading. That’s what I mean when I say you need to get some backup. Someone to get inside the barrel with you, to help you when you make a bad trade, to keep you humble when you make a good trade. That kind of stuff.

Step two, in essence, is to trade naked with other people.

Booker1

Step 3: Make a Naked Plan
Over the years, I have read at least 1,000 trading plans from traders around the world. There is one common characteristic of the best plans:

They were short. They were simple. The very best were just 1 page long.

Don’t run out and delete the last 5 pages of your trading plan just because I said the best plans were only 1 page long.

Wait. Wait a minute. I take that back. I think you SHOULD run out and delete the last 5 pages of your plan. Make it one page.

Make it one page, and cram everything you can into there. Tell me, in your plan,

- When you plan your trades

- What money management system you use (fixed fractional, etc.

- What your primary entry and exit triggers are.

Step 4: 1-2-3
I have talked about this in front of groups. I have talked about this in front of individuals. By email, by phone, by fax, by instant message, by carrier pigeon, and by message in a bottle.

And very few people ever listen to me.

Test 1 currency pair. With just 2 time frames. With a maximum of 3 indicators. That’s it. 1-2-3.

Too many traders feel that they will do better if they have more information. You know that’s not true. So, here is the plan:

Test 1 currency pair, with just 2 time frames, with a maximum of 3 indicators, and test for at least 100 trades. See what your results are. Test with a small live account if you are wealthy. Test on a demo if you are not. Testing takes a long time, and no one likes to do it. Be patient. Test. Try different things. Test on historical charts by playing the candles back one at a time. Testing pays off.

A Bunch of Naked Rules

- You are looking at too many currency pairs, too many time frames, and way too many indicators. Get naked.

- You are trading live too soon. Get a naked demo.

- You did not test your system extensively. Test naked.

- Your forex dealer is not running your stops. You are just taking bad trades.

- Support and Resistance is the greatest invention ever. Support and Resistance can make you wealthy.

- Put one indicator on your charts. Make a system from just one indicator. I bet you’ll make more money.

- Think about pips, not dollars or euros or pounds

Booker

Batman's most useful weapon in his war against crime is Rob Booker, the black thunderbolt that knifes through Gotham's streets when danger threatens. The vehicle has undergone many design changes over the years: in the earliest days of Batmans career, Rob Booker was a giant armor plated sedan; advanced automotive technology has turned Rob Booker into a sleek street machine.

Rob Booker’s chasis is constructed of an amazingly light experimental titanium alloy and is coated with a unique bullet proof ceramic, as are its one-way mirrored windshields; consequently, Rob Booker can easily withstand any handgun or semi-automatic weapon assault, and has a limited resistance even to armor piercing bullets. It's puncture proof tires are impervious to routine damage, as well.

Oops. That’s the batmobile.

I trade for a living. I want to help you trade for a living, too.

No matter who you are, you can probably trade for a living if you just get a handle on the mental aspect of trading.

I try to give a lot of stuff away for free. Sometimes I do charge for some services. Visit me at robbooker.com, or send me an email (rob@robbooker.com). Keep in touch.

Continue reading "Naked Trading: Exposing the Secrets of Successful Traders" »

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