Friday, February 12, 2010

Trading Tips and Tricks

There are a few things all traders need to learn - and they generally aren't what most of the trading education out there teaches.

#1 Trading is not solving an algebra problem.

No matter how how you try, you will not find the magic indicator that will solve for X and make you money.

Unfortunately for the vast majority of traders however there is the human desire for certainty so many keep searching. A better strategy is to figure out whichever sport or hobby you relate to and think of your decision making as if you were either playing that sport, writing that novel, painting that painting or building that boat.

#2 Emotions do not need to be controlled, actions do.

Everyone puts all of the emphasis on the emotion when in reality the thing you can control is how you act out the emotion - not the feeling itself. In fact, if you have no confidence, will you take the trade? Is confidence an emotion?

Feeling frustrated or angry, afraid or disgusted isn't fun (I know that!) ... but it is still only a feeling. Trying hard to rid yourself of the feeling only loses you the opportunity to learn what it is telling you and sends you down a path where you will act out the feeling anyway - usually in what will later look like a very stupid trade!
My Notes: Source: Trader Psyche, New York.


ANAS said...

JAHAN-PANAA TUSSI GREAT HO . To be very frank. Unintentionally, I have already understood your Principle No. 1.(by many trial & error methods and experiences on the Trading Floor.] And now, from Monday , I promise to practise, Principle No. 2 too. A few days back I requested your kind attention, and was seeking some explanation on the following quotation. ''SOMETIMES PRICES TREND,SOMETIMES PRICES TRADE,.... PRICES DONOT MOVE IN RANDOM MANNER.'' (words may vary] This is said to be one of the princples of DOW THEORY. Kindly give your opinion. Thanks , Bye.

men said...

Mr. Sudarshan, as we approach the end of the financial year, the returns of the market has to be accounted for, if you think this is the right place we could you have a healthy discussion on the tax aspect. If one contacts CA's we get divergent views to the same problem as the law has a lot of greay areas leaving us at the mercy of the ITO, your inputs would help, if this is acceptable to you I have a few questions which I would post once you agree ONLY, these would benefit everyone and PARTICULARLY ME.
Thanking you,

Nirav said...

Dear Sir,

As you have mention that "emotions do not need to be controlled" but what I thing is that during trading our emotions like greed, fear, etc. will come to play and due to this we can divert from our trading plan or method and due to this we may miss a supernormal profit or take a loss. So don't you think in this type of case we should control our emotions?

And one more topic for discussion is that, sir I have much interest in trading and I like to become professional trader but whenever I think that Trading as a business then at that time one question comes to my mind is that if we say that trading is a business then like other business in which main objective of the business man is earn profit but at the same time he produce something which is needed by the people, but in trading only trader get the profit and no one else is benefited. So can we call it as a business? Please respond to it.

Brigesh Bhaliya said...

Nice note