Search results

Humans have a tendency to forget the obvious. We often think that life is more complex than the issues right in front of us, and that obvious solutions offer little comfort when trying to find solutions to seemingly insurmountable problems. The markets are complex at times, but the...

A lot of people wish they could trade more contracts or more shares. But I try to tell them that there is a point of diminishing returns and diminishing productivity - two laws of economics. People have an erroneous impression that, if they could only trade well with a couple of contracts or 100...

Try this idea: take the three-day average daily range and find the absolute difference from the ten-day average range. Project tomorrow’s range equal to the three-day average range plus or minus the absolute value from the ten-day average range. Define the trend, assume the open to be within...

Many times in the past I've written about the need to adapt, the need to be able to change your behavior relative to the market because the markets are ever-changing. I've stated that mechanical systems may be workable, but for only a short time relative to the life of markets. You must...

Master Traders develop a style that is a reflection of their education and character. Most individual trading styles are either positional or combinational and, rarely, a synthesis of both. However, there are other styles. Positional traders take x amount of positions within a specific price...

I guess from time to time I would say this somewhat differently, but what comes to mind is as follows: Here are five steps to becoming a successful trader: 1. Focus on trading vehicles, strategies, and time horizons which suit your personality. You need to be comfortable. 2. Identify...

I recently received this letter, and thought you might like to see how another currency trader approaches the markets. "I approach the markets as a game of probabilities. As far as I'm concerned, that's the only way to navigate the currency markets. "What I mean by a game of...

Recently I was asked the following question: "Any idea of who was the seller of the first mechanical trading system? I heard that it included a whole bunch of phony information." I have more than a few candidates for that honor. But rather than name names, because I'm not 100% positive which...

I often write about mindset, attitudes, psychological hangups and emotional problems that plague traders. The following is from a friend on mine, Noman Hallett, who has delved deeply into such matters. “It occupies a chapter in just about every trading book ever written. It’s been...

Is trading easy or hard? To the outside observer, trading seems easy enough. You merely pick what you want to trade, bet it will go up or down, execute a trade and see what happens. What's the big deal? If it were that easy, however, everyone would be doing it and making millions. Unfortunately...

When your money is on the line, it's natural to want to make every effort to protect yourself. You want to account for every possible adverse event that may thwart your trading plan, but you don't want to overdo it. Some traders have difficulty making a distinction between sound decision making...

Trading rectangular block, i.e. ledges, or sideways chart patterns is a solid market trading approach so long as the breakout is not a false breakout. A legitimate breakout should not retrace to 50% of the block pattern range, as the most profitable trades never retrace below the breakout price...

In the trading world, the "Market Wizards" are often elevated to the status of idols. Why not? They have accomplished relatively rare feats. Consider Tom Baldwin, for example, he took what Jack Schwager called a "skimpy capital base" and turned it into a fortune. His "fearless" approach to the...

When learning any new skill, you need to find the right balance between pushing yourself to the limits and setting realistic expectations and goals. But whatever approach you take, you must work with what you've got. You must identify your natural inclinations and work around them. This is...

Cultivating discipline and self-control is vital for consistent and profitable trading. You implement proven trading strategies, over and over, so that across a series of trades, the strategies work enough to produce an overall profit. It's like making shot after shot on the basketball court so...

Successful trading is often a matter of selling at the right time. It is often possible to be a conformist and just follow the crowd. When there is strong interest in what you are trading, you can merely follow the prevailing trend. As prices move up, the media reports on the optimism, and the...

Research studies have demonstrated that when people's psychological resources are taxed to the limit, they make impulsive mistakes. Maintaining discipline takes psychological energy, and when you use it up, you have to rest. Just like a muscle, when you are worn out, you need to take a break and...

How does a trader live in the moment? Perhaps the first step is just intellectually considering the existentialists' proposition that anxiety is sometimes a matter of focusing on, and mulling over, the past, or worrying about the future. When you consider it, it seems reasonable to think that if...

Trading and risk go together. Short-term trading denies the trader the strategy of minimizing risk by holding a position over a longer time period. Short-term traders must learn to use momentum and volatility. Volatility can force short-term traders to become scalpers. I know; often I am one of...

Whenever we miss a big move and then try to find some pattern, indicator, rationale, or modification to make to what we are doing so that the next time we will not miss such a move, it is a part of the hunt for something magic; a continuation of our quest for the holy grail of trading. What a...