Padu and Max, thanks for putting up charts... very interesting approaches and interpretations.
Trading Basics
- Thread starter schizo
- Start date
This is a pretty comprehensive list of Don'ts (not mine, of course). Which one can you relate to?
(Not sure I need to include the source, but all credit goes to The Subtle Trap of Trading: Why So Many Smart People Don't Make Money Trading, and How to Get on the Right Track on Less than Two Hours. Comments in italics are mine.)
The Mistakes That Traders Make That Bring Ruin
1. Underestimating what it takes to be successful in trading.
2. Overestimating your abilities as a trader.
3. Overestimating your emotional control.
4. Starting off uneducated, and thinking that you can “learn as you go”.
5. Ignorance of how trading and the markets actually work.
6. Treating trading like a hobby or sport, rather than as a business.
7. Starting off undercapitalized.
8. Using money that isn’t truly risk-capital.
9. Overconfidence.
Aren't we all.
10. Being in a hurry to make money, to hit the home run.
You reading this, SML?
11. Thinking too short term.
Well, this depends on your trading style.
12. Guessing at what the charts and patterns mean, then acting on that guess.
That was definitely me in my earlier incarnations before blowing up on more than one occasion.
13. Trading without a plan.
I would say this is the biggest culprit to one's downfall.
14. Having unrealistic expectations for trading.
15. Over trading your account (both in size and frequency).
16. Not defining the trade you're going to take.
IOW, read 13 again.
17. Not defining the risk / reward for each trade.
Again, go back to 13.
18. Not using stops.
That's right, re-read 13.
19. Wanting to be right instead of making money.
OMG, really? As sad as it sounds, it's true.
20. Listening to others (deviating from your methodology or system).
Well, that's because you never had a system in the first place. So head back up to 13.
21. Trading the opinion of others (e.g. market direction).
Right again, revisit 13.
22. Trading on hunches.
Need I repeat? 13.
23. Trading markets that you don’t understand.
I dunno about you but, for me, this is what helped define who I am today. Being a specialist, namely trading the same instrument every single day, helps immensely.
24. Risking money on systems that you don’t fully understand.
25. Trading only fundamental news without adequate analysis.
26. Using too many oscillators or indicators.
27. Not paying attention to previous market action, ignoring the history.
28. Overspending on computers and software.
29. Trading around the clock (another form of overtrading).
30. Having a fear of losing money.
Never trade with scared money.
31. Lack of money management.
You can't possibly succeed as a trader without a good money management under your belt.
32. Thinking that you can ‘beat the market’ if you just analyze it enough.
Well, don't beat yourself up even if you don't. Needless to say, we've all been there and done that.
33. Assuming that paper trading alone will successfully lead to profitable trading.
Still, it's better than going in cold turkey.
34. Using the wrong methodology for your level of expertise or emotional style.
Unfortunately, a lot of traders don't realize this.
35. Not understanding your own ‘emotional style’.
36. Not asking questions to gain understanding when starting out.
Perhaps they've had too many beginner's luck.
37. Changing systems and markets frequently without ‘mastering’ any of them.
IOW, no plan.
38. Not documenting their trades, or at least inadequately so not reviewing trades after the fact to learn from one’s mistakes.
(Not sure I need to include the source, but all credit goes to The Subtle Trap of Trading: Why So Many Smart People Don't Make Money Trading, and How to Get on the Right Track on Less than Two Hours. Comments in italics are mine.)
The Mistakes That Traders Make That Bring Ruin
1. Underestimating what it takes to be successful in trading.
2. Overestimating your abilities as a trader.
3. Overestimating your emotional control.
4. Starting off uneducated, and thinking that you can “learn as you go”.
5. Ignorance of how trading and the markets actually work.
6. Treating trading like a hobby or sport, rather than as a business.
7. Starting off undercapitalized.
8. Using money that isn’t truly risk-capital.
9. Overconfidence.
Aren't we all.
10. Being in a hurry to make money, to hit the home run.
You reading this, SML?
11. Thinking too short term.
Well, this depends on your trading style.
12. Guessing at what the charts and patterns mean, then acting on that guess.
That was definitely me in my earlier incarnations before blowing up on more than one occasion.
13. Trading without a plan.
I would say this is the biggest culprit to one's downfall.
14. Having unrealistic expectations for trading.
15. Over trading your account (both in size and frequency).
16. Not defining the trade you're going to take.
IOW, read 13 again.
17. Not defining the risk / reward for each trade.
Again, go back to 13.
18. Not using stops.
That's right, re-read 13.
19. Wanting to be right instead of making money.
OMG, really? As sad as it sounds, it's true.
20. Listening to others (deviating from your methodology or system).
Well, that's because you never had a system in the first place. So head back up to 13.
21. Trading the opinion of others (e.g. market direction).
Right again, revisit 13.
22. Trading on hunches.
Need I repeat? 13.
23. Trading markets that you don’t understand.
I dunno about you but, for me, this is what helped define who I am today. Being a specialist, namely trading the same instrument every single day, helps immensely.
24. Risking money on systems that you don’t fully understand.
25. Trading only fundamental news without adequate analysis.
26. Using too many oscillators or indicators.
27. Not paying attention to previous market action, ignoring the history.
28. Overspending on computers and software.
29. Trading around the clock (another form of overtrading).
30. Having a fear of losing money.
Never trade with scared money.
31. Lack of money management.
You can't possibly succeed as a trader without a good money management under your belt.
32. Thinking that you can ‘beat the market’ if you just analyze it enough.
Well, don't beat yourself up even if you don't. Needless to say, we've all been there and done that.
33. Assuming that paper trading alone will successfully lead to profitable trading.
Still, it's better than going in cold turkey.
34. Using the wrong methodology for your level of expertise or emotional style.
Unfortunately, a lot of traders don't realize this.
35. Not understanding your own ‘emotional style’.
36. Not asking questions to gain understanding when starting out.
Perhaps they've had too many beginner's luck.
37. Changing systems and markets frequently without ‘mastering’ any of them.
IOW, no plan.
38. Not documenting their trades, or at least inadequately so not reviewing trades after the fact to learn from one’s mistakes.
I want to get rid of most of these books that I have. But some do contain nuggets of gold so I plan to just post them here for everyone's benefit.
Why you call this a chop?
Hmm... Can this this true? I guess it largely depends on what time frame (or number of ranges or ticks if rangebar or tick chart) you're looking at. Now 50% retracement is something to keep your eyes on. I will say most of these chart patterns and how they're explained in TA 101 books are quite awful. These two following charts are no exceptions.
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As for spotting a trend early on, I got to say it’s a big fallacy. I myself used to think that way and found out that I could never capture a big trend.
Later, I realized that the big trend thing is purely an illusion. It’s in fact a complete hindsight. You never know in advance if any move will be a big trend or a trend at all. The only certainty you have is within a very short timeframe most of the time. Very rarely a big trendy day is obvious early in the day.
Now I only try to capture segments of price movement and don’t think in the way of a big trend. There’s no home run because you simply don’t know beforehand.
Later, I realized that the big trend thing is purely an illusion. It’s in fact a complete hindsight. You never know in advance if any move will be a big trend or a trend at all. The only certainty you have is within a very short timeframe most of the time. Very rarely a big trendy day is obvious early in the day.
Now I only try to capture segments of price movement and don’t think in the way of a big trend. There’s no home run because you simply don’t know beforehand.
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i was being sarcastic
do not be apologetic. you are welcome, for the sake of wider good, to join me.
we can have some interesting conversations especially since i am getting out of Brooks' shadow or clutches. it is very important to have a wide view of all experts' ideas so that you can do what ever the market condition demands
ask any BPA practitioner about 15 nov and they will have no problem dealing with that
all of themThis is a pretty comprehensive list of Don'ts (not mine, of course). Which one can you relate to?
(Not sure I need to include the source, but all credit goes to The Subtle Trap of Trading: Why So Many Smart People Don't Make Money Trading, and How to Get on the Right Track on Less than Two Hours. Comments in italics are mine.)
The Mistakes That Traders Make That Bring Ruin
1. Underestimating what it takes to be successful in trading.
2. Overestimating your abilities as a trader.
3. Overestimating your emotional control.
4. Starting off uneducated, and thinking that you can “learn as you go”.
5. Ignorance of how trading and the markets actually work.
6. Treating trading like a hobby or sport, rather than as a business.
7. Starting off undercapitalized.
8. Using money that isn’t truly risk-capital.
9. Overconfidence.
Aren't we all.
10. Being in a hurry to make money, to hit the home run.
You reading this, SML?
11. Thinking too short term.
Well, this depends on your trading style.
12. Guessing at what the charts and patterns mean, then acting on that guess.
That was definitely me in my earlier incarnations before blowing up on more than one occasion.
13. Trading without a plan.
I would say this is the biggest culprit to one's downfall.
14. Having unrealistic expectations for trading.
15. Over trading your account (both in size and frequency).
16. Not defining the trade you're going to take.
IOW, read 13 again.
17. Not defining the risk / reward for each trade.
Again, go back to 13.
18. Not using stops.
That's right, re-read 13.
19. Wanting to be right instead of making money.
OMG, really? As sad as it sounds, it's true.
20. Listening to others (deviating from your methodology or system).
Well, that's because you never had a system in the first place. So head back up to 13.
21. Trading the opinion of others (e.g. market direction).
Right again, revisit 13.
22. Trading on hunches.
Need I repeat? 13.
23. Trading markets that you don’t understand.
I dunno about you but, for me, this is what helped define who I am today. Being a specialist, namely trading the same instrument every single day, helps immensely.
24. Risking money on systems that you don’t fully understand.
25. Trading only fundamental news without adequate analysis.
26. Using too many oscillators or indicators.
27. Not paying attention to previous market action, ignoring the history.
28. Overspending on computers and software.
29. Trading around the clock (another form of overtrading).
30. Having a fear of losing money.
Never trade with scared money.
31. Lack of money management.
You can't possibly succeed as a trader without a good money management under your belt.
32. Thinking that you can ‘beat the market’ if you just analyze it enough.
Well, don't beat yourself up even if you don't. Needless to say, we've all been there and done that.
33. Assuming that paper trading alone will successfully lead to profitable trading.
Still, it's better than going in cold turkey.
34. Using the wrong methodology for your level of expertise or emotional style.
Unfortunately, a lot of traders don't realize this.
35. Not understanding your own ‘emotional style’.
36. Not asking questions to gain understanding when starting out.
Perhaps they've had too many beginner's luck.
37. Changing systems and markets frequently without ‘mastering’ any of them.
IOW, no plan.
38. Not documenting their trades, or at least inadequately so not reviewing trades after the fact to learn from one’s mistakes.