Trading Articles
GET REAL
Article on Trading by Joe Ross
Many novice traders are frustrated when they start trading. It's common to hear a beginning trader complain, "I don't know what's going wrong. I study the markets every chance I get. I put on trades under ideal market conditions, but I just can't make a profit overall."
You may wonder if enough time and effort is devoted to trading. How much time is actually put in? How many trades are actually made? Answers to these questions are quite subjective.
For some novice traders, a couple of hours a day may be all they have available. In that time, they must monitor the markets, look for ideal markets to trade, and actually execute trades under optimal conditions.
Is this enough time? It depends. If you have a large enough account, and don't need to make very much profit, it will be sufficient. But what if you have a small account, not much time to trade it, and want to make a huge profit? Well, in that case, you may be unrealistic. Successful traders work with a realistic frame of reference. They don't try to do the impossible.
Trading requires time. Learning to trade requires a lot of time, and a lot of concentrated focus. Unless you want to use trading for entertainment, you need time to learn this business.
Can you imagine becoming a medical doctor using the approach that many traders use in learning the business of trading?
"I have a couple of extra hours every evening, so I can read medical books and then try out my skills. My operating plan is to start out using a simulator. I guess I can do that over at the morgue, until I feel ready to tackle the real thing. To make it more realistic, I'll wear my green scrubs and a face mask. I don't want to get any germs from the corpses I'll be working on."
"When I think I'm ready, I'll go over to the hospital to see if anyone will let me operate on them."
© by Joe Ross. Re-transmission or reproduction of any part of this material is strictly prohibited without the prior written consent of Trading Educators, Inc.
YOUR TRADING EDGE
Article on Trading by Joe Ross
Sometimes the edge or advantage you have when trading becomes a matter of being able to identify those key moments when you don't have it.
As much as we would like to trade at a level of top performance all the time, having that kind of mindset it isn't always possible. There are those times when our trading is off; we've lost our edge, and we would be wise to stand aside until we are rested, relaxed, and re-energized.
Consider what happened to me a few days ago. I was having a bad day. I started the trading day full of enthusiasm and optimism, excited about meeting the challenges of a new day. But after the open, I made two losing trades.
Suddenly my enthusiasm turned to disappointment. Then I made a mistake. I violated my own rules and decided to keep trading, but somehow I just couldn't stay focused. I kept worrying about the mistakes I had made and the money I had lost. On top of that, I was on a guilt trip knowing that I had violated my own rule by not quitting after having two losses in a row. It wasn't long before I felt tired and exhausted.When my mood is down, it is wise to consider standing aside for the rest of the day.
Many trading experts suggest monitoring your mood, and when you feel down, in a rut, or disappointed, you should close out your positions (that need immediate attention), and stop trading for the rest of the day. Some traders start every morning by monitoring their mood. Unless they feel they are at peak levels, they don't trade that day. They don't trade until their mood returns to normal.
It is essential for long-term survival in the markets to frequently monitor your moods. When you are tired you may not have enough energy to monitor your trades carefully and make sound decisions. You may feel on edge, and may act impulsively.
Similarly, when you're feeling disappointed, you may allow even a minor setback to intensify your negative mood. Depending on your personality, and your ability to get up again after a fall, it is often wise to just cut your losses, admit defeat, and retreat to trade another day. After you are rested, relaxed, and ready, you'll find that a brand new day looks more promising. The more you can learn to stand aside when necessary, and approach trading with a fresh outlook, the more profitably you will trade in the long run.
© by Joe Ross
Re-transmission or reproduction of any part of this material is strictly
prohibited without the prior written consent of Trading Educators, Inc.
SURVIVING THE CHAOS
Article on Trading by Joe Ross
The markets are often unpredictable and uncertain. Some people buckle under the pressure, others thrive on it. What's the difference between a trader with a fighting spirit and one who skulks away? A stress resilient personality may be part of it, but it doesn't tell the whole story. We've met many traders who were successful in demanding professions, yet when it came to trading they didn't have very much confidence. They acted impulsively, entering at the wrong moments, and abandoning trading plans prematurely. In the final analysis, the traders who can weather the storm to make enormous profits have a combination of characteristics that make them winning traders.
There is no substitute for experience. A winning trader has experience with the markets and with his or her own personality. Novice traders are much like beginners learning a new sport, such as skiing or tennis. They don't know what to do at first. They haven't experienced the variety of events that may come up. The market can be a mass of seemingly random movement.
A winning trader sees structure in what others see as chaos. Over time, they develop an intuitive feel for the markets. They can sense when particular market conditions have emerged, and they know that the odds of success are on their side. The novice trader, in contrast, doesn't know what will happen or whether he or she can make a profit.
Uncertainty is anxiety provoking, and novice traders succumb to the fear. When they are ready to put on trades, they aren't calm and focused, but scattered and afraid. They breathe hard in anticipation, are on edge, and are likely to make an impulsive move rather than a confident, decisive one.
Winning traders, in contrast, have a wealth of experience, and thus, rock-solid confidence. They know that the odds are in their favor, and that if they make enough trades under these ideal market conditions, they will come out ahead. Since they know that, in all likelihood, they will succeed, they are calm and relaxed. They know there are no guarantees, but they truly believe that it won't be the end of the world should they hit upon a series of losing trades. They have experience, and genuine trading skills. Should they encounter the worst-case scenario, they know they will live to trade another day and make the losses back.
When a trader has genuine trading skills, he or she knows that there is little to worry about in the long run. He or she is never stressed out. The uncertainty and unpredictability of the markets that produces stress in the novice trader is seen as excitement and opportunity by the skilled, experienced trader.
Whether you are a novice or an experienced trader, you can learn to handle the uncertainty of the markets and the stress it may produce. The first step is to acknowledge the problem. You'll waste more time trying to avoid the issue, and be paralyzed by it, than if you just admit it and try to work around it. Second, it is vital to take an active, problem-solving approach. Stay optimistic, yet realistic. The more trades you make, the more likely you will gain experience and sharpen your trading skills. It may not happen overnight, but it will happen eventually. In the meantime, you might as well accept your fate and patiently wait until you build up superior skills and confidence. By staying optimistic, working hard, gaining valuable market experience, and accepting uncertainty, you can learn to thrive under even the most stressful conditions. You'll survive the chaos to become a winning trader.
As with any challenging endeavor, putting in the necessary time and effort to become successful is really important. Most of the time, the main difference between the winners and losers is the time and effort winners put in.
Studies have documented that unsuccessful people show two major flaws: they are afraid to accurately monitor how much time and effort they devote to a goal, and they do not have an accurate frame of reference. In other words, they think it's easier to achieve a goal than it actually is, but they don't know that. They wrongly think they are putting in enough time and energy, even though it is far from adequate.
Trading coaches describe a similar phenomenon among novice traders. Many novice traders treat trading as a hobby rather than as a serious business. That's fine if you view trading as merely recreational gambling, but if you expect to make reasonable profits from your efforts, it is necessary to take things a little more seriously.
Trading is a skill, just like any skill that professionals, such as doctors or lawyers, develop. Developing a high level of skill takes time and a great effort. It often takes several years to develop the skills of any experienced professional, and that is also true of trading.
To make profits under a variety of market conditions, you must gain experience with all those conditions. In addition, no trading strategy is foolproof. You must continually develop new strategies and methods and test them out under new conditions. It takes experience to trade skillfully, flexibly, and effortlessly. A hobbyist approach isn't going to be sufficient to sharpen such skills.
If you want to move from the status of an amateur hobbyist to that of a master trader, you must have a realistic frame of reference. You must be willing to view the development of your trading skills the same way as other professionals go about developing their skills.
If you have to work a regular job to pay your expenses, then you need to view your life as working your way through college and graduate school. It means shifting priorities and making a solid commitment to developing your skills. It will require hours of study and training from reputable venues. And it is also essential to be realistic. The "graduation rate" from novice to experienced trader is low, and if you want to be one of the rare few who make it, then you must gain as much experience as possible, and make any necessary sacrifices. So don't hinder yourself from reaching the status of a master trader. Put in the necessary time and effort. You'll be rewarded in the end with lasting trading success.
The only way you can short-cut the usually long process is to find a mentor who will lead you through the right steps. It will still take time and effort on your part, but you will arrive at your goal a lot sooner.© by Joe Ross. Re-transmission or reproduction of any part of this material is strictly prohibited without the prior written consent of Trading Educators, Inc.
YOUR MENTAL EDGE
Article on Trading by Joe Ross
Jim is a master trader. He manages a multimillion dollar hedge fund and has made substantial profits for the past five years. He drives a Mercedes and lives in a beautiful home in the affluent part of town. Many of his friends and neighbors admire Jim and ask him how they could follow in his footsteps. Jim doesn't mind the attention, but frankly, he doesn't really care for it. He secretly knows that the only thing that matters is what he thinks and does. He has a true sense of confidence and inner worth. If you want to be a successful trader, it's not the markets you must master. It is your personal psychology that matters.
Why do most people trade? Obviously, it's for the profits and what the profits can get you. The great irony, however, is that the single-minded pursuit of profits usually doesn't lead to success. It is crucial to focus your energy looking inward. There are a few key steps you can take in this inner self-examination towards achieving success.
First, don't let your net worth define your self worth. It's tempting to let your account balance dictate what you think of yourself. The winning trader, however, doesn't care about profits. When you focus on profits as a source of self-worth, you start putting contingencies on the value you place on yourself. When you are doing well, you feel good, but when you are doing poorly, you feel inadequate. It's wise to remember that you have value regardless of your account balance. You are a creative, intelligent, and worthy person no matter how much money you have in your account.Second, focus on the process of trading rather than on the prize. Winning traders truly enjoy trading. They would trade even if they earned only a living wage. Trading is inherently interesting. Doing it can provide its own reward. When you really love what you are doing, you end up doing it well. The more you can appreciate how much fun trading can be, the more successful you will be at it.
Finally, if you can truly feel a sense of self worth, look inward for guidance, and really enjoy what you are doing, then you will feel relaxed and creative. You'll be in tune with your inner self, and you'll learn to trust your intuition. Your perceptions will be vivid and clear. If you can achieve this higher level of consciousness, you'll trade creatively, effortlessly, and profitably. You'll achieve lasting success.© by Joe Ross. Re-transmission or reproduction of any part of this material is strictly prohibited without the prior written consent of Trading Educators, Inc.
SHARING
Article on Trading by Joe Ross
I came across the following in my notes. I thought it interesting enough to share with you.
Every person has an obligation to give back something to the field in which he became successful. In the process of giving seminars to help others fulfill their potential as successful, self-reliant traders and human beings, I learned as much as did my students, and became a better trader for it. Intelligent, professional traders attended my seminars, and asked very sharp questions. The answers led to areas I had not thoroughly covered. You can never give something away without its coming back to you!
All earthly possessions are on loan until we leave them or give them to others, including our wisdom, truth, and beauty. Truth cannot be denied, assailed, or made to look other than what it is, simple, absolute, and self-evident. The essence of all individual truth is based on past personal experiences. So thought Aristotle, who taught "it is possible to know and understand all occurrences in a systematic manner." He created logic and the syllogism, which used inductive and deductive reasoning that systematized knowledge of nature and the cosmos. Socrates wanted to change the world through education, but wrote nothing down as he taught Plato. Plato recorded Socrates' works and taught them to Aristotle, the teacher of Alexander the Great. Alexander, at 32, definitely changed the world when he conquered it.© by Joe Ross. Re-transmission or reproduction of any part of this material is strictly prohibited without the prior written consent of Trading Educators, Inc.
HOLIDAY PARTIES — KEEP YOUR MOUTH SHUT
Article on Trading by Joe Ross
Early in my trading career I learned to keep my big mouth shut about what I do for a living. I would tell people, "I'm a trader." They thought I was saying, "I'm a traitor." The reaction, you might have guessed, was not always pleasant. In those days most people had never heard of a trader. Things have certainly changed.
It is the holiday season, a time to spend socializing with family and friends. It's tempting at those holiday parties to discuss how well your trading is going, but you may want to keep it quiet. Many people are curious about or interested in trading, and may find you interesting as a successful trader.
The attention may be enjoyable at first, but a need to maintain this reputation may impact your trading attitude and your ability to maintain an objective, emotion-free mindset.
It is important that you avoid letting your reputation influence your performance. It is useful to keep your conversation at parties discreet when it comes to your trading career. The more you present yourself socially as a "successful trader," the more mental effort you will spend defending this reputation.
Several research studies have documented that one of the biggest obstacles to sound decision-making is the need to save face in social situations. People are so reluctant to face the adverse social consequences of having made a poor decision that they stay on a losing course of action rather than admit they were wrong. For example, some traders are reluctant to sell off losers in order to avoid the possible social criticism that acknowledging a failure might bring. This is such a powerful psychological process that it is worth trying to minimize it as much as possible, even if it means avoiding the topic of trading at holiday parties.
Most partygoers are looking for entertainment, and what can be more entertaining than hearing about how to make huge profits in the markets? It may be tempting to brag a little, and tell everyone how you've earned a bundle, or reveal a hot tip. In the short term it may be fun, but in the long run it may lead to a powerful need to look good.
Suppose at Thanksgiving you told your friends about a large position you had been holding, but during the days leading up to Christmas the trade went sour. At the New Year's Eve party the next week, many of your friends will look forward to asking you how your big trade is doing. Their expectations may color how you handle trading decisions. If you are afraid to face the fact that you made a bad trade, you may hold on to the position so that you can claim that the trade is still in play, knowing full well that you are merely postponing the inevitable.
The added pressure to perform so as to impress others may lurk at the back of your mind and impact your trading decisions. It's better to avoid getting into such a mess. Keep your trading activities to yourself. Find something else to talk about. You'll make your life easier.
In social settings, such as a holiday party, once you announce and identify yourself as a trader, you will feel a need to defend your reputation. Trading is hard enough, why introduce additional social and psychological pressures that will adversely influence your trading results? Stay humble and quiet. There is no logical reason to discuss the specifics of your trading career socially. It's often done just to build up one's ego, and enjoy the attention of others. You'll pay a long-term price for this short-term gratification. But if you can just stay quiet and keep the specifics to yourself, you'll avoid embarrassing questions and comments that will interfere with your trading.
Always keep in mind: pride goes before a fall!© by Joe Ross. Re-transmission or reproduction of any part of this material is strictly prohibited without the prior written consent of Trading Educators, Inc.
THE SPIRITUAL SIDE OF TRADING
Article on Trading by Joe Ross
Over the years, I have come to the conclusion that there is a lot more to trading than the physical, emotional, psychological, and financial aspects of trading. Taken individually, each one of these aspects can be difficult for any trader. Not everyone has the physical stamina to sit and trade all day long while remaining effective. Most traders find that at some point they must deal with the emotional aspects of trading. Psychologically, trading can be very difficult, pushing a trader to the limit of his/her ability to handle the price action. Even financial aspects are difficult for many traders. Trading with a limited amount of funds can be a truly challenging experience. Even traders with huge amounts of capital can reach the limits of what they are able to withstand. Recently I came into contact with a trader who has experienced it all. Consider that during his trading career, he has lost over $1 million.
So, for many people, what is the missing dimension in trading? What was the missing dimension for my recently busted friend? The one thing he never looked into, the one thing 90% or more of traders never even think to examine: the spiritual aspects of trading. Yes! There is a spiritual side of trading, and understanding what it is and how it fits into a trader's life can, and almost always will, remedy the problems connected with all of the other aspects that are a part of a trader's life.
Find out more about the Spiritual Side of Trading.
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