Market Sense

When a methodology or system you are using to trade sends out a signal that there is an opportunity present, sometimes you need to have enough “market sense” and discipline to ignore it. The system itself can only be used as a guide, if you purely trade the system it will eventually fail. For example,  a system that relies on a moving average has to have inputted parameters. Those parameters do not change with the market. Markets are an ever changing entity. There is constantly an increase and decrease in volume/activity, and parameters are not built to adjust to such changing conditions, and therefore you need a countermeasure to make sure your method stays robust. That is where logic and market principals come into play. Trading is multi-dimensional, most traders fail to see this. Ask an average trader why their system works, and he wont be able to tell you, he doesn’t understand the logic behind his method, and is in turn doomed to failure.

David Hurka
Forex Vanguard
www.forexvanguard.com

The Road To Riches: Giving Up

How do you minimize your losses?

Give up.

The reason most traders “blow up” their accounts is by letting their losses get out of control. You have been trained and conditioned your whole life to think positively and never to give up or back down. That sort of thinking will reek havoc on an equity curve.

The trick is to enter every trade with the mindset that you are wrong. Being able to admit defeat is probably the most admirable trait a trader can have.

The Only Thing You Should Try and Pick is Your Nose

Trying to consistenly pick tops, and in this case bottoms, is a dangerous game. Leave this up to the professionals, the professionals who want to lose their jobs and client’s money.

Wait until a clear cut uptrend has formed before going long in anything. Don’t get caught with your finger up your nose.

Remember, a trend only reverses once. Think about that statement for a while, its a testamate of how easy trading can be.

Trading, What You Think You Know

Always be skeptical about what you think “works” in trading. Even if you have seen it work with your own eyes countless times. You need to fully understand why something happens, not just see something happen.

I recently disproved a lot of theories I had regarding trading and the market. It is sort of discouraging to have all that work just go to waste, but as Thomas Jefferson once said “I have not failed, I have found 10,000 ways that do not work”.

Stepping Up My Game

Covered In The Pre-Market Hours

As soon as 8AM hit I was awake and excited to cash out of my Apple short holdings. Before the bell Apple had dropped another 2 points, and I entered my orders accordingly and took my profits for one of the best trades of my career.

The only thing you can learn from this is that the market can do anything, you just have to be ready for it. Have a plan for every contingency!

AAPL, A Revel In My Victory

“Apple said its current-quarter earnings would be well below Wall Street targets, sending shares in the maker of Macintosh computers and iPod music players down nearly 9 percent in after-hours trading.

While Apple has a reputation for giving conservative financial forecasts, its view for the fiscal fourth quarter undercut analyst expectations to a deeper degree than in past quarters, prompting investors to seek more details.”

-CNBC

I am short AAPL (currently AAPL is down 16.59 points, and it is 1AM, we will have to see what the morning brings)

Sorry, But The Market Has Been Good To Me

I apologize to any of my readers, or any visitors who have came to my site recently. I have not been updating as regularly as I should, and for that I am sorry. I have been trading very well, and this blog has taken a back seat to my success. I did not just create this blog for me, it is for any trader who is lost in the markets, losing money, and has no place to go. So, I will continue to post, and update my entries, for if I can help just one person become successful, learn to trade, and make a living doing what they love to do, then I will feel like I have made a real difference in this world.

I have learned a lot since the last time I made a post, and will be sharing this information shortly, so stay tuned and visit often

A Common Factor For Success

Several years ago, I took a survey of how many traders currently trade or have ever traded according to a trading plan. In that survey, I detailed a few things that had to exist for the “plan” to really be considered a trading plan. Fewer than 2% responded in the positive that they have ever traded according to a trading plan.

Shocking? In a sense, yes.

What person starts a business without having a plan in place. Actually, I should reword that. What person starts a business and succeeds without having a plan in place? Not too many I’m sure.

In fact, if I were to do a survey of the number of businesses who had a business plan when they started and lasted for more than 2-years, I would be willing to bet a large sum of money that at least 95% of them would respond in the positive.

-Ryan Jones

Jesse Livermore

This man is my hero, here are some of his own words from his book “How To Trade In Stocks”

Trust Yourself
When you are handling surplus income to do not delegate the task to anyone. Whether you are dealing in millions or in thousands the same principal lesson applies. It is your money. It will remain with you just so long as you guard it. Faulty speculation is one of the most certain ways of losing it. Blunders by incompetent speculators cover a wide scale.

Losers Average Losers
I have warned against averaging losses. That is a most common practice. Great numbers of people will buy a stock, let us say at 50, and two or three days later if they can buy it at 47 they are seized with the urge to average down by buying another hundred shares, making a price of 48.5 on all. Having bought at 50 and being concerned over a three-point loss on a hundred shares, what rhyme or reason is there in adding another hundred shares and having the double worry when the price hits 44? At that point there would be a $600 loss on the first hundred shares and a $300 loss on the second shares. If one is to apply such an unsound principle, he should keep on averaging by buying two hundred shares at 44, then four hundred at 41, eight hundred at 38, sixteen hundred at 35, thirty-two hundred at 32, sixty-four hundred at 29 and so on. How many speculators could stand such pressure? So, at the risk of repetition and preaching, let me urge you to avoid averaging down.

Margin
I know but one sure tip from a broker. It is your margin call. When it reaches you, close your account. You are on the wrong side of the market. Why send good money after bad? Keep that good money for another day. Risk it on something more attractive than an obviously losing deal.

Price Movement
We know that prices move up and down. They always have and they always will. My theory is that behind these major movements is an irresistible force. That is all one needs to know. It is not well to be too curious about all the reasons behind price movements. You risk the danger of clouding your mind with non-essentials. Just recognize that the movement is there and take advantage of it by steering your speculative ship along with the tide. Do not argue with the condition, and most of all, do not try to combat it.