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Combining Strategies For Comfort

Combining Strategies For ComfortBefore I get into today's article I need to respond to some comments received after last week's Mean Reversion article. One criticism was the system was losing its edge as the equity curve had been flattening over the last few years.

This most likely came about as I used a log scale chart. So for better clarity, here is the linear scale chart.

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Trading Mastermind

trading mastermindYour special topic for today is Trading Psychology.

Your time starts now.

Question: How can you overcome your most debilitating psychological trading barriers?

My Answer: Go out and get another job. We’ve discussed this before. And I don’t mean stop trading. I just mean add some other revenue streams into your bread winning basket. If trading is your only source of income, you are going to be under pressure every month to make money. No matter what the market conditions.

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An Effective Mean Reversion System - Part 2

trading strategyLast week I laid the foundation for mean reversion trading. You may read that article HERE.

I'll build upon that now with a specific set of rules then test the outcome.

In layman's terms the rules are:

When a stock is trending higher look for a heavily oversold point. Once an oversold level is attained, place a buy order below the market for the following day. If that order is filled, await the first higher close then exit the position on the next open.

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Keeping Your Mental Pathways Clear

Mark TwainI love this quote by Mark Twain:

‘I have had many troubles in my life, most of which have never happened ‘

As Traders, and in life in general, it is easy to clog our brains with concerns and worries. We’ve all met people who are constantly worried about things that have yet to occur.

The thing is the human brain can hold millions of thoughts. Yet that doesn’t mean human beings are capable of functioning properly whilst moving back and forth between these thoughts. It’s human nature of course to do this, yet such behaviour will never have us functioning to our full potential as creative beings.

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An Effective Mean Reversion System - Part 1

tradingsystem1The following is an excerpt from the Trading System Mentor Course. Limit seats now available for Q4 2019. Apply HERE.

Mean reversion is the process of prices moving away from the respective average or mean price and then reverting back again, in some instances quite quickly.

Mean reversion is the opposite of momentum.

Momentum relies on the long tails that sustained trends provide and the goal is to ride those trends for as long as possible.

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Acceptance

business acceptanceFor many of us, acceptance is a hard thing to swallow. Especially when things go against us. Yet when it comes to trading, accepting the outcomes of all your trades, not just the good ones, is going to be key to your longevity.

There will always be situations out of our control that are going to see us giving back some profits. Or taking a loss. Yet just as we are happy to give ourselves a pat on the back for our wins, we also need to accept responsibility for our losses. After all it was us that pulled the trigger.

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Revisiting My First Trading System

strategyLet's spin the clock back to 1985.

Trading fell in my lap one day. Randomly. One of those life changing events.

For some background take a listen HERE from the 24 minute mark.

The strategy wasn't mine yet I could see trends and thus profits.

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Affirmations, Attraction, Action

Affirmations Attraction ActionYour brain is a very powerful piece of equipment. Yet it can be both your friend and foe when it comes to trading.

The goal is to not only make the brain our friend, but also our secret weapon.

You want to make brain power part of a daily strategy to improve consistency with your trading results.

You can have the greatest strategy in the world, but you will always be its weakest link.

So how can we lessen the impact of this ‘weakest link’ and turn it into our strongest and most trusted ally?

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The Real World vs The Trading World

The Real World vs The Trading WorldWhy is it easy to be consistent in many aspects of our lives in the real world yet difficult to stay consistent in the trading world?

The answer is quite simple. We’re comparing two different universes.

Yes, in the real world, there’s a lot of crazy stuff going on. Yet much of our lives are routine based, logical and generally predictable.

Yet when it comes to trading, there is not a lot of logic, nor predictability. In fact, markets are a mass of human emotions that often lack sense and reasoning.

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The Fast Money Syndrome

fast moneyDid you start trading with the belief that you’ll make money quickly?

You’re not alone!

Most people see a news item about a new float doubling in price on its first day. Or read about a penny dreadful stock that has tripled over the past week. They can’t get set up quickly enough to start trading.

Yet what new traders read and see is a far cry from reality.

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