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Trading Words of Wisdom

  • Parent Category: Articles

One Simple Step to Avoid Financial Disaster

Financial successThere is one element that determines whether you will be a successful trader or a failure.

Completion of a trade will determine your success.

Exiting positions makes the world of difference.

Anyone can buy a stock, and they do, but most people don't finish. Finishing things - exiting a position - is what makes progress.

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  • Parent Category: Articles

The Main Reason Why People Fail at Trading

dollar signsA lot of traders fail at this game because they are undercapitalized.. It has nothing to do with the strategy. It has nothing to do with trend following, short term trading, swing trading, scalping, mean reversion, whatever. At the end of the day any kind of trading has drag via commission, so you have to work backwards.

Let’s assume that your trend following strategy makes fifty transactions a year. So that’s fifty buys, fifty sells, that’s a hundred transactions a year. Let’s assume you pay ten dollars per transaction. That’s a thousand dollars in commission for the year. If you’ve got a ten thousand dollar account, you’re going to have to making 10% just to break even –and 10% is too much drag. If your account is smaller, let’s say its five thousand dollars, you’re going to have to be making 20% just to breakeven. I’m not talking about strategy, I’m just talking about the mathematics of the transactional drag. I don’t care how good your strategy is, if you’ve got to make 20% to breakeven, you’re pushing it up hill.

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  • Parent Category: Articles

How do you stay motivated as a stock trader?

stressed manI’ve spent a lot of my research time studying the track records of the great traders. Those track records are freely available and by studying the track records and the performance records of great traders, and varied traders, you come to appreciate what is going to be required in the journey of trading.

A lot of people come to this game and they think that trading is making money every day, every week, every month and every year. For some people that may well be the case, but for the rest of us who are just common people in the street trying to make a go of it, that’s not the case. You’re going to have losing trades, you’re going to have losing days, you’re going to have losing weeks, losing months and yes, you will have losing years. If Warren Buffett has a losing year, why the hell shouldn’t you? That’s what it comes down to.

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  • Parent Category: Articles

Patience is the key to trading success.

loungeA lot of people expect that trading the stock market is easy and they will start and instantly find trading success. They tend to focus on the easy money that’s made out there. You know the stories of people that have made a lot of money, and sometimes that is based on pure luck. That’s a natural human desire, to focus on success –we all want to be lucky. It’s like buying a lottery ticket. Everyone reads about the guy that wins twenty-five million dollars, but they fail to see the other four hundred and eighty thousand people that lost their money on the bet. It’s the same with golf. You’ve got Jason Day, Jordan Speith and Rory McIlroy and what you don’t see is the other twenty-five thousand people slugging it out, sleeping in the back of cars, trying to make some coin as a professional golfer.

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Inspirational Trading Quotes

Inspirational Trading QuotesTaken from Joe Ross - Trading is a Business:

"Some of the greatest trading stars have been people who have had a bulldog approach to trading. They have withstood the enormous financial strain and pressure of being net losers in the markets until they mastered their chosen profession. Along with staggering financial losses, they have stood up to the immense mental and emotional strain of losing, often over long periods of time. It would seem that for most, the only way to the top in trading is to persevere."

"Life is nothing more than a series of bets and bets are really nothing more than questions and their answers. There is no real difference between, "Should I take another hit on this Blackjack hand?" and "Should I get out of the way of that speeding and wildly careening bus?" Each shares two universal truths: a set of probabilities of potential outcomes and the singular outcome that takes place.

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