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  Simon Euers 12:09 pm on June 27, 2011 Permalink | Log in to leave a Comment
  Tags: trade recording, traders ( 4 ), trades ( 2 ), Trading ( 9 ), trading records   

  Winning is a Habit: Record Your Trades 

  For some reason most novice traders begrudge the fact they need to keep high-quality trading records. It’s another trap created by believing that trading is easy and every time we put a trade on it’s going to gang busters or, even if this one doesn’t, the next one will for sure. I just need to watch my bank balance going up and up! That’s all I’m interested in.

  When I work with traders, I hear it all the time, why would I waste time on keeping all those records? Or, the platform I use does it for me, why would I bother to do it again?

  Another reason for this apprehension (that amateur traders have about keeping trade records) is the fact that the results of our records represent the black and white, unemotional, truth of our trading AND that can be scary.

  Well the reality is it’s probably one of the main distinctions between professional traders and amateur traders.

  You think about traders working for a firm or a fund. Their trades are completely scrutinised by their superiors. The performance of their trading is analysed based on their trading records. Their entire employment is governed by them. Do you think they would be trading diligently?

  For individual traders, trade recording is one of the most underutilised tools available to them.

  That’s right, instead of looking at trade recording as a chore; you should be looking at it as a fundamental tool you can use to improve your trading. The correct use of trade recording is the main driving force of improvement.

  For instance if you give me 20 of your recorded trades, I can tell straight away weather you will be a successful trader or not. There’s no need to keep bumbling along, wondering if you’re ever going to make it as a trader. I can tell you straight away, just by looking at your past trades. I can also tell you exactly where you’re going wrong and what you need to do to fix it.

  You know if you haven’t got 20 past trades recorded in some form, then what does that say about your trading aspirations?

  But…Hey Simon gives us break I’ve only just started trading!! I haven’t had 20 trades yet!!

  They don’t have to be live trades. Paper trades should be recorded and analysed just like live trades.

  Isn’t it a better concept to paper trade, record and analyse those trades and then modify and improve technique according to the results of the analysis?
  Most people don’t want to go through that process. They just want to jump straight in and start making money…. and lots of it.  Well the statistics tell the story; Less than 10% of the individual traders who come to the market, actually last long enough to learn to become successful traders.

  Noticed I said learn to become successful traders.

  Trading is a skill. It’s behaviour. It can be taught. Assessing and modifying your past actions refines your trading process.

  “Some of the best lessons we ever learn are learned from past mistakes. The error of the past is the wisdom and success of the future.”

  Your records should be a complete log of all trades plus involve current account balances which are used for correct capital allocation.

  There are two components when you are recording your trades.

  1. When a trade is opened the position is should be recorded, as an open position. This is to remove the allocated funds from our trading bank.

  2. When the trade is closed the information is entered which closes the trade and adjusts our trading records and balances accordingly.

  This readjusts our total balance for correct allocation of funds to other trades.

  Here are some things that you may want to record, depending on what you are trading;

  Account Balance, Risk Allocation, Open date, Ticker Symbol, Type (Call, Put or stock), Strike, Expiry date, Option Price, Number of Contracts, Price stops, Profit targets, Total Trade Outlay, Close date, Number of Contracts Closed, Close Price, Amount Received, Brokerage Costs, Profit/Loss on Trade, Return on Trade, and Return on bank.

  So correct trade recording helps us allocate the right funds to each trade and then can be used as an analytic tool to identify and repair possible flaws in our trading routine.

  Make trade recording and evaluating a habit in your trading.

  Simon says Winning is a Habit.

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  Simon Euers 12:08 pm on June 27, 2011 Permalink | Log in to leave a Comment
  Tags: charts, indicators, stock market ( 8 ), Trading ( 9 ), Trading diary   

  Winning is a Habit: Keep a Trading Diary 

  Once you have a trading framework or structure written down it allows you to focus just on your game plan. It gives you some direction on what you should be doing. In other words, if you have a framework to trade options on the US market then there is no point looking at CFD’s on the Australian market or four X trading on currencies, what you want to focus on is options on the us market.

  Now, I’m not saying there doesn’t come a time when you want to expand your trading BUT you should only be doing so once, you have your trading well under control. Too many traders swap from instrument to instrument hoping to find the special secret one that’s going to hit home runs all the time….well to be honest, it just isn’t there. It is also important to note that one is not better than the other. Remember, it doesn’t matter what you trade, it’s how you trade it!

  So you have your over all game plan written down.

  Now a good place to put it is in what I call a Trading Diary.

  A trading diary is basically a recorded journal of all the things you need to watch to trade according to your trading framework. So you have your plan, you now need to observe the market conditions to identify trading opportunities that fit your plan.

  Write these observations down in your diary.

  This should be on a daily basis and it always should be done when the market is closed.

  Doing this type of work when the market is closed allows you to limit the impact of emotions and helps in reading the current market conditions without any bias.

  What we want to do is to set ourselves up for the next trading day, with clear and precise objectives. (If xyz stock hits this price I will do this.)

  But hey Simon, what do we actually look at?

  Well, that actually depends on what market you are trading but here is an example…

  Firstly, I record what I see in my charts. I actually write down what I see in my charts.

  That’s on the Dow, Nasdaq, S&P 500.

  Where is each day’s closing price is in relation to yesterdays?

  Where is the close in relation to the indicators you use? I use moving averages but you may use Bollinger bands. So, you would record where the price closed in relation to the bands. Is it pushing on the top band? Has it broken through the middle band? Or, is it resting on the bottom band?

  I also record the actual relationship of the moving averages I use. That tells me what direction the current trend is in and how strong it is.

  Some other things I record are things like..

  The advancing/declining issues, the up volume and the down volume, the new 52 week highs and the new 52 week lows and the Equity only put call ratio.

  If you are day trading or short term trading, you may do the arms index or the trin.

  I also look at what’s happening with the sentiment indicators: the vix, vxn and the qqv.

  So don’t you think that once you do that, you would have a good understanding of the current market conditions? And, if you do that on a daily basis would it not make trading decisions easier?

  Once I have an understanding of the current market conditions, I can then look at the charts of the open positions I’m holding. I do the same thing in relation to the closing price of the instrument I’m trading. Where is it in relation to my indicators and more importantly where is in relation to my individual trade plan for this trade?

  I write down what action I will take if certain things happen the next trading day. For example, if it closes below my key moving average, or if it hits my profit target or trailing stop I will exit the trade.

  That’s my open positions taken care of…I know exactly what I’m doing no matter what happens the next day.

  I then go through my watch lists and write down any stocks that look like they are setting up for my entry triggers.

  I tend to keep these in three separated columns, bullish, bearish or confused.

  All that information then is ready for me when I go live into the market.

  Do you think that sort of approach takes some of the emotion out of trading?

  Keeping a training diary over a period of time helps us to see what’s happening in the market well before most of the other market participants.

  When you make this a habit it starts to give you an inside view into the market.

  It starts to develop an awareness or sixth sense of where the market is heading.

  Now let me just stop on that point for a moment….It’s very important, in fact critical that we don’t make that awareness into a preconceived notion and get locked into thinking that the market will do what we think it will. That is a trader’s biggest blunder.

  By keeping a trading diary as a habit will help us to look at the market objectively as each day we are adjusting to the actual current conditions as they happen.

  That’s why……

  Simon Says

  Winning is a Habit!

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  Simon Euers 12:01 pm on June 27, 2011 Permalink | Log in to leave a Comment
  Tags: framework, fundamentals, stocks ( 7 ), Trading ( 9 )   

  Winning is a Habit: Building a Trading Framework 

  This first series I have called…Winning is a Habit!!!

  What do I mean by that? What I mean is that ultimately it’s your habits that create your results.To win you need to have winning habits.

  In this series, in each blog post, I want to give you a number of different actions that that you can immediately start to incorporate into your trading.

  You can start these things straight away, even tonight or tomorrow. This post is focusing on Building a Trading Framework.

  This is like your business plan for trading. You should spend the time to write it down. When you write something a whole new commitment to the process takes place.

  So this is a written plan of all the different components that make up your own trading style.

  It needs to address three key elements:

  1.  Indentifying the trend.

  2. Choosing the right strategy.

  3. Money management rules.

  It should Answer Questions like:

  What type of stocks are you going to trade? Are you going to trade just the biggest companies on the Dow Jones or are you going to trade the guys that make up the S&P500? Or, Do you like penny stocks on the bulletin board?

  If you are trading options then what type of options strategies will you use? Will just buy and sell put and calls? Will you use spreads, covered calls or other types of combinations?

  What will help indentify stocks in an uptrend or down trend?

  What indicators are you going to use? Moving averages, Stockastics, Macd’s, Bollinger Bands, Volume, price movement?

  Will you use Fundamentals as part of your analysis or just use charts and technical analysis?

  If you do use Fundamentals, what are the key ones you look for? Is it PE ratios, earning results, current debt or market capitalisation?

  How much money will you allocate to trading?

  How much to options? How much to any one single trade?

  What are you prepared to risk on any one trade?

  When will you cut your losses?

  When will you take a profit?

  What time of the day will you watch the market? What time will you trade?

  How often will you scan for new stocks?

  You need to know the answers to these types of questions. These and more all need to be part of your trading framework.

  They are the Guiding principles that help take out some of the emotions created by traders who simply don’t have a game plan and are more related to gamblers rather than traders.

  Fear and Greed run the market. If we have a trading structure it allows us to think independently of the herd mentality of the market. That’s not saying we going to trade against the trend. We always make the trend our friend, but it is saying we can independently make our own decisions based on our own trading structure and our own framework; not on what other people are saying or doing.

  Once you have a written trading framework, you then need to focus on implementing it into your trading routine. As you go, you can fine tune it but it is important you don’t just throw it out after a short period of time, give up on it and just go and try something else.

  It takes time to build your framework into a routine that you trust, you believe in and which becomes automatic behaviour, or in other words ….. a Habit.

  Simon Says – Winning is a Habit.

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  Michael Brook 2:18 pm on June 16, 2011 Permalink | Log in to leave a Comment  

  Hope – The Killer of Trading Balances. 

  For most traders, the process of trading is a highly individual experience. They sit in front of their computers, weigh up risk and reward, probability, pattern strength and other factors before committing themselves to a specific position. Often they experience a buzz of excitement when they are just about to enter the trade, followed by anticipation of profit or loss.

  Depending on the type of position a trader is in, what happens next can bring on a roller coaster of emotions and experiences. If the trade goes up, then typically positive emotions are experienced. If the trade goes does down, negative emotions are experienced.

  Expert and experienced traders set their stop loss positions and exit their positions with discipline.

  Novice traders or even expert traders who have had a few losses in a row, sometimes hold on to losing positions in the hope that those positions will come back to them. The lower the price goes the more intensely the novice trader will hold on to that hope.

  Often when novice traders are holding on in hope, they will do a number of things. They will research company reports and announcements to convince themselves that staying in is a good thing to do. They will look at comparisons between the fundamentals of their losing stock and those of comparable companies including relative valuations and stock prices. They will talk about the underlying upward trend of the commodity/market even when their position is going counter to the underlying upward trend. All of these behaviours are symptoms of traders attempting to justify to themselves, the hope that the price might come back to them.

  This rarely happens. Hope has destroyed far more trading balances than exuberance.

  From talking to many traders, the common response is that novice traders hang on in hope. This almost invariably destroys large chunks of traders’ trading balances (if not the whole trading balance) and they have to become a super trader in order to make back their losses. Trading then takes on a whole new level of difficulty for which the novice trader is normally unprepared.

  What to do if you are hanging on in hope.

  First, if you find yourself hanging on in hope for a position to turn around, ask yourself a number of questions.

  Has your losing position hit your 2% loss limit?
  Most trading educators recommend a loss limit of 2% of the trading balance. If the loss on any one position exceeds this amount, the position should be closed out. If the answer to the previous question is “yes”, you should exit it immediately.

  Does your trade conform to the rules of your trading plan?
  If you don’t have a trading plan then you should exit all your positions immediately and write one. If you do have a trading plan and it is within your rules, manage the position. If it’s outside the rules of your trading plan, you should examine closely what you are in the trade for.

  Finally, is the probability function with the trade or against it?
  The probability function is the probability that the trade will work. This changes constantly over time, hence it is described as a function. If the probability is against a trade succeeding, such as if you are going long into a falling market, then you should consider cutting your losses. If the probability is with the trade, as when the market is going higher and you are long, then you could be experiencing a temporary retracement and the position may be worth holding.

  If you are still holding the position after answering these questions, then you are probably either experiencing a manipulation pattern or you are clinging desperately to the hope that it will turn around and you will achieve the results you want from that choice.

  As traders, our results come from the combination of how well we are seeing the market and how well we are managing ourselves. By understanding the market and ourselves, we can profit from the limitless patterns that present themselves constantly.

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  Trader Lyn 9:33 am on February 17, 2011 Permalink | Log in to leave a Comment
  Tags: option, profit, Risk ( 3 ), strategy ( 2 ), strike price, vertical spread   

  Trading with Options can be safer than shares…. 

  Have you wished you could profit from a stock price rise without owning the shares?

  Then let me show you a way, using options, which will limit your losses and carries less risk than owning the shares outright.

  How would you like to rent that option out at the same time, receiving additional income, and reducing the amount you have at risk even more?

  Let me introduce you to a “Vertical Spread”.

  It’s a bull-call spread option trading strategy, so when you think that the price of a stock will go up moderately in the near term, you can reduce your risk.

  To construct a Bull call spread you buy an at-the-money call option and sell an out-of-the-money call option, of the same expiration month. It is also known as the “bull call debit spread” as a debit is taken upon entering the trade.

  The maximum gain is reached for the bull call spread options strategy, when the stock price moves above the higher strike price of the two calls, and it is equal to the difference between the strike price of the two call options minus the initial debit taken to enter the position.

  To put it simply, a Vertical Spread is an options trading strategy with which a trader makes a simultaneous purchase and sale of two options of the same type that have the same expiration dates, but different strike prices. The widening or narrowing of the difference between the option premiums on the two positions, determines the profits.

  The formula for calculating maximum profit is given below:

  •    Max Profit = Strike Price of Short Call – Strike Price of Long Call – Net Premium Paid – Commissions Paid

  •    Max Profit Achieved When Price of Underlying >= Strike Price of Short Call

  The bull call spread strategy will result in a loss if the stock price declines at expiration. The maximum loss cannot be more than the initial debit taken to enter the spread position.

  The formula for calculating maximum loss is given below:

  •    Max Loss = Net Premium Paid + Commissions Paid

  •    Max Loss Occurs When Price of Underlying <= Strike Price of Long Call

  Bull Call Spread Example

  If you believe that XYZ stock trading at $42 is going to rally soon, you buy a March 40 call for $300 and sell a March 45 call for $100. The net investment required to put on the spread is a debit of $200.

  If you bought the equivalent of 100 shares your investment would be $420.

  The stock price of XYZ begins to rise and closes at $46 on expiration date. Both options expire in-the-money with the March 40 call having an intrinsic value of $600 and the March 45 call having an intrinsic value of $100. This means that the spread is now worth $500 at expiration. Since the debit was $200 to enter the trade the net profit is $300.

  If the price of XYZ had declined to $38 instead, both options expire worthless. You will lose the entire investment of $200, which is also the maximum possible loss.

  If you owned the shares at $42 and it is at $38.00 you would incur a $400 loss so using the option has reduced your loss.

  To find out more about this strategy, join our 3-hour vertical spread training webinar, including 4 weeks of follow up live-trading sessions, starting on Wednesday 222^nd February.

  This is an excellent opportunity to expand your knowledge and have another strategy available to make you a more profitable trader. We hold these training webinars only once a year and run them live to keep the information current and relevant to the market right now. This is great strategy for a conservative trader with limited funds. You will learn how to create a trading plan using the strategy that suits your risk profile. Visit https://www.stockcourse.net/wl?3i9=7t16325 to learn more.

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  Lyn Summers 4:58 pm on November 15, 2010 Permalink | Log in to leave a Comment
  Tags: australia ( 3 ), investments ( 3 ), learning, money, portfolio, Stock Course, Stockmarket Education ( 7 ), stocks ( 7 ), stop loss, trading coaching, trading journal, trading plan ( 2 ), Trading Psychology ( 5 ), webinar ( 3 )   

  5 Tips for New Traders 

  So often when people hear I trade the Stock Market, they say “that’s risky”, or “that sounds very hard” and I can understand why. To an outsider the Stock Market can appear to be a big scary place, where you can lose all of your money in the blink of an eye- and, this is true if you don’t know what you are doing.
  
  I have been trading the markets for over 10 years now, however it has been a long journey and one which is constantly making me learn and grow each day. After leaving school in grade 9, I began work cleaning and continued this for the next 10 years. After hearing about the Stock Market through a friend, I was instantly drawn to trading.
  
  I immediately immersed myself in learning everything I could, studying and learning with experts and brokers. I followed their wins, their losses, examined their mistakes and their strategies. It was one of the most exciting times in my life.
  
  For 11 years now I have been trading the Markets.. have I lost money on trades? Yes, of course, but what most people don’t know, is that like anything in life, you must learn the rules and processes, or strategies as we say before jumping in- you can choose a strategy according to your level of risk and minimize losses by learning how to protect yourself.
  
  5 Tips for new traders..
  
  1) Get Educated.  I cringe when I hear of people who have put their money on the line without getting educated first. As they say ” pay for education or pay with pain”..and I have found this motto to be true time and time again. It is so important to learn what you are doing. You wouldn’t take a boat out into the ocean if you didn’t know how to drive it? or better yet without life jackets on board? So why risk your hard-earned money without 100% certainty in the decisions you are making. I have spend thousands of dollars, and countless hours learning from expert traders and brokers for over 10 years now, and to this day I am still constantly learning! One of the best decision I made was to travel to the US and complete a trading course. I also spent 4 weeks with an office of brokers and followed what they were doing. As there was nothing like this in Australia at the time, a few years later, with too many friends asking me to teach them how to trade, I began teaching and sharing my experience with others. Whoever you decide to learn through, I certainly recommend this is a vital part of becoming an expert trader and effective money management.
  
  2) Know your risk level and find your trading style . There is no point trading CFD’s if just the thought of it gives you nightmares. Each person has an independent level of risk that they feel comfortable with, and this is an important part of determining your trading personality. Find out what sort of trader you are? Do you want to day trade options? Or hold long-term leaps? What sort of time do you want to commit? Do you want to trade full time or part time?  Ensuring you diversify your portfolio accordingly is critical.
  
  3) Have realistic expectations When setting goals for anything, it’s important to be realistic. You want to set the bar high enough that you’re challenged to meet them, but not so high that they seem unattainable. Setting reasonable goals will keep you motivated and won’t have you feeling “behind” if you don’t meet your objective.With a portfolio of $5,000 you can’t expect to turn it into $100,000 in a year trading Stocks alone. Also, don’t be fooled into thinking that trading doesn’t take time- it does, especially in the beginning. You simply  cannot expect to spend 5 minutes a day and walk away straight off the bat. The bottom line is that it t is your money and you need to put the effort in and take responsibility.
  
  4) Paper Trade.. this one is probably one of the most critical steps in starting out at a trader. While you might be eager to rush in and make money, if you can’t master it on paper than why risk it?
  
  4) Keep a Trading Journal- Mental stops tend to get blown. Writing your trading plan motivates you to uphold your commitment. It will greatly increase your odds of reaching the goals you’ve set. Measuring your progress will keep you on your toes to alert you of possible needs to adapt your strategy. You may want to do a weekly review of your progress, with more intensive check-ups monthly and quarterly.
  
  5) Pay attention to your emotions. Mastering your emotions is one of the most difficult parts of trading. And most of the time you don’t even know it is affecting you. Most people say ‘Trade without emotion” or get rid of fear and greed. But in actual fact emotions are always going to be there, and you need to learn to deal with each one as it comes up. First, recognising the emotional states you are going through is important, write down what you are experiencing and why. If you find an emotional state such as excitement, or fear, is causing you to deviate from your trading plan, then you need to stop and take a breath before you jump in. For more articles on Trading Psychology go to: http://www.learntotradeshares.com/category/trading-psychology/
  
  It is my passion now to share my knowledge and experience with others. Through my company Stock Course I run weekly coaching webinars and market updates, so I can teach others to trade from the comfort of my own home in Sydney Australia.
  
  If you have a question about trading, you can email me at lyn.summers@stockcourse-team.net,  you can also get a copy of my E-Book at  http://www.stockcourse.net/welcome 
  
  Thanks for reading,
  
  Lyn Summers (More …)

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  Lyn Summers 7:55 pm on July 29, 2010 Permalink | Log in to leave a Comment
  Tags: Nicolas Darvas, Recommended Books, Stockmarket Education ( 7 )   

  How I made $2,000,000 in The Stock market 

  From the back cover of How I made $2,000,000 in the stock market; “How did a world famous dancer with no knowledge of the stock market or of finance in general, make 2 million dollars in the stock market in 18 months starting with only $10,000?”

  I believe that every trader of the stock market should read this book, I know I related to it immediately and realised where I had been going wrong up until that point.

  Here is an excerpt from the book that many of you may relate to;

  “I BROUGHT AT THE TOP   
  

  As soon as I brought

  The stock started to drop

  I became frightened

  AND SOLD AT THE BOTTOM

  As soon as I sold

  The stock started to rise

  I became greedy

  AND BROUGHT AT THE TOP

  I developed a tremendous frustration. Instead of blaming my own stupidity, I invented different reasons for my failures. I started to believe in ‘They’.”

  Find out what he was doing wrong and what he did right to make $2,000,000 in the stock market.

  And what is even more incredible is that he did it in the 1950′s, when $2,000,000 was a serious amount of money.

  Steve Arthur – Trader and Trading Coach

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  Michael Brook 1:51 pm on July 26, 2010 Permalink | Log in to leave a Comment
  Tags: Emotion ( 2 ), Psychology of Trading ( 3 ), Trading Psychology ( 5 ), Trading Success   

  Consistency – When The Rollercoaster Stops 

  Consistency in Trading– When the Rollercoaster Stops.

  Many traders experience trading like a rollercoaster of emotions, especially in their early learning journey. They find themselves in high peaks of euphoria as trades go extremely well. Then they plummet into despair as they are hammered by an uncaring market into a black hole in their trading balance. Trading success comes when a trader can acheive consistent results.

  As time passes, many traders survive the learning journey, either through their own skill or with the help of a mentor or coach. Of the survivors, some learn to smooth the path of the rollercoaster, at least for part of the time. Others, however, do not and they continue to experience extreme highs and lows in their emotions.

  Instead of these traders being in control of their trading, the rollercoaster of the market is in charge of them. As if they were locked into their seats, these traders feel a rush of excitement with every upward move and the dread of impending sudden plunges.

  Riding a rollercoaster may be exciting in the short term, but living on it is exhausting. If a trader is tired and distracted, their attention for the market is limited. If a trader is feeling under pressure, they can miss essential elements of their plan.

  Some proponents of the psychology of trading recommend becoming completely unemotional when trading. However, this is not natural for humans and so takes a lot of attention that could otherwise be applied to trading. Of course, it is possible in the short term, but emotion will leak through and this can be discouraging. Eventually, if you squash your emotions routinely, you can miss intuitive signals and your trading can become pedestrian.

  There is another way.

  If your results are inconsistent, you can bring this within your control. One of the hallmarks of expert traders is consistency in their trading results. They achieve this consistency through a number of ways.

  First, they have a clearly written trading plan that takes into account bull, bear and sideways markets and they recognise signals from the market that indicate when to switch their trading approach between these. The majority of retail traders only trade to the long side and often get hammered when the market goes short.

  Second, they know when to stop trading. If the market isn’t performing the way they would like, or if they don’t understand the market, they have no hesitation in pulling some or all of their positions out of harms way until they do understand. Novice traders don’t know when to stop, but experts do because they have experience.

  Third, expert traders know that when they are off track, either they have had a string of losing trades, or something is going on in their personal life that distracts them and they will alter their trading accordingly to maintain their effectiveness.

  Finally, expert traders are more than happy to back-test a system over extended time periods in order to prove the viability of a system of trading. We know of one trader who back tested a system for 9 months before making a single trade on it.

  What to do if you are getting inconsistent results.

  1. Examine your trading plan. Does it reflect different trade setups for different markets and when you should switch your trading from long to short.
  2. What precise criteria you have that tell you to stop trading? If you don’t have them yet, you should develop them.
  3. What type of trading are you good at? You should be able to say immediately what setups work well for you and in what markets you trade best. Expert traders only do what works for them.
  4. Examine your ability to manage your state of mind. If you have difficulty maintaining your focus you should attend our clear mind training course.
  5. Consider your relationship with risk. If you are taking on too much leverage and risk (your positions sizes are too large) consider reducing your leverage and position sizes until you are achieving consistent results.

  Trading involves risk and each trade has only a probability to success. All the expert traders we have spoken to describe periods of high stress and inconsistent results.

  This can be overcome and there is an unlimited flow of opportunity in every market for the flexible trader who trades with clear mind and a structured trading plan.

  You can learn to achieve consistency in trading. You can learn consistency in managing your emotions while trading and this feeds forward into your results. When you learn effective emotional self-management, the quality of both your on days and off days will improve. You can become comfortable with the occasional roller coaster ride because you know how to handle it.

  Imagine knowing you can let your emotions run free, whatever the market conditions, because you know you can take appropriate action with yourself and the market immediately. This is trusting yourself. It frees you to give trading your undivided attention.

  Your evidence will be more consistency in your trading results, automatic use of the skills in the Clear Mind Trading Course and a trading plan that you trust because you have tested it and it works.

  Once you are consistently achieving the trading success you desire, whether it’s in Forex trading, CFD trading or equities trading,  you can move towards the goals you chose when you first started to trade.

  A useful reference book is Enhancing Trader Performance by Dr Brett SteenBarger.

  

  Previous Blog

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  Lyn Summers 10:48 am on July 22, 2010 Permalink | Log in to leave a Comment
  Tags: Education, Learn to Trade ( 2 ), Losing Money on the Stockmarket, Make Money in the Stockmarket, Make Money On The Stockmarket, Stockmarket Education ( 7 )   

  Why some people ALMOST always make money in the stockmarket 

  And why some people do make money in the Stockmarket!

  It all comes down to education and information, from my experience with teaching people how to trade for over 10 years there are big differences between those that succeed and those that fail.

  People that DON’T make money in The Stockmarket!

  Person 1. Buy a trading course put it on the bookshelf, open a trading account and listen to stock picks, start placing trades and wonder why they miss the entry and exit points… your teacher isn’t sitting next to you all day every day, YOU have to take responsibility and use the knowledge that is in the training material on the bookshelf to make decisions YOURSELF.

  Person 2. Go online and search for information on how to trade, and there is an awesome amount of information out there, some of it is really excellent and some is quite vague… the trouble with learning this way is that you get bits and pieces of information, and when you are learning a new trade or profession you need to go through the building blocks in a step by step fashion so that you have all of the pieces to make clear decisions in pressured situations, and believe me when you are losing some or A LOT of your hard earned cash in a trade it is PRESSURE!

  People who DO Make Money in

  The Stockmarket

  People who do make money in the stockmarket start by learning from the basics building one piece of knowledge on top of the other, they learn from a mentor building good systems that turn into good habits. The successful person then starts paper trading like they are using real money, recording all of their results in a trading diary analysing when the trade goes well and when the trade goes against them, they typically keep excellent records, get to know their risk tolerance and hence the kind of trading that they are comfortable with before they venture into putting real money on the line.

  Learning how to trade is a serious business, imagine if your doctor or plumber for that matter, did not go through a stage by stage learning process from the start, building their knowledge and HABITS in a successful formulae that has been proven over time utilizing the experience of their mentors to not make some of the mistakes that they and their mentors made.

  Emotional training is the major influence on a persons trading results, knowing the emotional stages of a trade gives you the understanding of how your emotions are going to play out before they happen so you are armed with the tools to fight them as the best traders work without emotion, they analyse a trade, create a plan with entry and exit points and then carry it out to the letter.

  Learning how to make money in the stockmarket is a profession that takes dedication to learn properly and will give you plenty of challenges along the way but when the penny drops it will change your life forever, unlocking you from the daily grind enabling you to do the things you want when you want and gives you the ability to earn money no matter where you are in the world.

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  Michael Brook 10:37 am on July 22, 2010 Permalink | Log in to leave a Comment
  Tags: Emotion ( 2 ), Learn to Trade ( 2 ), Stockmarket Education ( 7 ), Trading Psychology ( 5 )   

  Emotional Stages of a Trade 

  When we think about trader education, most people’s attention goes towards learning to use technical analysis or fundamentals, choosing sources of information and making sense of them with intent to identify potentially profitable positions. The media report changes in the markets and in some of the fundamentals that influence them.

  The trading psychology of traders rarely get a mention, yet these have an enormous impact on individual traders’ results. Emotions influence our capacities to take in information, process it and make functional decisions and the feedback for a trader is instant. We are not proposing that an alert, embodied, flow state will guarantee results by itself, but in combination with a good trading system and plan, it will contribute to effective decision making and hence, profits.

  To foster an understanding of the scale of problems many traders experience with trading emotions, we will outline below the different stages of a trade and events that can happen to induce emotional difficulty for traders.

  Stage 1 – Commencing a trade.

  When novice traders place a trade, there is often a mix of emotions. Excitement may be experienced about the potential for profit; fear about the potential for loss. Hesitation is often experienced if the trader is unsure about trading or about the position. These things can all happen at once or in sequence.

  Psychological research has identified this common thought process. Once a decision is made, whatever the subsequent result, people look for evidence that they have made the “right” decision after they have made it. Their perception of the probability of the identified outcome increases after the decision has been made.

  Once a trade is taken, novice traders often experience the decision as being the correct one.

  Stage 2 – Option 1 – The trade goes into profit

  When a trade goes in the correct direction, novice traders experience a flush of excitement and joy. They were right and they begin hallucinating what they can or will do with the money they will make from the trade. They begin hoping and wishing for it to go higher. The higher and faster it goes up the more excitement they feel.

  Stage 2 – Option 2 – The trade goes into loss

  Hopes are turned to dust as a great idea is smashed by an uncaring market. The emotions generated by this event can range from mild annoyance at the trade not going right, to fearful anxiety, to a complete inability to think.

  Stage 3 – It’s time to get out.

  At the time to get out, traders can be experiencing a mix of emotions. If the trade went well they can extremely joyful. If they got out at a massive loss, they can be filled with panic and intense regret at staying in for so long. Often traders can feel that the market is against them personally. Doubt and self-reproach are common when exiting at a large loss.

  Stage 4 – Post trade emotions.

  The post trade emotions can vary depending on the outcome of the trade. They can vary from wild exuberance and ongoing joy if exiting at a large profit, to devastation and recrimination if exiting at a large loss.

  Regret is a very common post trade trading emotion. Traders often regret getting out if the stock goes on to higher prices. Alternatively, they can regret not getting out earlier if an exit signal was presented and not taken immediately.

  The technical merits of the trade are rarely considered in the aftermath, nor how well the trade was executed. Yet these are essential considerations that support long term trading survival and success.

  You probably recognized some of these experiences from your own trading history. At times it may have seemed that you were the only one in the experience. However, everyone who has traded will have had some of these experiences.

  Key Understandings

  Since different emotions arise at different parts of a trade, it’s possible to predict the likelihood of their occurrence. The emotions that take place at different parts of a trade are occurring at that stage because, without being conscious of it, you have identified something important that is out of place. The natural response is strong sensation around the midline of the body, which may be called excitement when the anomaly is pleasing, or anxiety, regret etc when the anomaly is displeasing.

  For example, the emotion of regret for doing something that cost you money serves a purpose of letting you know not to do it again. The emotion of excitement for making a very good trade serves the purpose of rewarding you to do the behavior again.

  In Summary:

  * Trading Emotions are functional and they serve a purpose.
  * Trading Emotions have repeatable structures and patterns.
  * They are communications from your unconscious mind to protect and serve you.
  * Knowing the patterns enables you to have choice about which emotions to have at what time.

  How to use this information.

  Knowledge leads to choice and functional action. Knowing about yourself and how you respond to your environment allows you to engage the environment and respond to it as you choose, instead of repeating actions the way you were programmed from the past.

  When you appreciate that you may experience different emotions at different stages of a trade, you will be able to notice when they are beginning and not allow them to cloud your judgment.

  Noticing your emotions can also serve as a trigger to focus you back on the technical aspects of your trade.

  After you exit a trade, it can be helpful to reflect on what emotions you were experiencing while entering or exiting the trade. This can assist you in preventing loss making trades in the future.

  When you know your emotions can affect your trading, you can learn to use them deliberately, to help you become a better trader and make your trading more profitable.

  Improving your trading can be assisted greatly by understanding your own emotional patterns and learning effective ways to improve or vary your emotional responses.

  More about us

  Trading State Pty Ltd is a company committed to assisting traders to deal with the emotional aspects of trading and to improve their trading performance. We offer training courses and coaching in state management and emotional flexibility for traders.

  If you think you have had problems with the emotions of trading, you are not alone.

  Together we have over 30 years experience in assisting traders to achieve better performance in their trading and in trading ourselves.

  Whatever issue you have with your trading experience, we can assist you. For more information about us and previous articles on our blog visit our website. http://www.tradingstate.com.au

  © Trading State Pty Ltd. All rights reserved 2010

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