Do’s and Dont’s in Stock Market

Investing in stock market can be a profitable and enjoyable proposition. It requires a great deal of patience and discipline.

Right attitude and having proper tools is a must in the financial markets. Most traders loose because they do not do their homework and they don’t plan their trades.

They also don’t realize that they are playing against the best brains in the business. One win alone force them to shed their skepticism and next trade comes out of a jubilant but ignorant and biased mind. To understand the result, one need not to study rocket science.

Most don’t understand the value of having proper tools of the trade. Some play on inside information some play on fundamentals and few play on technical. Total percentage of all these together is not more than 15%. Rest play on their whims and fancy.

That’s why only 5 to 7% make money trading. I often ask traders if they have studied any book on trading or trader’s psychology or any other relevant subject. Shockingly 95% says no and most are not willing to buy and read.

To control greed and fears one must understand the traders or gamblers psychology. Books give you wisdom and one can become a better trader or investor by applying knowledge.

YOU DON'T KNOW WHAT YOU DON'T KNOW. Knowing and applying is the key.

I would love to see those 95% do what they do when they start any other business venture. They do some market research about of the field concerned. They build or rent a shop or office. They buy furniture and stationary appoint some help and do many more things required to run that shop / office efficiently.

But would like to point it out once again “See around you. You know many of these guys. What infrastructure do they have for this business? My experience is that they have (most of these if not all out of those 95%) a copy of the pink paper in their hands every day. It is their total net worth as far as infrastructure for the trading is concerned.

One important aspect they do not realize about losing money is Draw downs. It is simple math unknown to them. Drawdowns are the biggest enemy of traders. Let me explain the term draw downs and how it is one of the most important facts of trading to know.

Suppose one start trading with a capital of Rs 100000 and loses Rs 40000. It means that he lost 40% of his capital Right? There is nothing special here but point to know and remember is coming now. You ask him how much he must win in percentage term to break even. I am sure he would think about how stupid the question is because even a child would know that a gain of 40% would be required to break even.

Unfortunately it is not the reality. I wish it was. Actually he needed to win 66.66 percent to break even of the remainder capital. Now let’s examine different scenarios.

Losses grow exponentially. I have been asked what these 95% traders should do. An answer is nothing but keeps loosing so that remaining 5% can enjoy life and secure their future. It’s another cruel fact of life. Let me elaborate. There are two categories of people in life not only in financial markets. Winners and losers. Who fits where depends on the attitude and attitude only. Only those can move out of the bigger lot who were ignorant about the requirement and once they realize what is to be done and actually they take corrective steps. Just plain lip service would not do. Knowledge is power. How many believes is a powerful statement. To me it is incomplete and as it is of no use. The complete phrase is Applied knowledge is power.

Winner would do whatever it takes to be successful. Looser will find excuses that books are costly. Software’s and data cost are too high and who has time to read books or scan through charts. You suggest that why you don’t take services of a professional. He would find another excuse here too, saying if I have that much money why would I need to trade? Or surely I would take his services but let me make that much money from the market. List never ends and soon enough his trading account ends.

On the contrary winners think otherwise. He think that I am new or I don’t know all the things and I must invest in learning either for reading books or learning for a mentor by taking some trading course.

Let me give you a very straight forward example of importance of tools of the trade. Imagine yourself as a brand new dentist. You are ready to setup your dental clinic. You have taken a shop and put up a sign board so your first patient drops in with a cavity. You ask him to sit on a stool and examine his cavity and ready to fill that one. But you have to drill a bit. Now you take out a hand drill your patient get up asking what you are up to Doctor Sahib. Don’t you have a proper machine? What would happen if you tell him that I am a new doctor and would setup my clinic when I earn enough money? Here it looks funny but it happens in the market every day and everywhere. Every nook and corner of the street you can meet such traders.

In general if one has to setup a conventional business they know tools are required first. Employees have to be hired and machinery must be commissioned first before they get even a single order. But they do not treat trading or investing money as a business. Most lose money elsewhere and come to the stock market for the want of available leverage. Pay 5% margin and trade for 100% value.

In a setup like that where you play for leverage, odds are stacked always against you. You have to do lot of preparation to get trading odds in your favor. That cost time and money. When it comes to putting time and money, traders avoid them and put themselves in the category of the losers. It is again an attitude problem.

Many people ask me for tips and I give them too. But GOD has a rule. There is no free lunch. Information that is available free often loses value and conviction. If there is no conviction you would not act or not act timely in a market where time is money. If you have paid for the information or you have put in efforts to get that piece of information you would have conviction and courage to act on it. Profit cannot be made on sitting on that info. One has to act on it.

Money management strategies are not on the priority list of this group. List is quite long. Why they remain where they are and then they vanished cribbing the market for their misfortune.

PLAN YOUR TRADE AND TRADE YOUR PLAN.

Intuition & Vision in Trading

Intuition – A qualitative virtue recognized by few and held by even less. Our intuition is the byproduct of the analysis performed by our subconscious. It acts much like a muscle and requires exercise to develop and grow. Like a muscle, neglect can cause atrophy. Traders with a strong intuition built on a strong trading strategy put themselves in an ideal position to achieve consistent success in the market. Over time, traders can feel the energy a market gives off and can execute trades from this. It is an invaluable tool in one’s trading arsenal.

Vision – While total clairvoyance as to future price movement is unrealistic. It is my goal as a trader to assimilate as much information as possible with the goal of playing out scenarios that tie in together. It’s not always easy to do, yet understanding trading does not occur in a vacuum and markets do exhibit funny things get you mentally prepared to deal with these outlier events. Those that can think for themselves and need not rely on templatized news releases for their ideas usually put themselves in a position to benefit from their forward thinking.

We have heard many times about leaders who saw an industry trend before it happened. This was no accident. It came as a result of their understanding of their field and what could change it for the better. Traders who gain an understanding of how things can potentially play out and factor that into their trading strategy go a long way to keeping their objectivity when things unfold in a fast and volatile market.

Self-Discipline in trading

Developing Self-Discipline is something that you can start doing right NOW. It doesn’t take vigorous Special Forces training, nor does it require being related to the almighty samurai bloodline. Instead it requires will, devotion and regular action.

·        Start by cultivating a desire. Do that by understanding the incredible benefits of such an achievement. The majority of human endeavors fail because humans themselves quit; they quit because their mind and emotion subdues their will and discipline. Such a trait shall make you unstoppable.

·        Use what is coined by NLP (Neuro-Linguistic Programming) as an Incantation. Stand up and energetically state that you shall achieve this regardless of anything, it’s crucial to incorporate physical movements as well. This molds a stronger message in your mind due to the incorporation of emotion and physicality. Repeat this daily.

·        Analyze yourself; know where your discipline falls short and is mostly likely to fail. Is it exercising, or facing fears, or maintaining dietary habits? This will create the targets which you shall work upon. Fast results will come from major concentrated action and not from minimal diffused efforts.

·        Start; initiate your pursuit by working directly on the weaknesses that keep you away from being self-disciplined. Start small and gradually proceed to making big chances. Day by day incorporate more change but avoid overloading yourself.

·        Once you have tackled one weakness proceed to the other. The conquest for self-discipline is a never-ending one. Acquiring it requires a constant stream of action; otherwise it shall simply leak from your possession.

Positional Call For The Week 29-9-14

Technical Analysis Of RPOWER:

Buy Rpower For A Target Of 92.

Technical Analysis Of JPPOWER:

Buy Jppower For A Target Of  18.

Technical Analysis Of  JINDALSTEL:

Buy Jindalstel For A Target Of  236.

The Essence of a Trading Process

At the broadest level, trading consists of analyzing, synthesizing, and doing.

·        Analyzing is extracting information from markets, immersing ourselves in data.  It is our look through the microscope.

·        Synthesizing is assembling those data into a coherent picture, extracting pattern and meaning from the reams of market information.  It is our telescopic view.

·        Doing is taking action on the meaning we have extracted from studying markets.  It includes everything from determining the best expression of a view to managing risk and reward once the view has become a position.

In trading, the microscope and telescope of viewing are transformed into real world doing.

At the end of a trading day, week, or month, we repeat the process–only we turn the lens inward.

We analyze our performance, immersing ourselves in the data that tell us how well we executed and managed our trades; how well we discerned genuine opportunity in markets.

We synthesize our performance observations into goals that move us forward, capturing what we’ve done well and what we need to improve.

Then we return to doing, feeding those goals forward into future market analysis, synthesis, and doing.

Deliberate practice is a cycle of stepping back to observe and stepping forward to act.  It’s also a cycle in which we first act in the world and then act upon our performance.

Analyzing, synthesizing, and doing, in markets and with us:  that is what a trading process is all about.

Technical Analysis Of IDEA CELLULAR LTD (26-9-14)

Technical Analysis Of IDEA CELLULAR LTD:

Short IDEA For A Target Of 150.

Technical Analysis Of MCX CRUDE OIL (25-9-14)

Technical Analysis Of MCX CRUDE OIL

Sell Mcx Crude Oil For A Target OF 5650 With Stoploss Of 5780.

Technical Analysis Of SRTRANSFIN (25-9-14)

Technical Analysis Of SRTRANSFIN :

Short SRTRANSFIN For A Target Of 883. Stoploss As Per Your Risk.

Technical Analysis Of Grasim (24-9-14)

Technical Analysis Of Grasim :

Short Grasim For A Target Of 3408.

Technical Analysis Of MCX NATURAL GAS (23-9-14)

Sell MCX NATURAL GAS for a target of 233 & 228 With Stoploss of 240.

Mcx Crude Analysis (22-9-14)

Positional Call:


Buy Mcx Crude For Short Term For A Target of 5690 With A Stoploss of 5575.

Nifty Analysis (21-9-14)

Nifty Analysis :

Last week Nifty has fallen from 8180 to 7925 and bounced back to 8160 levels. What is the Deciding factor is level 8140 and also it is a critical level. If Nifty stays above 8140 for 3 days signals fresh round buying on the street. If not the its kinda bearish market. On Weekly Chart Bearish Hanging man has been formed so we need to closely watch next week price action.

I also may be wrong. Kindly do your research before taking any trading position.

10 Basic Principles Every Investor Should Know

In the stock market there is no rule without an exception, there are some principles that are tough to dispute. Here are 10 general principles to help investors get a better grasp of how to approach the market from a long-term view. Every point embodies some fundamental concept every investor should know.

1. Ride the winners not the losers :

Time and time again, investors take profits by selling their appreciated investments, but they hold onto stocks that have declined in the hope of a rebound. If an investor doesn't know when it's time to let go of hopeless stocks, he or she can, in the worst-case scenario, see the stock sink to the point where it is almost worthless. Of course, the idea of holding onto high-quality investments while selling the poor ones is great in theory, but hard to put into practice. 

The following information might help:

Riding a Winner - The theory is that much of your overall success will be due to a small number of stocks in your portfolio that returned big. If you have a personal policy to sell after a stock has increased by a certain multiple - say three, for instance - you may never fully ride out a winner. No one in the history of investing with a "sell-after-I-have-tripled-my-money" mentality has ever had a ten bagger. Don't underestimate a stock that is performing well by sticking to some rigid personal rule - if you don't have a good understanding of the potential of your investments, your personal rules may end up being arbitrary and too limiting.

Selling a Loser - There is no guarantee that a stock will bounce back after a decline. While it's important not to underestimate good stocks, it's equally important to be realistic about investments that are performing badly. Recognizing your losers is hard because it's also an acknowledgment of your mistake. But it's important to be honest when you realize that a stock is not performing as well, as you expected it to. Don't be afraid to swallow your pride and move on before your losses become even greater.

In both cases, the point is to judge companies on their merits according to your research. In each situation, you still have to decide whether a price justifies future potential. Just remember not to let your fears limit your returns or inflate your losses.

2. Avoid chasing hot tips:

Whether the tip comes from your brother, your cousin, your neighbour or even your broker, you shouldn't accept it as law. When you make an investment, it's important you know the reasons for doing so; get into the basics by doing research and analysis of any company before you even consider investing your hard-earned money. Relying on a tidbit of information from someone else is not only an attempt at taking the easy way out, it's also a type of gambling. Sure, with some luck, tips sometimes pan out but they will never make you an informed investor, which is what you need to be to be successful in the long run. Find out what you should pay attention to - and what you should ignore.

3. Don't sweat on the small stuff:

As a long-term investor, you shouldn't panic when your investments experience short-term movements. When tracking the activities of your investments, you should look at the big picture. Remember to be confident in the quality of your investments rather than nervous about the inevitable volatility of the short term. Also, don't overemphasize the few bucks difference you might save from using a limit versus market order.

Active traders will use these day-to-day and even minute-to-minute fluctuations as a way to make gains. But the gains of a long-term investor come from a completely different market movement - the one that occurs over many years - so keep your focus on developing your overall investment philosophy by educating yourself.

4. Don't overemphasize the P/E ratio

Investors often place too much importance on the price-earnings ratio (P/E ratio). Because it is one key tool among many, using only this ratio to make buy or sell decisions is dangerous and ill-advised. The P/E ratio must be interpreted within a context, and it should be used in conjunction with other analytical processes. So, a low P/E ratio doesn't necessarily mean a security is undervalued, nor does a high P/E ratio necessarily mean a company is overvalued.

5. Resist the lure of penny stocks

A common misconception is that there is less to lose in buying a low-priced stock. But whether you buy a Rs. 5 stock that plunges to Rs. 0 or a Rs. 75 stock that does the same, either way you've lost 100% of your initial investment. A lousy Rs. 5 company has just as much downside risk as a lousy Rs. 75 company. In fact, a penny stock is probably riskier than a company with a higher share price, which would have more regulations placed on it.

6. Pick a strategy and stick with it

Different people use different methods to pick stocks and fulfill investing goals. There are many ways to be successful and no one strategy is inherently better than any other. However, once you find your style, stick with it. An investor who flounders between different stock-picking strategies will probably experience the worst, rather than the best, of each. Constantly switching strategies effectively makes you a market timer, and this is definitely most investors should avoid. Take Warren Buffett's actions during the dotcom boom of the late '90s as an example. Buffett's value-oriented strategy had worked for him for decades, and - despite criticism from the media - it prevented him from getting sucked into tech startups that had no earnings and eventually crashed.

7. Focus on the future

The tough part about investing is that we are trying to make informed decisions based on things that have yet to happen. It's important to keep in mind that even though we use past data as an indication of things to come, it's what happens in the future that matters most.

A quote from Peter Lynch's book "One Up on Wall Street" (1990) about his experience with one of the stock he bought demonstrates this: "If I'd bothered to ask myself, 'How can this stock go any higher?' I would have never bought it as stock price already went up twenty old. But I checked the fundamentals, realized that company was still cheap, bought the stock, and made sevenfold after that." The point is to base a decision on future potential rather than on what has already happened in the past.

8. Adopt a long-term perspective.

Large short-term profits can often entice those who are new to the market. But adopting a long-term horizon and dismissing the "get in, get out and make a killing" mentality is a must for any investor. This doesn't mean that it's impossible to make money by actively trading in the short term. But, as we already mentioned, investing and trading are very different ways of making gains from the market. Trading involves very different risks that buy-and-hold investors don't experience. As such, active trading requires certain specialized skills.

Neither investing style is necessarily better than the other - both have their pros and cons. But active trading can be wrong for someone without the appropriate time, financial resources, education and desire.

9. Be open-minded

Many great companies are household names, but many good investments are not household names. Thousands of smaller companies have the potential to turn into the large blue chips of tomorrow. In fact, historically, small-caps have had greater returns than large-caps; over the decades.

This is not to suggest that you should devote your entire portfolio to small-cap stocks. Rather, understand that there are many great companies beyond those in the Small Cap Index, and that by neglecting all these lesser-known companies, you could also be neglecting some of the biggest gains.

10. Don't miss to diversify your equity portfolio

Its always wise to have stocks from different sectors and Industries. Do not expose your self to many stocks from the same sector. Be it IT, Consumers, Finance, Infrastructure, Pharmaceutical or any other sector, you must have a proper mix of all with suitable allocation based on future outlook of that sector and industry. Most of the companies from capital goods and Infrastructure sector have not performed since last 4 to 5 years but private banking stocks, consumers and pharmaceuticals companies stocks are making new all time highs. Hence, its important to stay diversified with your stock investments.

Technical Analysis Of MCX LEAD (19-9-14)

Technical Analysis Of MCX LEAD :

Accumulate Lead From 125-126 Levels For A Target Of 133.

Stoploss As Per You Risk.

Technical Analysis Of Hexaware (19-9-14)

Technical Analysis Of Hexaware:

Hexaware has given  a breakout  for a target of 250+. So one can buy at this level.

Technical Analysis Of MCX CRUDE OIL (18-9-14)

Positional Call :

Short Mcx Crude oil Between 5765-5785 with a stoploss of 5795 for a target of 5688.

Technical Analysis Of IDFC (18-9-14)

Positional Call :

Buy IDFC For A Target OF 180.

Technical Analysis Of Bank Of Baroda (17-09-2014)

Positional Call :

Sell Bank Of Baroda For A Target Of 862.

Technical Analysis Of MCX ZINC (16-09-14)

Positional / Trading Call:

Short MCX ZINC For A Target Of 132.

Technical Analysis Of Archies (16-9-14)

Delivery Call : Archies

Buy Delivery Of Archies For A Target Of 40.

Technical Analysis Of JSWENERGY (15-9-14)

Positional / Short Term Call : Jsw Energy Ltd.

Short Jswenergy for a Target of 73.

20 Reasons why your Buy/Sell Signal Indicators will Fail

These days people are much more fascinated towards Mechanical Models aka Auto Buy/Sell Signal Softwares and Autotrading Softwares. However at some point of time they do find themselves still loosing in this markets even after adopting various strategies. Here are some points which explains why a trader fails by adopting a trading system with half baked knowledge.

1)You think Buy Sell Indicators are predictive in nature. However in reality the mathematical indicators aka Auto Buy or Sell Signals dont have brain to predict the randomness. And eventually you will fail at some point of time.

2)You want a Buy/Sell Indicator that makes money

3)You want a Best Intraday Buy/Sell Indicator and you dont know how to gauge a Buy/Sell Indicator.

4)You are still trading with subjective bias like Trading Patterns, Elliot Wave,Gann, Fibonnaci, Divergence etc along with your buy/sell indicators.

5)You are jumping from one stock to another stock randomly while following the Buy/Sell Trading rules and selecting the trades again randomly.

6)You are searching for double confirmation by using multiple buy or sell indicators or correlating your indicators with News Events, Global Markets, TV Channels/Analysts or Comparing the Brokers/Tipsters/Analysts calls with your Signals.

7)You dont know how to backtest a trading system which explains the nature of the trading system. And probably you dont want to spend much of your time in learning the basics of trading system.

8)You loose faith after 5-6 continous losses in your trading system.

9)You are probably trading the signal in a wrong timeframe.

10)You dont want to trade all the signals.

11)You are a lunch time or dinner time trader and you want to trade the signals only during those times.

12)Taking the trades based on your anticipation of future Signals rather than trading the actual signals.

13)Averaging the trades when market moves against your position a little.

14)You are too lazy in trading and following the Buy/Sell rules.

15)You are using the most commonly used trading system among the people that is invented somewhere around 1960’s or 1980’s.

16)You learnt a simple trading system from the most popular book and you are using it.

17)You dont know whether the Buy/Sell Signal indicator will work for a particular trading instrument or not and you are willing to take a risk by trading it.

18)You seen the Best part of the trading system and you got confident and you want to trade the subsequent signals.

19)You dont know the mathematical logic behind the buy/sell indicator. However you are blindly interested in following it.

20)You had seen Paid Buy/Sell Indicators Advertisement in Facebook/Twitter which gives 85%-95% guarenteed success and your are interested in purchasing it at any cost.

Source : Marketcalls

Technical Analysis Of BHEL (12-9-14)

Positional / Short Term Call:

Buy Bhel For A Target Of 243 With A Stoploss of 216.

Technical Analysis of Dowjones (11-9-14)

Positional Call :

Buy Dowjones Future At Cmp For A Target OF 17145 With A Stoploss of 16990.

Technical Analysis Of BOI (Bank Of India) 11-9-2014

Positional Call :

Bank Of India Has Formed A Pennant Pattern. So It May Head To The Lower TrendLine. So We Can Short Towards 267.

Stoploss At Your Own Risk.

Technical Analysis of Bpcl (10-9-14)

Positional Call / Short Term Call Of Bpcl (10-9-14)

Short Bpcl For a tgt of 667 with a stoploss of 702.

Technical Analysis Of Crude Oil (9-9-2014)

Positional Call :

Short Crude oil with a stoploss of 94.85 for a target of 87.

Technical Analysis of Mcdowell (8-9-14)

Technical Analysis of Mcdowell :

Positional call : Sell Mcdowell for 2040

Stoploss as per your risk.

Day Trading / Intraday Day Trading Call For 8-9-14

Day Trading / Intraday Day Trading Call For 9-8-14.

Sell PNB(punjab National Bank) For a Target of 930 CMP 936.

Sell TATAMOTORS For a Target of 500.35 CMP 506.

Stoploss as per your risk levels.

Day Trading / Intraday Call Allahabad Bank 5-9-14

Day Trading / Intraday Call Allahabad Bank 5-9-14.

SEll Allahabad bank for a target of 112.

Technical Analysis Of Forex Pair EUR/USD

Technical Analysis Of Forex Pair EUR/USD:

Buy Eur/Usd  For A Target of 1.3190 & 1.3240.

49 Professional Trading Rule.

1. Trading is simple, but it is not easy.. If you want to stay in this business, leave hope at the door, focus on specific setups, and stick to your stops,

2.  When you get into a trade watch for the signs that you might be wrong.

3.  Trading should be boring. like factory work. If there is one guarantee in trading, it is that thrill seekers and impulse traders get their accounts ground into parking meter money.

4.  Amateur traders turn into professional traders once they stop looking for the "next great indicator."

5.  You are trading other traders, not stocks or futures contracts.Who is taking the other side of your trade? Is it an amateur who is chasing or a professional who has been patiently waiting for this entry all day? You have to be aware of the psychology and emotions on both sides of the trade,

6.   Be very aware of your own emotions. Irrational behavior is every trader's down fall. If you are yelling at your computer screen, imploring your stocks to move in your direction, you have to ask yourself, is this rational? Ease in. Ease out. Keep your stops. No yelling. The person who is screaming should be the one on the other side of your trade

7.  Watch yourself if you get too excited excitement increases risk because it clouds judgment. If you are feeling peak excitement, it probably means the move is just about over. Tighten your stop and look to reverse,

8.  Don't over-trade.

9.  If you come into trading with the idea of making big money, you are doomed. This mindset is responsible for most accounts being blown out.

10.  Don't focus on the money. Focus on executing trades well. If you are getting in and out of trades rationally, the money will take care of itself.

11.  If you focus on the money, you will start to try to impose your will upon the market in order to meet your financial needs. There is only one outcome to this scenario: You will hand over all your money to traders who are focused on protecting their risk and letting their winners run.

12.  The best way to minimize risk is to not trade when it is not time to trade.

13.  There is no need to trade five days a week.

14.  Refuse to damage your capital. This means sticking to your stops and sometimes staying out of the market.

15.  Stay relaxed. Place a trade and set a stop. If you get stopped out, that means you are doing your job. You are actively protecting your capital. Professional traders actively take small losses. Amateurs resort to hope and sometimes prayer to save their trade. In life, hope is a powerful and positive thing. In trading, resorting to hope is like placing acid on your skin.  The longer you leave it there, the worse the situation will get.

16.  Never let a day trade turn into an overnight trade. An overnight trade should be planned as an overnight trade before the trade is ever entered..

17.  Keep winners as long as they are moving your way. Let the market take you out at your target or with a trailing stop. Don't use impulse exits. Every exit is taken for a specific reason based on parameters that have been clearly defined.

18.  Don't overweight your trades. The more you overweight a trade* the more hope comes into play when it goes against you. Remember, hope to trading is like acid to skin.

19.  There is no logical reason to hesitate in taking a stop. Reentry is only a commission away.

20.  Professional traders take losses. Being wrong and not taking a loss damages your own belief in yourself and your abilities. If you can't trust yourself to stick to your stops, whom can you trust?

21.  Once you take a loss, you naturally forget about the trade and move on. Do your self a favor and take advantage of any opportunity to clear your head by taking a small loss.

22.  Find out what loss parameters work best for your setup  and adjust them accordingly.

23.  Get a feel for market direction by drilling down.' Look at the monthly charts, then the weekly, daily, 60-minute, 15-minute, and 5-minute to get the best idea of what the market is going to do in the short term. Always start with the larger time frames and drill down to the smaller.

24.  If you are hesitating to get into a position when you have a clear signal, that indicates that you don't trust yourself, and deep inside you feel that you may let this trade get away from you. Just get into the position and set your parameters. Traders lose money in positions every day. Keep them small. The confidence you need is not in whether or not you are right; the confidence you need is in knowing you execute your setups the same way each and every time and do not deviate from the plan. The more you stick to your parameters, the more confidence you will have as a trader.

25.  Averaging down on a position is like a sinking ship deliberately taking on more water This is ridiculous and stupid. Don't be ridiculous and stupid.

26.  Try to enter in full size right away. If you pick up a half position first, don't add to it and create a full-sized position unless the trade is going your way.

27.  Ring the register and scale out of your position.

28.  Adrenaline is a sign that your ego and your emotions have reached a point where they are clouding your  judgment. If you are not in a trade, do not enter a new trade in this state of mind. If you are in a trade, stick to your parameters and walk away. If you are in a losing trade that has gone through your stop, exit your trade immediately and walk away from the markets.

29.  You want to own the stock before it breaks out, then sell it to the momentum players after it breaks out. If you buy breakouts, realize that professional traders are handing off their positions to you in order to test the strength of the trend. They will typically buy them back below the breakout point which is typically where you will set your stop when you buy a breakout- Use this information to make money off of amateur traders who buy breakouts.

30.  Embracing your opinion leads to financial ruin. When you find yourself rationalizing or justifying a decline by saying things like, They are just shaking out weak hands here or, The market makers are just dropping the bid here then you are embracing your opinion. Don't hang onto a loser. You can always get back in.

31.  Unfortunately, discipline is not learned until you have wiped out a trading account. Until you have wiped out an account, you typically think it cannot happen to you. It is precisely that attitude that makes you hold onto losers and rationalize them all the way into the ground. If you find yourself saying things like, My stock in EXDS is still a good investment^* then it is time to rethink your trading career.

32.  Siphon off your trading profits each month and stick them into a money market account. This action helps you to focus your attitude and reminds you that this is a business and not a place to seek thrills. If you want thrills, go to Disneyland.

33.  Professional traders risk a small amount of their equity on one trade. Amateurs typically risk a large amount of equity on one trade. This type of situation creates emotions that ruin amateurs' accounts.

34.  Professional traders focus on limiting risk and protecting capital. Amateur traders focus on how much money they can make on each trade. Professionals always take money away from amateurs.

35.  In the financial markets, heroes get crushed. Averaging down on a losing position is a heroic move that is a kin to Superman taking a spoonful of Kryptonite to prove his manhood. The stock market is not about blind courage. Nobody hands out any awards to traders who picked the dead high or the dead low. Wait for a setup. This is about finesse. Don't be a hero.

36.  Traders never believe that they will blow out their account. Always realize you will become a candidate for this if you don't stick to your trading rules.

37.  The market reinforces bad habits. If early on you held onto a loser that went against you by 20 percent, and you were able to get out for break even, you are doomed. The market has reinforced a bad habit. The next time  you let a stock go against you by 20 percent, you will hang on because you have been taught  that you can get out for breakeven if you are patient and hang on long enough.

38.  Take personal responsibility for each trade.

39.  Amateur traders think about how much money they can make on each trade.  Professional traders think about how much money they can lose.

40.   At some point traders realize that no one can tell them exactly what is going to happen next in the market, and that they can never know how much they are going to make on a trade. Thus the only thing left to do is to determine how much risk they are willing to take in order to find out if they are right or not. The key to trading success is to focus on how much money is at risk, not how much you can make.

41. Losing trades don't diminish you as a person. You're also not your winning trades. They are just by-products of the business you're in.

42. Act in your best interest – placing a trade because you're afraid of missing out on a big move is NOT acting in your best interest.

43. Flawless execution comes from forming a habit. A habit is formed when it is repeated over and over again. Start practicing.

44. Don't let personal/external factors affect the trading for thou judgment is clouded. Let the market show you what to do. Always.

45. Make sure your trading goals are 1) realistic, 2) attainable, 3)measurable. If they don't meet these criteria, then the goal is nothing.

46. You want to own the stock before it breaks out, then sell it to the momentum players after it breaks out. If you buy breakouts, realize that professional traders are handing off their positions to you in order to test the strength of the trend. They will typically buy it back below the breakout point-which is typically where you will set your stop when you buy a breakout. (In case, you ever wondered why you get stopped out on a lot of "failed" breakouts).

47. Amateur traders always think, "How much money can I make on this trade!" Professional traders always think, "How much money can I lose on this trade?" The trader who controls his or her risk takes money from the trader whose head is in the clouds.

48. Siphoning out your trading profits each month and sticking them in a money market account is a good practice. This action helps to focus your attitude that this is a business and not a place to seek thrills.If you want an adventure, go live in Minnesota for a winter. If you want excitement, deliberately forget your anniversary. Just don't trade. Adrenaline is a sign that your ego and your emotions have reached a point where they are clouding your judgment. Realize this and immediately tighten your stop considerably to preserve profits or exit your position.

49. Averaging down on a position is like a sinking ship deliberately taking on more water.