on Saturday, January 31, 2015
Technical Analysis of ApolloTyre:



Apollotyre is looking Bullish in charts. One can go trade in long side  for a target of 270. Stoploss at your own risk levels.


DISCLAIMER:

Investing and Trading in any equity,future,gold,silver,forex and crude-oil is risky. My recommendations are technical analysis based on & conceived from charts. The information provided is not guaranteed as to accuracy or completeness. This is my personal view only.


Please consult your adviser or consultant or analysts before investing and/or trading. We assume no responsibility for any transactions undertaken by them. The author won't be liable or responsible for any legal or financial losses made by any.
on Wednesday, January 28, 2015
Technical Analysis Of ADANIENT :


Sell Adani Enterprises For A Target of 518.

Technical Analysis of DLF :


Buy DLF Above 167 For A Target Of 183.

Stoploss at your own risk levels.


DISCLAIMER:

Investing and Trading in any equity,future,gold,silver,forex and crude-oil is risky. My recommendations are technical analysis based on & conceived from charts. The information provided is not guaranteed as to accuracy or completeness. This is my personal view only.

Please consult your adviser or consultant or analysts before investing and/or trading. We assume no responsibility for any transactions undertaken by them. The author won't be liable or responsible for any legal or financial losses made by any.


on Tuesday, January 27, 2015
The most profitable trading strategies are innovative. You cannot merely follow the crowd or think conventionally if you plan to make profits in market after market. You have to sift through information on your own, and in the end, you must trust your instincts and go your own way. It takes courage, willingness to take risks, and is not for the faint of heart. It isn’t for everyone. Make sure it is right for you.

Market conditions are continually changing. You can’t expect to simply follow the masses and hope that it will always work. Instead of following the herd, buying when everyone else is buying and selling when everyone else is selling, you have to anticipate the crowd. You have to be a leader rather than a follower. That often means buying when everyone else is selling, and selling when everyone else is buying. In other words, buy on weakness, and sell on strength.
How does this work? Assume that prices move in cycles. For mere illustrative purposes, pretend that market cycles, or waves, go down at the open at the middle of the week, up at the close of the following day, and open down on the next day. If history was to repeat itself, and unfortunately it rarely does, you could buy low, wait for the price to go up, and sell for a sure profit. If the cycle followed a reliable, consistent pattern, you wouldn’t need to be a rugged individualist, or know how to use your intuition. You would know exactly what would happen and when, and trading would be simply a matter of waiting for the right moment and buying or selling, depending on the specific point during the cycle. But history only repeats itself when it does; the rest of the time it does not, and no one knows for certain when it will or will not repeat. That’s what makes trading a challenge. You simply don’t know exactly where or when the cycle will repeat. In the end, it’s just a matter of probabilities. You can’t wait for solid confirmation from the herd and merely follow them. The future is never certain, and so that’s where thinking independently, like a rugged individualist is relevant.
In the final analysis, you only have a cache of fallible trading strategies and your own intuition to rely on. It helps if you are a natural, rugged individualist, a person who isn’t used to looking toward others to see what to do next. A rugged individualist is familiar with taking chances, and using gut instincts to make decisions. And that’s all trading is — making a good guess, taking a chance, and having the courage to follow your convictions so that you manage the trade to a profitable outcome.
Having the flexibility to follow the crowd when it is advantageous and to go against the crowd is not difficult. You can be neither a conformist who feels safety in numbers, nor a deviant who likes to go against prevailing opinion. The winning trader truly thinks independently and trusts his or her own instincts. Cultivating these talents is necessary to achieve lasting profitability. How can it be done?
The first step is to assess your own personality. Are you a conformist, rule follower or a deviant, rule breaker?Neither extreme is very adaptive. It’s useful to know where you stand on the continuum and to realize that you must develop skills characteristic of the other end. Rule followers must learn to deal with uncertainty and risk, for example. Rule breakers, in contrast, must learn discipline and self-restraint. In other words, they must learn how to follow conventional wisdom (when it’s actually right).
Second, you must gain a wealth of experience, and over time learn to trade in different market climates, and at different points during the ebb and flow of market prices. Many traders know how to trade the trend, and that’s a good start.But seasoned traders also know how to anticipate a turning point and capitalize on the masses’ herd mentality, which compels them to stay with the trend even when it is about to change.
Some people are natural individualists. Other people have to work at it. But regardless of your natural inclination, it is vital that you find the courage to follow your own convictions. The winning trader is a rugged individualist. If you can find the strength to go your own way, you can join the league of winning traders.



There is an old parable known as “the blind men and the elephant.” In this story, there are four blind men who are asked to determine what an elephant looks like. The first blind man feels the leg of the elephant and says, “The elephant is like a tree because it is large and round like a pillar.” The second man feels the tail and says, “The elephant is like a rope because it is small and coarse.” The third man feels the ear and says, “The elephant is like a fan because it is flat and thin.” The fourth man feels the trunk and says, “The elephant is like a snake because it is long and curves.”

A king comes to the four blind men and says, “all of you are correct.” The king goes on to explain that each one had drastically different descriptions of the elephant because they are all feeling different parts. So, they are all correct. The elephant has all the features described by the four blind men.

This parable is a good analogy describing different types of profitable traders. Many of the arguments that erupt between traders on social media are due to not understanding the others time frames or not understanding the other trader’s position sizing, stop loss level, or expected winning percentage. Also too many cult members of Elliot Wave, Trend Following, Market Profile, Day Traders, and option traders etc. think their way of trading price action is the only way when their way is only one of many paths to profitability. There are as many ways to trade price action to be profitable as there are profitable traders.

The elephant in the room is that profitable traders do a few things in common:
They manage their losses to keep them small regardless of their winning percentage.
They trade position sizes that bring their potential risk of ruin through a string of losses to virtually zero.
They are an expert in their own profitable strategy.
Their emotions are not used in trading decisions.
Their ego does not pick position sizing, entries, or exits.
They go with the flow of what is actually happening not what they want to happen.
They trade a robust methodology.
They do the work required to be successful.
They are comfortable with what they are doing.
Their trading fits their risk tolerance and personality.
Many profitable traders only see the aspects of the markets that make them profitable. Seeing the full dynamics of the markets and all the opportunities to make money is a step toward enlightenment.
on Sunday, January 25, 2015
Technical Analysis of Bpcl:



Buy Bpcl For a Target Of 730.

Technical Analysis of Cairn:



Buy  Cairn For A Target Of 240. Cairn is poised for good up move so one can trade for a target of 240.


DISCLAIMER:

Investing and Trading in any equity,future,gold,silver,forex and crude-oil is risky. My recommendations are technical analysis based on & conceived from charts. The information provided is not guaranteed as to accuracy or completeness. This is my personal view only.


Please consult your adviser or consultant or analysts before investing and/or trading. We assume no responsibility for any transactions undertaken by them. The author won't be liable or responsible for any legal or financial losses made by any.
on Friday, January 23, 2015

Any quick drive through Las Vegas makes it pretty clear who is rolling in the money – the Casinos! Why do gamblers keep going back despite losing most of the time?  Misplaced hope, fantasies about the big win, promising themselves they will walk away when they are up and still winning, and probably the inability to calculate probabilities. These symptoms may sound familiar to new traders who have lost money in the stock market, especially when we were new to trading and had delusions of grandeur about trading their way to prosperity quickly and easily.
In gambling there are really only two sides to choose to be on, either you are a gambler or you are the house. The gamblers have the long term odds stacked against them. The more they gamble, the more the odds are that they will inevitably lose. The casino has stacked the odds on their side over the  long haul. The more the gambler keeps gambling, the more the odds shift in favor of the casino operator. The more they gamble the greater the chance the gambler will leave empty-handed.


Profitable traders operate like casinos, with the odds in their favor over the long term. They have learned to trade with historically, back-tested trading systems that put the odds on their side. Much like casino operators, they risk small amounts of equity per trade (around 1% – 2% of their accounts), so no one trade can hurt them financially and mentally for that matter.


Most unseasoned traders behave like gamblers, with no real advantage. They plunge large bets on stocks so haphazardly that they just have a 50-50 shot like a roulette wheel – red or black. Many times these traders hurt themselves even worse by buying into the market in a downtrend and shorting into a rally,  believing that they can pick the bottom or top. Some new traders would love to have a 50/50 win ratio, many actually to all the wrong things and are no where near a 50% win rate.



New traders often have no concept of risk management and like gamblers they eventual give back all their winnings and then some. Profitable traders do this by not being emotionally invested in any one trading outcome. It shows traders the supreme importance of risk management and a positive expectancy model. Traders must control risk and manage odds in the same fashion that casinos do. Casinos set table limits so as not to expose themselves to the risk of ruin by allowing a gambler to hurt the casino’s bottom line on any one huge bet.



Traders must have the discipline to stick with positive expectancy models and risk management. Casinos do not get upset and change their rules trying to win back money from a gambler who goes on a lucky streak, as they know luck eventually runs out. Traders should never go off their trading plan to try to win back money quickly that they lost . Luck is what gamblers hope for while good traders are trading for a positive expectancy. Successful traders and casino operators consistently play the probabilities and manage risk so should you if you want to win.



Trade the market – not the money involved in your account. Each trade must be based on a proven trading system of entries and exits and not by how much we hope to make. Never let failed trades in the past force you to revenge trade and and do not anticipate a signal. Let the market come to you and take it only when it is hit, utilizing rigid discipline.



Winning traders always stick with their historically proven trading system. Casinos do not close down if gamblers get on a winning streak because they have calculated the odds and play based on those odds. Trading Like a Casino is truly a great book with a great analogy to explain how to win the trading game. The principles the book explains to use for winning in the markets are spot on and are easy to understand when associated with what many readers should be familiar with:casinos and how they take our money.


we can’t beat them, let’s join them, be the casino not the gambler.
on Wednesday, January 14, 2015

You Don’t have to be an Investment Geek to Make Money with this Idea
Ever wonder why a stock or the market just takes off like a rocket, with no apparent rhyme or reason?
Me too. 



Sometimes you get why it’s going up, like if an announcement was released that was favorable, the Fed’s are adding more liquidity, or that the worry over Ebola or a Middle East war has been adverted. 
That makes sense.
But what about when it happens and it doesn’t make sense?
Ever hear of the term ‘Short Squeeze’?
To understand it fully, you need to understand what it means to “short a stock”.



Simply put, you make money when the stock goes down. It’s the opposite of what you usually think about when you invest in the stock market, which is that you make money when the stock goes up. 
Think of Sept. 11, 2001, when the terrorists shorted the airline stocks, especially United Airlines and American Airlines. Those were the two companies whose planes where used in the cowardly act of killing innocent people. 



The terrorists knew that the stock would decline, which it did (about 43% and 39% respectively). So they made money instead of losing it.



They knew the stock would decline in price, so they made money when the stock plunged. A short squeeze is a situation in which a heavily shorted stock (stock that has been declining and many people have been betting that it will continue to decline) moves sharply higher. In order not to lose everything, it forces the short sellers to close out their positions. This means they must buy the stock. The stock market is an auction, so they compete to buy which puts pressure to pay higher prices (because remember, they must buy the stock, it’s not optional). This snowballs and adds to the upward pressure on the stock. The term “short squeeze” implies that short sellers are being squeezed out of their short positions, usually at a loss. In other words, squeeze is synonymous with forced. So the investors who have shorted the stock are forced to buy the stock, and when there is a lot of them, they run the stock up!



Each one trying to get out with as little damage as possible. A short squeeze is generally triggered by a positive development that suggests the stock may be embarking on a turnaround. Although the turnaround in the stock’s fortunes may only prove to be temporary, few of the short sellers can afford to risk runaway losses on their positions and may prefer to close them out even if it means taking a substantial loss. After all, who knows how high the stock will go.



There’s that Warren Buffet again. Contrarian investors (those type of investors that look to do the opposite of everyone else, like Warren Buffet) look for stocks with heavy short interest specifically because of this short-squeeze risk/return. To them, they know at some point in time, the stock will turn around. And when it does… look out. The pushing and shoving to buy the stock can make a mint for them, sometimes in just one day! These investors begin buying as the stock has declined a certain percentage. Of course, they are looking for good companies that are just having a setback, not a company that may be going out of business. Their risk is limited to the price paid for it, while the profit potential is unlimited. 



This is diametrically opposite to the risk-reward profile of the short seller, who bears the risk of theoretically unlimited losses if the stock spikes higher on a short squeeze.
Interesting, wouldn’t you say. 
I hope this helps you better understand a short squeeze. 
Good luck!
on Tuesday, January 13, 2015
Technical Analysis Of Exide Industries:



Exide Industries has entered in sell mode from 192. So short term traders can short it for a target of 173 with a stop loss of 196.

Technical Analysis Of Jain Irrigation (JISLJALEQS):


Jain Irrigation is in bearish mode for long and the price will be more lower for a target of 58. One can short for short term target of 58.

Technical Analysis Of TataMotors :


Tata Motors has formed lower top 526. And entered bearish mode so one can short tata motors with a stoploss of 533.

Short Tatamotors For A Target Of 488 With A Stoploss Of 533.


DISCLAIMER:

Investing and Trading in any equity,future,gold,silver,forex and crude-oil is risky. My recommendations are technical analysis based on & conceived from charts. The information provided is not guaranteed as to accuracy or completeness. This is my personal view only.


Please consult your adviser or consultant or analysts before investing and/or trading. We assume no responsibility for any transactions undertaken by them. The author won't be liable or responsible for any legal or financial losses made by any.

Do all the needed homework and research about your trading style before you ever trade any real money.

Never trade without a detailed trading plan. You have to know exactly what you will do in response to the price action before the market opens each day.

Learn how to maximize winning trades with trailing stops or start exiting in steps and leaving a part of your position on to run.

Trade with the trend in your time frame and quit trying to fight it.

Never have a big losing trade. Position size so all your losing trades are small losses.

Know what your edge is in the market, if you don’t know what your edge is you shouldn't trade until you have one.

Do not gamble with your trades. All your trades should be unemotional business transactions not thrill rides.

Trade in your ego for flexibility. Stubbornness is expensive but going with the flow pays.

Trade a little bigger when you are on a winning streak and a lot smaller during losing streaks.

Be in losing trades for short amounts of time but when you are right stay in the trade until it stops going in your favor.
by Stephen Burns...
With all the QE ,the central bankers across the world has only achieved in ''RUINING THE WORLD ECONOMY'',The reality is catching up ,,lets at least face it now .

1.there is so much of paper money in the world ,UNCLE SAM was the pioneer ,,now we have a lot of toilet paper currencies .

2. the central bankers funded the ,,banks that created the sub-prime ,and gave these bankers free money to manipulate the markets to show a good balance sheets in their books .The outcome ,,the man in the street has gone broke ,,,

3.with so much of paper money chasing so little goods ,the inflation should be high in most countries,,, what is the truth ,,,they have DEFLATION .


4.OIL ,GOLD ,COPPER ,, NAME THE COMMODITY ,,,the price was pushed with out any real demand ,,why?china was buying ...what a dumb reason ,,there was no real consumptions of all these commodities ,, ''speculative '' trade it was ,,.


5.instead of holding the banks and the financial institutions that created this chaos ,, and destruction to the world economy ,,,the respective govts awarded them with more money ,,why? THEY WERE TOO BIG TO FALL "'.


THERE IS SO MUCH MORE TO THIS TRUTH ,,,,When politics takes precedence over economic consideration ,,this is what the end result is.
on Monday, January 12, 2015
I’ve had the question of whether I have a trading plan template or anything like that I can provide or recommend a couple of times in recent weeks. In short, the answer is no, but that’s because I’m hesitant to recommend one.
You see trading plans necessarily must be very personalized things. That makes the idea of a specific template something difficult to contemplate. A template is rigid, and as such isn’t going to work for everyone or even necessarily for any given trader all the time.
With that in mind, I’m going to do a bit of excerpting from The Essentials of Trading over the course of a couple of posts to share my thoughts on how to put together a good trading plan. I’ll start of in this post by laying the groundwork.
What’s a Trading Plan?
The starting point of effective trading is the Trading Plan. One can think of it like a Business Plan for the trader. Just like the Business Plan, the Trading Plan is a specific outline of current status, objectives for the future, and the expected path to reach those goals.
In plain language, the Trading Plan is a set of rules governing the trader efforts in the markets. It brings together all of the what’s, when’s, where’s, why’s, and how’s of trading in an all encompassing definition of what the trader is seeking to accomplish and how he/she will go about trying to make it happen. The Trading Plan is the starting point for every trader looking to succeed in the markets.
Please note that while we may be speaking here in terms of the trader as an individual, everything presented is equally applicable to a fund or company environment. The Trading Plan still must be constructed, albeit from a different perspective.
Why does one need a Trading Plan?
The very simple answer is that it allows the trader to measure their performance in a very clear, straightforward manner, on a running basis. Just as one uses a map to both establish the path to be taken and to judge the progress which has been made, the Trading Plan defines the trading system and gives the trader benchmarks for use in judging their execution of it.
Be aware that a Trading Plan and a Trading System are two different things. The latter is, in brief, the way one determines entry and exit points the timing of trades, if you like. The former is more over-reaching in that it includes the Trading System, plus other important things like money management.
What is the purpose of the Trading Plan?
There are several reasons to have a Trading Plan, but probably the biggest is the way it simplifies things. A good, well thought out Trading Plan takes a great deal of excess thinking out of the trading process. Decision-making is very clear-cut. The Plan defines what is supposed to be done, when, and how. Trading can be a very emotionally charged venture. That can lead to all kinds of less-than-optimal behavior. The Trading Plan takes that out of the equation. Just follow the plan.
The Trading Plan is also very, very handy in helping one to understand the reasons for performance problems. If one is suffering from losses beyond what would be expected (as defined by the Plan), there are only two possible reasons. Either the Plan is not being followed, or the there is a problem with the trading system. That’s it. Without the Trading Plan, resolving performance issues is a much more complicated process.

While a Trading Plan is intended to help the trader succeed in the markets, having a Trading Plan is not a guarantee of generating profits. A Plan is only as good as the components in it.
on Saturday, January 10, 2015
Technical Analysis Of Reliance Industries :


Reliance is falling from levels of 1017 to 832 and in consolidating phase. So short term recovery may happen towards 920+.

Buy Reliance Industries (RIL) For A Target Of 920. Stoploss As Per Your Own Risk Levels.



DISCLAIMER:

Investing and Trading in any equity,future,gold,silver,forex and crude-oil is risky. My recommendations are technical analysis based on & conceived from charts. The information provided is not guaranteed as to accuracy or completeness. This is my personal view only.


Please consult your adviser or consultant or analysts before investing and/or trading. We assume no responsibility for any transactions undertaken by them. The author won't be liable or responsible for any legal or financial losses made by any.
on Thursday, January 8, 2015
95% of all traders fail” is the most commonly used trading related statistic around the internet. But no research paper exists that proves this number right. Research even suggests that the actual figure is much, much higher. In the following article we’ll show you 24 very surprising statistics economic scientists discovered by analyzing actual broker data and the performance of traders. Some explain very well why most traders lose money.

1.80% of all day traders quit within the first two years.

2.Among all day traders, nearly 40% day trade for only one month. Within three years, only 13% continue to day trade. After five years, only 7% remain.

3.Traders sell winners at a 50% higher rate than losers. 60% of sales are winners, while 40% of sales are losers.

4. The average individual investor under performs a market index by 1.5% per year. Active traders under perform by 6.5% annually.

5. Day traders with strong past performance go on to earn strong returns in the future. Though only about 1% of all day traders are able to predictably profit net of fees.

6.Traders with up to a 10 years negative track record continue to trade. This suggest that day traders even continue to trade when they receive a negative signal regarding their ability.

7.Profitable day traders make up a small proportion of all traders – 1.6% in the average year.However, these day traders are very active – accounting for 12% of all day trading activity.

8. Among all traders, profitable traders increase their trading more than unprofitable day traders.

9. Poor individuals tend to spend a greater proportion of their income on lottery purchases and their demand for lottery increases with a decline in their income.

10. Investors with a large differential between their existing economic conditions and their aspiration levels hold riskier stocks in their portfolios.

11.Men trade more than women. And unmarried men trade more than married men.

12. Poor, young men, who live in urban areas and belong to specific minority groups invest more in stocks with lottery-type features.

13.Within each income group, gamblers under perform non-gamblers.

14.Investors tend to sell winning investments while holding on to their losing investments.

15. Trading in Taiwan dropped by about 25% when a lottery was introduced in April 2002.

16. During periods with unusually large lottery jackpot, individual investor trading declines.

17. Investors are more likely to repurchase a stock that they previously sold for a profit than one previously sold for a loss.

18. An increase in search frequency [in a specific instrument] predicts higher returns in the following two weeks.

19. Individual investors trade more actively when their most recent trades were successful.

20. Traders don’t learn about trading. “Trading to learn” is no more rational or profitable than playing roulette to learn for the individual investor.

21.The average day trader loses money by a considerable margin after adjusting for transaction costs.

22.[In Taiwan] the losses of individual investors are about 2% of GDP.

23.Investors overweight stocks in the industry in which they are employed.

24.Traders with a high-IQ tend to hold more mutual funds and larger number of stocks. Therefore, benefit more from diversification effects.

Conclusion: Why Most Traders Lose Money Is Not Surprising Anymore
After going over these 24 statistics it’s very obvious to tell why traders fail. More often than not trading decisions are not based on sound research or tested trading methods, but on emotions, the need for entertainment and the hope to make a million dollars in your underwear. What traders always forget is that trading is a profession and requires skills that need to be developed over years. Therefore, be mindful about your trading decisions and the view you have on trading. Don’t expect to be a millionaire by the end of the year, but keep in mind the possibilities trading online has.
1st find a way which works for u, any way ................any way at all , just it should work for u

2ndly , go after this way like crazy , test it with every possible set of data,there is not a great level of difference between stock, futures and forex, as a technical trader, u r trading price ............. so ur perspective should be same

3rdly note down the out come, be totally honest with urself and note it down ,see out of 100 trades, how many times u gain and how much u gain, and how many time u lose and how much u lost?

4. if the difference is positive ................. u r in right way bro/sis  now u have provided urself an "edge" , use ur edge and let the world go to hell , never listen to any one  

since u know on the long run, u have ur edge, so when eventually u face ur loss making days here and there, keep telling urself " i hv an edge and in the long run i am going to win " this is will give enough confidence to keep going

personally when i face loss, i bring down my position size, so when i have my bad days, mostly i am on my least volumes. many years after this practice, i found in Tonny Stark bhai's writing that legendary trader paul tudor jones also advocated such a "bad time least volume approach". needless to say, his writing abt P.T. Jones approach gave me more confidence and i assumed i am doing right thing and hence i shared this to u guys 
on Wednesday, January 7, 2015
I’ve had the question of whether I have a trading plan template or anything like that I can provide or recommend a couple of times in recent weeks. In short, the answer is no, but that’s because I’m hesitant to recommend one.
You see trading plans necessarily must be very personalized things. That makes the idea of a specific template something difficult to contemplate. A template is rigid, and as such isn’t going to work for everyone or even necessarily for any given trader all the time.
With that in mind, I’m going to do a bit of excerpting from The Essentials of Trading over the course of a couple of posts to share my thoughts on how to put together a good trading plan. I’ll start of in this post by laying the groundwork.
What’s a Trading Plan?
The starting point of effective trading is the Trading Plan. One can think of it like a Business Plan for the trader. Just like the Business Plan, the Trading Plan is a specific outline of current status, objectives for the future, and the expected path to reach those goals.
In plain language, the Trading Plan is a set of rules governing the trader efforts in the markets. It brings together all of the what’s, when’s, where’s, why’s, and how’s of trading in an all encompassing definition of what the trader is seeking to accomplish and how he/she will go about trying to make it happen. The Trading Plan is the starting point for every trader looking to succeed in the markets.
Please note that while we may be speaking here in terms of the trader as an individual, everything presented is equally applicable to a fund or company environment. The Trading Plan still must be constructed, albeit from a different perspective.
Why does one need a Trading Plan?
The very simple answer is that it allows the trader to measure their performance in a very clear, straightforward manner, on a running basis. Just as one uses a map to both establish the path to be taken and to judge the progress which has been made, the Trading Plan defines the trading system and gives the trader benchmarks for use in judging their execution of it.
Be aware that a Trading Plan and a Trading System are two different things. The latter is, in brief, the way one determines entry and exit points the timing of trades, if you like. The former is more over-reaching in that it includes the Trading System, plus other important things like money management.
What is the purpose of the Trading Plan?
There are several reasons to have a Trading Plan, but probably the biggest is the way it simplifies things. A good, well thought out Trading Plan takes a great deal of excess thinking out of the trading process. Decision-making is very clear-cut. The Plan defines what is supposed to be done, when, and how. Trading can be a very emotionally charged venture. That can lead to all kinds of less-than-optimal behavior. The Trading Plan takes that out of the equation. Just follow the plan.
The Trading Plan is also very, very handy in helping one to understand the reasons for performance problems. If one is suffering from losses beyond what would be expected (as defined by the Plan), there are only two possible reasons. Either the Plan is not being followed, or the there is a problem with the trading system. That’s it. Without the Trading Plan, resolving performance issues is a much more complicated process.

While a Trading Plan is intended to help the trader succeed in the markets, having a Trading Plan is not a guarantee of generating profits. A Plan is only as good as the components in it.
on Sunday, January 4, 2015
Every seminar and book will tell you that controlling your emotions and having discipline in you’re trading are essential to your success. But no one tells you how to achieve emotional control and personal discipline while trading the market. Every trader sees the market differently because our past, our current lives, and our perceptions are unique. Understanding those things about yourself and harnessing their affect on your trading will help you keep trading realities free of emotional debris. Here are some steps that will make a difference. You must take a technical approach to your emotions and discipline training just as you take a technical approach to analyzing a stock chart. But before we get into the logistics of how to control emotions, you must understand some basics of why some market participants have solid control of their emotions while others do not.

All price action in stocks is critically dependent on emotional reactions from varying market participants. Without emotions, price sits flat. There are many degrees of emotional surges, waves of euphoria and greed, and waves of panic and despair that drive prices up or down. And always within those waves are the killer rip-tides that come from those who have learned to control emotions, and wipe out those who do not have control. Ultimately, success in the market is a combination of anticipating the next move and the moves of all the other market participants who may enter that stock, and determining when you should participate. Unfortunately, most traders trade the market not as if they were playing chess with the complexity of the bluff of poker, but as if they were in Las Vegas, gambling on a roulette wheel.

In the world of stock trading there are Master Traders who have control over their emotions and then there are the Gambler traders who buy and sell based purely on emotion whether they realize it or not. A Master Trader combines the skill of a chess player who anticipates an opponent’s moves and plans his own well in advance and also uses the poker player’s bluff in never revealing his hand before he chooses to reveal it. A gambler is simply reacting to his emotions without logic or forethought in what he does.

Market participants who trade the market with the skill of a Master Chess Player–anticipating price action days, weeks, and months in advance; incorporating the ‘never reveal your hand’ aspect of poker–have the extreme advantage over gambler traders. They have control over their emotions and hence control over how they trade. The gambler trader is just throwing money at the market and hoping something will go their way.

It is also important to realize that you do not come to the market as a blank page. You come with the personal history of your life, what happened to you and more importantly, how you reacted to what happened. You have preconceived opinions and preset emotional trigger responses to each situation you will encounter in the market based on past experiences relating to money. You come to the market fully loaded with trigger points just waiting for the right conditions to fire. And they do.

Now you understand that even before you initiate a trade in the market; emotions are already underway–negatively impacting how you study the charts, learn a new strategy, or take a weekend seminar. Emotions are ruling your decisions, interpretations, and how you use what you have learned. The entire mechanism of emotions has begun to impact your trading before you ever enter an order. You are trading emotionally right now, at this moment. As you read this article, you are basing opinions about what you read on emotional reactions to what you have read before, how those articles helped or didn’t help your trading, and what you are expecting or hoping to find now.

Of course, there are varying degrees of Master Traders and Gambler traders. Most of the time, the larger the capital base a trader has available to trade, the more emotional control and discipline a trader has developed. The giant institutional investor manager who trades billions of dollars has ultimate control and discipline. The odd lot trader who has only a couple of thousand dollars to trade has the least emotional control. Statistics show that the smaller the capital base, the less knowledge a person has and the greater risk they take.

That said, there are small retail traders just like you, out there trading, who remain calm, cool, and collected no matter what is going on with their trade at any given moment in time. A floor trader for a big market maker firm can be down in their account by a million dollars but still can stay calm and choose the right decision to turn trades around to his advantage. How you do achieve this kind of control?

Steps to Controlling Emotions and Gaining Trading Discipline:

1. Know what you are going to do before you do it.

A Master Chess Player is at least 6 moves ahead of his opponent at every step in the game of Chess. A Master Trader identifies the market participants in that stock at that moment, determines when the next level of market participants will buy, decides a specific price for entry, and has one or more exit strategies planned for that stock trade before he ever places an order. In other words: he knows what he is going to do before he initiates the trade and has all of his various strategies worked out for all the different scenarios that can happen to that trade. He is prepared for all situations and ready to trade.

2. Develop your own unique Trading Style.

Too often traders simply follow the crowd. Instead you should develop your own unique trading style. A trading style is not a strategy. It is a set of parameters or rules that you adhere to strictly, ignoring rare anomalies that occur in your trading from time to time that go against your rules. Your trading style should also ignore gimmicks, fads, and ‘hot new strategies’ that are constantly being promoted to crowd traders. If you establish a set of parameters for your trading, write those rules down, and follow them while ignoring the crowd mentality of most small retail traders, you will begin to establish strong emotional control in your trading decisions. The trick is writing the parameters down and then sticking to those rules. Emotions want traders to ignore rules.

3. Ignore the Money.

Don’t trade for the money. Trade because you can’t imagine doing anything else. Trade because it is the most enjoyable and rewarding profession you can do. You can have a passion for studying charts without letting passion rule your decisions. Highly successful people, in any career, do not do their job because of the money, they do it because they love what they are doing and can’t imagine doing anything else. The money is secondary to doing the job that gives them purpose and self-esteem. Money is not the ultimate motivator, purpose and self-esteem are.

4. Don’t count your profits before the trade is completed.

Most traders worry about their profits and check them every day. They get elated when a stock they are holding moves up a few points and get frantic when a stock they are in moves down. They constantly check their held positions and calculate their gains or losses during the trading day. This is one of the biggest mistakes traders make and it creates an emotional state of mind that lacks control. Checking your profits or losses constantly is obsessive, gambling mode trading. And it is not based on facts.

Most traders assume that if they are in profit in a held stock they have made that money. Conversely, if they are losing money, then they take the stance that this is just a momentary loss and not a real loss. This is how most traders think, but it is the opposite of what they should be thinking.

To gain control over emotions and to gain discipline in your trading you must view your stocks this way: When a stock moves against you, you immediately have a loss, even before you are taken out of that stock. If the stock moves a few points in your favor then you have the potential for profits. But until you exit that stock you do not have profits. Only when you sell that stock do you actually have profits. A loss is immediate, even before you sell. Approaching your held stocks in this manner is critical to maintaining the proper viewpoint when holding stocks.

If you view every stock this way, your emotional control is geared for correct responses and decisions for the condition of your trade. If you say to yourself that a losing trade is going to turn around, you immediately increase your emotional level so that instead of thinking logically, you are hoping and praying for a miracle that the stock will turn around. This will cause you to miss subtle chart patterns that are telling you to dump the stock and move on.

If you are in a profitable trade and you say to yourself “look at all the money I’ve made!” you are in an emotional euphoric state of mind. Euphoria makes traders feel invincible, and you will ignore weakening patterns. The result of this euphoric state of mind is that you will either hold a stock too long, or you will take greater risks in your next few trades that will result in losses due to poor analysis dominated by emotions and a false sense of invincibility.

Solution to euphoria: First recognize it. Traders are never brilliant. It is only an ideal trade during great market conditions for that trade. To quell the euphoria, do not trade after you have made a huge profit. Take a few days to settle down. This is not gambling where you can say to yourself “I’m on a roll!” You are most definitely NOT on a roll. Trading takes logical analysis, not super-heated emotions of feeling brilliant. If you stop trading and let your emotions calm down, you will see huge improvements in your consistency of profitability. This is the reality of trading the stock market.

5. Know your risk tolerance.

Two chronic complaints from traders is that Market Makers are ‘out to get them’ and that stop losses don’t work. Both are fallacies steeped in conditions that create deep emotional trading patterns. First let’s get rid of ‘The Market Makers are out to get the little guys Syndrome’. The truth is the Market Makers primary role is to keep the markets orderly by buying or selling their own inventory of stock IF there are no buyers or sellers for an order. That is something that occurs only in large lot activity or illiquid stocks.

If you are trading under 5000 (five thousand) share lots, then you are trading what is considered a small lot in today’s market where billions of shares trade hands each day. The reality is that small orders under 10,000 share lots are routed to computer processing systems. These computer programs fill small lot orders automatically when received from the brokerage houses. Market Makers never see these small orders. NASDAQ has its SuperMontage automated order processing system and NYSE has Archipelago. The Market Makers don’t even know you exist. If your stop loss gets taken out and then the stock moves up (or down) this is not because a Market Maker saw your stop loss and decided to take you out of your tiny share lot trade, it occurred because too many small traders all used the same percentage stop loss and thereby accidentally created an imbalance of order flow that triggered a series of automatic selling that caused you to be taken out.

The second myth: Stop losses don’t work. The problem is that you are trading way beyond your risk tolerance. Risk tolerance is different for each trader. Most traders don’t even know what their risk tolerance is nor do they consider this when entering a trade.

The common scenario: A trader places a stop loss that is obviously too tight for the stock’s normal price action patterns because he is afraid to lose money. He thinks that if he keeps a very tight stop, then he is only risking a small amount of money. Often these stop losses are based on a specific dollar amount that has nothing to do the with the chart price action.

The trade is too high risk for his risk tolerance but instead of discarding the trade in search of a trade within his risk tolerance, he trades emotionally by convincing himself the trade will make him a lot of money and that if he just keeps a tighter stop then it is okay. The reality is that by keeping a tighter stop than the stock price action pattern indicates is correct, he is actually increasing his risk for that trade as the normal price action will wipe out that stop loss quickly. And that trader’s normal emotional response is that stop losses don’t work.

Rule for stop losses: Do not use common and popular percentage stop losses. Use proper stop losses based on solid support levels for that stock.

Properly placed stop losses do work. They protect you from the occasional trade that goes against you. And they tell you if the risk of the trade is too high–a common condition of an overextended stock ripe for profit taking by large lot traders. Improperly placed stop losses increase your risk and are an indication that you are trading outside of your risk tolerance. You are therefore trading emotionally.

How to control emotions: Determine your risk tolerance and only trade stocks that are within that range. Usually the lower your capital base the lower your risk tolerance will be. As your capital increases, your risk tolerance should also increase as well. Never trade beyond your risk tolerance because you will trade with a heightened state of emotion and your decisions will be based upon greed or fear rather than logic.

5. Know your Financial Self-Worth.

Financial Self-Worth is probably the least known and least understood aspect of trading emotionally. Most traders don’t even realize or accept how much it impacts their trading. The most common symptom of this problem is the trader who suddenly makes some good trades and profits and is feeling great about his trading but the next few trades are disasters that leave him feeling bewildered and frustrated. If this has happened to you on more than one occasion, one of the reasons may be due to the influence of your financial self-worth.

Your financial self-worth is a culmination of many years of your professional adult work experience, your childhood experiences, your general feelings about money, and your educational experiences which create your perception of your worth to the society you live in. These perceptions are a major emotional constraint in your trading. It is not created by your trading, but has been with you for many years prior to even thinking about becoming a trader. It influences your life far more than you probably realize. It can keep you from earning more money. And it can thwart and hinder your trading profitability. It keeps you from making a higher income and it sabotages your trading whenever you exceed your financial self-worth. It is the primary reason some traders make a lot of money while others have mediocre results.

Fortunately, financial self-worth is easy to determine and easy to adjust upward. Taking the Financial Self-Worth Test will give you a basis that tells you critical information about yourself. Once you have assessed this aspect of your trading, it will lower emotions and give you more control. You can increase your financial self-worth and in doing so will increase your profitability, while eliminating that seesaw effect of gains followed by losses. You will have the tools to stop sabotaging your own trading profits.

7. Treat it like a Business.

If you want to make trading a full time career, you must treat it as any professional would in any career. View trading as a business rather than just a hobby and your entire emotional level will change. Set up an office that is quiet, well organized, and far away from distractions. Keeping your trading computer in the family room is just asking for poor trading results. Maintain accurate records of every transaction you make. Document all of your trading efforts in a Trading Journal. All professionals keep journals or logs to track their performance over time. All serious traders should also have journals or logs that detail what they have done. That way you can easily go back and study what happened before and compare to current patterns.

Professionals never stop learning. They know that being a professional requires constant training and education to continue to hone skills and expertise and to keep up with the ever changing world we live in. Nothing is stagnant, life is constantly changing and so is the stock market.

Be a Specialist. The highest paid and most successful professionals in any field are Specialists. For example, doctors who specialize make far more money than a general practitioner. Traders who specialize also make far greater returns than those who dabble and experiment with every new gimmick and strategy. Choose an area of stock trading and become exceptional in that area.

8. Paper Trade on an ongoing basis.

Test Theories before implementing them. Too often traders learn a new strategy or think of a new theory about trading and then rush in to the market without testing that theory or strategy. The end result is loss, often huge losses. A doctor wouldn’t test a theory on a live patient. Theories are tested in the lab for many years before they are used successfully on patients. The ideal way to test your theories or ideas is to simulate trade the current market for a period of time. Many traders attempt to back-test theories but the problem is that the market is constantly changing. The market we have had in the past 4 years is quite different than the market of the late 1990’s so back-testing your theory on the market of the 1990’s will give you different results than what you will have for this current market.
Reminder: It takes at least 100 trades to fully test a theory. Many traders test a theory on a few trades and then go live in the market only to have disappointing results.

9. Get rid of Traderitis.

Most retail traders trade too often. They react to the market instead of anticipating the market. Brokers, clearing houses, the news media, stock and options seminars, the exchanges, etc all benefit from retail traders activity. The more trades you do, the more profits your broker, clearing house, news media, and others make. They want you to trade as often as possible and they don’t care if you make money or lose money so long as you trade, trade, trade. Traderitis is compulsive trading. It is grounded in the false belief that trading more often will result in more profits. It is a falsehood promoted by those who make money from your trading.

In the stock market less is more. If you made money 9 out of 10 trades and those trades were highly profitable with the one having a small loss, versus 100 trades where 55 trades were losses, and 45 were profitable, which group would make you more take home profits? Remember: quality, not quantity. Every time you trade, there are costs involved. If you have many losing trades it is more than just the loss of that trade, it is the cost of the order, the time you spent on it, and the overhead you incur when trading as a business.

Too many traders have Traderitis and are obsessed with trading and those who benefit from this kind of trader continually feed and nourish the fallacy that you must trade every day. You don’t. In fact if you only trade a few ideal patterns with low risk and strong profit potential you will be way ahead of your peers who trade hundreds of times every month. This is a proven statistical fact that nobody wants you to know.

9. Be Self-Reliant and take responsibility for your trades.

When a trader lacks self-confidence, they run around trying to find someone else to make their decisions for them. They buy dozens of newsletters that recommend stocks, watch news on TV that recommend stocks, and listen to numerous “gurus” touting great picks. This is the realm of insecure traders and their performance and success in the stock market is dismal.
To be highly successful at anything, you must take responsibility for your own actions. You must learn to depend upon yourself and your ability to make sound decisions. IF you are a novice trader, just starting to trade with limited experience, choose one mentor to guide you while you develop your self-confidence and skills for trading. Don’t listen to every guru and TV commentator as this will only confuse you. Find someone who can help you develop your own unique trading style and wants to teach you to becoming self-reliant.

If you are experienced but have gotten into the bad habit of getting angry after a bad trade, and blame the market, your broker, your trading buddy, your spouse, or whatever for that bad trade, then you need to work on taking charge of your trading. This is the symptom of someone who lacks self-confidence in their own trading decisions. If you are not confident you can choose good stocks, then you should not be trading live in the market. This usually means you didn’t paper trade or simulate trade long enough when you were first learning to trade.

Solution: Go back to the simulator and stop trading live in the market. It doesn’t matter whether it takes a few weeks or a few years. Until you are confident that you and you alone, are fully capable of consistently choosing good trades, you will never be successful as a stock trader or options player. If you aren’t successful paper trading or simulator trading then you will not be successful trading live in the market.

Professional traders make their own choices and their own decisions. They select one or two websites they use for stock and fundamental analysis, they have one primary charting program, and one to two internet brokers they use. They are comfortable and confident with every trade they enter and they remain calm and secure with their decisions even when the occasional trade goes against them. One bad trade doesn’t ruin their self-confidence. And they always use stop losses to minimize the risk of a large loss. They know that nothing is 100% in or out of the market and that being prepared for all contingencies is the best way to maintain consistent success. They rely upon their own technical skills to select stocks and ignore the crowds that are chasing stocks from “recommended” lists.

In Summary:

Most small retail traders are not held in high opinion by the professional traders of the market. The reason is simple. Most retail traders lack emotional control and discipline. They ignore sound trading rules and rush into the market to get rich, thinking it is easy if they only find that perfect strategy. But those few retail traders who do succeed and become successful are held in high regard by the community of traders. If you want to join this group, follow these simple rules:

Practice, experience, and skill will create self-confidence. You can’t over-practice trading. Behave professionally and treat your trading as a business. Develop your own unique trading style and don’t follow the crowd. Be self-reliant and develop self-confidence before trading live in the market. Know your financial self-worth and risk tolerance and strive to continually improve both of these areas. Realize that trading is a process and that you will always be in a professional learning mode. Have a passion for what you do but don’t allow passion to rule your trading decisions.

If you do all of these things, you will trade with controlled emotions and will have consistent success as a stock or options trader.