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Five Things Stock Traders Do To Make Money That Master Traders Say Will Lose Money

   by Lance Jepsen

in Finance    (submitted 2010-04-18)

Making money in the stock market can be so easy you don't even realize you're doing it. It just happens and you don't even think about how it happened, you're just glad it did.

Unfortunately, it turns out there are just as many things you're doing to lose money, again without even knowing it.

Patience

Having patience is one of the most overlooked attributes of successful traders.

You must have a trading system. Therefore, any given system is going to require patience on your part.

You must have the ability to wait for trades. Lack of patience causes traders to take profits and losses too soon. If that's you, then you really don't have a trading systembecause you are not sticking to it.

Perseverance

You need to be able to persist with a trading system. Trading systems do not function as expected from time to time. It is better to persist with that trading system until it is functioning correctly again than it is to abandon it. You must have the ability to persist and persevere even in the face of defeat.

Losses

Losses must be kept to a minimum. One must take a loss as quickly as possible. You must realize a loss when your mental stop loss is hit according to your trading system. If your trading system has a 5% stop loss rule, then if a stock drops 5%, you must sell. Holding on to a losing stock too long and praying and hoping its going to come back will eventually wipe out your trading account.

Don't Be Greedy

Keep your expectations to a minimum. Aim for tiny gains every few days to a couple of weeks. Think about protecting yourself on the downside instead of how much money you can make on the upside. Also expect to lose money for the first few years of trading as you learn the system. Then expect to break even for a year or so before you finally begin making money. Think of it like it's your college tuition fee as you study and learn how to trade in the stock market.

Don't Keep Adding Indicators

The greater number of indicators you use and the more complicated your trading system is does not translate into a more profitable trading system.

You may be tempted to think that the more indicators and rules you add to your trading system, the better it will make it. This is not the case. Adding new technical indicators and variables to your trading system may even cause your trading system to get worse. The simpler a trading system is, the more likely it is to be profitable.

About the Author

Watch Lance and Mike trade in real time throughout the trading day with live Facebook and Twitter updates plus read hundreds of great stock trading articles at stock trading blog

he Master Trader

  by Reynaldo Soriano Jr.

in Finance    (submitted 2007-07-11)

I have always compared trading to martial arts because they are psychologically the same. Like martial arts, there are different levels of trading.

At the entry level, a trader is similar to a martial arts white belt, and has just started searching for the right trading system. The belief of beginners is that after they go to a seminar or read a trading book for the first time, they will soon make lots of money. They are convinced that trading will make them millionaires in a short period of time. Most of them would also like to leave their jobs as soon as possible.

The second level of traders is the blue belt level. This type of trader is learning that trading can be easy or tough. When challenged, they will either persist and keep going to more seminars, looking for the "holy grail," or they will give up and play the victim, saying that trading is "risky." I call this the break-out stage. They either remain or leave.

The third level of traders is the black belt level. These traders start to realize that psychology plays a big role in trading. They also start to learn more about themselves. They begin to perfect their trading skills systematically and psychologically.

The fourth level of traders is the master level--the highest level of trading. When they trade, they are at one with the market physically, psychologically, and spiritually. They feel the market and they have no fear. They control their emotions when challenged and they take full responsibility of their own actions. In ancient Japanese, this is called Mushin.

Mushin is:

"a state into which very highly trained martial artists are said to enter during combat. The term is shortened from mushin no shin (無心の心), a zen expression meaning mind of no mind. That is, a mind not fixed or occupied by thought or emotion and thus open to everything.

Mushin is achieved when a fighter feels no anger, fear, or ego during combat. There is an absence of discursive thought, and so the fighter is totally free to act and react towards an opponent without hesitation. At this point, a person relies not on what they think should be the next move, but what is felt intuitively.

A martial artist would likely have to train for many years to be capable of mushin. This allows time for combinations of movements and exchanges of techniques to be practised repetitively many thousands of times, until they can be performed spontaneously, without conscious thought.

The legendary Zen master Takuan Soho said:

The mind must always be in the state of 'flowing,' for when it stops anywhere that means the flow is interrupted and it is this interruption that is injurious to the well-being of the mind. In the case of the swordsman, it means death. When the swordsman stands against his opponent, he is not to think of the opponent, nor of himself, nor of his enemy's sword movements. He just stands there with his sword which, forgetful of all technique, is ready only to follow the dictates of the subconscious. The man has effaced himself as the wielder of the sword. When he strikes, it is not the man but the sword in the hand of the man's subconscious that strikes.

However, mushin is not just a state of mind that can be achieved during combat. Many martial artists, particularly those practicing Japanese martial arts such as aikido or iaijutsu, train to achieve this state of mind during kata so that a flawless execution of moves is accomplished - that they may be achieved during combat or at any other time. Once mushin is attained through the practicing or studying of martial arts (although it can be accomplished through other arts or practices that refine the mind and body), the objective is to then attain this same level of complete awareness in other aspects of the practitioner's life." - wikipedia

You don't have to be a martial artist to achieve Mushin in trading. Mushin can be achieved through experience and lots of practice. How?, you may ask. The answer is by constantly back testing your trading system, following your trading rules, eating a balanced diet, exercising daily, practicing daily meditation and visualisation, and having ample rest prior to trading. When you have a free mind, you will be in flow with the market and you will be at one with the market. You don't think about the stock, you just react to the market's movement without hesitation and fear.

To reach the master level, one must have discipline, commitment, determination, passion, and the openness to learn. Once you reach this level, I totally guarantee you, you will be rewarded with more consistent profits.

If you'd like to know more about the techniques you can use to achieve Mushin, or the skills required to reach the master level, contact me at reynaldo@onlinetradingcfd.com.

About the Author

Reynaldo Soriano Jr. is an Australian based trader, investor, and businessman with a passion for share trading. He is a professional online trader, educator, and trader coach. He has traded equities, options, Forex, Indices, and CFDs and spent two years in the United States trading and studying the US market. http://www.onlinetradingcfd.com

Becoming a Master Trader

 by Jack Landry

in Investment    (submitted 2010-02-22)

Trading futures is a thrilling and daring game. It takes contemplation, a well-thought out strategy, and luck.

With the right combination of these three things, trading futures can be an extremely profitable activity. Recently the rules have changed so that traders can make accounts with only a small amount of money.

If a trader is market savvy, these accounts could grow tremendously. On the other hand, in market trading these accounts could be wiped out in just a few days.

In order to have a chance at becoming successful in trading futures, research is required. Trading takes more than a simple scan of a graph or chart, it requires diligence.

There are many resources to aid in this process of learning the ropes of future trading. Read a couple books by people who have success in the market.

Study the markets online and find a pattern develop your own system on. Be sure to study material by people who are master traders.

By following in their footsteps, novice traders can avoid much loss and anguish. Think of it as an apprenticeship until trading markets is a comfortable thing.

Select a role model who has proven, genuine, and consistent abilities to navigate the market. After research is done, develop some methods to follow.

Of course, these methods may be good or bad, but we will never know until they are tried out in the market. As a novice, there may be initial losses, but eventually there should be more successes.

If this is not the case, review the strategy and modify it until you start to win. Do not get stuck thinking about the losses.

Thinking about the losses is a great way to lose heart and drop out of trading. Focus the negative energy of the loss on something constructive such as obtaining the new skills to prevent future losses.

As a beginner, there is a ladder you will climb to become a master trader. The first rung is called unconscious incompetence.

Unconscious incompetence refers to the fact that you are unaware of everything you need to know. You may know that you do not know everything, but you do not know what to study or where to start.

The second rung is called conscious incompetence. Throughout this step you know how much you need to learn and where to learn it.

The third rung is called conscious competence. At this point you have developed a strategy that is working and you are becoming successful.

You are not yet a master when you reach this point, but you are well on your way to becoming one. During this step, you will continue to refine your strategy and practice using it.

The fourth and final rung is called unconscious competence. This step will occur after you have been on conscious competence for a while.

It is the step when you can automatically follow your strategy and you are very successful. It is at this point that you have finally become a master trader.

As a beginner you will have several questions. Your first question may be about which contracts you should consider.

The best commodities for a beginner to invest in are the popular ones. They are easier to learn on and result in fewer, smaller losses if handled incorrectly.

Do not rush your time as a beginner and studying the basics of futures trading. The more that you know and understand about basics, the more successful you will be in the long run.

While managing futures can seem like it takes a lot of extra work before actually beginning to trade, this extra work can save you a lot of money. For master traders this 'extra work' is not extra work, but necessary.

The sooner you can learn how to do this research quickly and efficiently, the closer you are to becoming a master. Trading futures can be an immensely rewarding investment intellectually, monetarily, and physically.

About the Author

Jack R. Landry has worked in financial services for the last 12 years and written hundreds of articles about investing and managed futures.

Contact Info:

Jack R. Landry

JackRLandry@gmail.com

http://www.WisdomFinancialInc.com

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