0Posted by Michael Glass on June 9, 2012 at 3:10 pm
Are You Prepared to Trade
I received an email today from a new trader asking where should she begin. My first response to her was Are You Prepared to Trade. She asked, what do you mean. Here’s my response:
If I was at the beginning again, I would emphasize that trading is like a business. Thus, you need to treat as such by creating a business plan or in trading, a trading plan.
Start off by understanding your strengths and weaknesses. In your contact, you discussed wanting to trade futures. They are great advantages to the futures market. My favorite is leverage, but with the advantage also comes greater risk when mismanaged. So, make sure the market you want to invest in matches your strength and weakness. Make sure you have a firm understanding of how money (capital, commissions, profits, losses, etc.) works just like a business needs to know assets and liabilities.
Then, you need to address the type of trader you want to be. By this I really mean a day trader or end of day trader. Even as a day trader there are different styles based upon the timeframe you want to watch the market. The longer the timeframe, the bigger your stop (the amount of money you can afford to risk) needs to be. This is very important and goes back to understanding the money.
Third, you can look for specific trading rules/strategies. You need to have a specific set of criteria that you follow. Only when those settings are matched will you enter a trade. This is all about being a disciplined trader instead of an emotional trader. If A, then B. If C, then D. Very specific. Make adjustments to the rules only when the market tells you to (which is when you start to see it not working).
Practice, Practice, Practice. Then Document, document, document. See what works. See how it affects cashflow. Document. Remember, it’s a business, not a hobby.
It’s only at this point that you can think about risking live/real money. Start small to get the feel of what it is like to make and lose money. Then go back and really make sure your rules, strategies, cashflow, risk tolerance still are the same.
Of course, I highly recommend getting a coach to help guide you through the process, but if I were at the start all over again, I would definitely treat it more like a business and not just a hope I would be successful.
I hope this helps. Feel free to contact me if any additional questions. Remember, there’s potential to both make and lose money.
0Posted by Michael Glass on February 26, 2012 at 12:02 pm
Why do 90%
Day Traders Fail?
It is often quotes that over 90% of all Day Traders Fail. The obvious question is WHY? Why do 90% of all Day Traders Fail? Well to start, you have to look at what exactly brought the investor to the stock market. Was it a sound plan with achievable objectives? Or was it a hot tip they received from a friend or saw on TV. My p oint is that many traders have their fingers burnt because they did not take the time to define why it is exactly that they are investing in the stock market.
That same trader will unrealistic goals now heads to Google to look for the Legend of the Holy Grail. They search day after day looking for some magical indicator or trading system that will remove all risk from traders. Of course, their are trading gurus promising just that. Buy my system and I’ll show you a cant miss trading strategy that anyone can replicate. If it is truly this easy, again I ask, Why do over 90% of all investors fail?
The answer? Consistent and profitable traders are aware that the key to success in trading is NOT found in a technical indicator or trading system. Instead they understand to be successful in the stock market that you must develop a trader’s mindset. You must be able to handle the emotions o both winning and losing trades.
0Posted by Michael Glass on September 25, 2011 at 10:24 am
Trading in the Zone
The Psychology of Trading
Most traders begin their career in trading by logging on to Google to find the latest and greatest technical indicators and trading setups. They believe that if they can just find the “perfect” trading system that they will well on their way to the Holy Grail. Experienced traders know that the true secret to the Legend of the Holy Grail is not found in an indicator or trading setup. Instead, it is an individual trader’s ability to manage the internal battle between wins and losses. In other words, in order to be a successful trader, you must be able to master the Psychology of Trading.
In the book Trading in the Zoneby Marc Douglas, it states the key to becoming a successful trader is developing a trader’s mindset. Reading this, you may think that acquiring this Trader’s Mindset would be easy. For some, it may be; however, for most it is the exact reason that they have never been able to trade consistently and most importantly profitably. Being able to stay focused and disciplined to your backtested trading plan clearly separates those who make money on a day to day basis and those traders who ride the stressful roller coaster of up and downs (unfortunatley more downs than ups).
Profitable traders are able to think differently about the market. First, they are able to control their fears about trading. Notice I did not say eliminate. We all face those fears each and every day. The different is that successful traders are able to maintain focus and control of their emotions to help prevent self-sabotage. In addition, they recognize that the stock market does NOT have a vendetta against them. It is not the trader vs. the market. Instead it is the trader’s ability to receive the opportunity flow the market provides each day. Sometimes you win. Sometimes you lose. Either way, the market provides opportunities. It is our jobs as traders to apply the appropriate strategy to the current market condition.
3Posted by Michael Glass on April 21, 2011 at 12:00 am
Why Does the Stock
Market Hate Me?
In order to be a profitable trader, you must be able to answer the following questions:
What is it that losing traders do that winning traders seem to avoid?
What are the things that successful trader do that losing traders do not?
Why Does the Stock Market Hate Me?
Now we know that the stock market really does hate anyone. We also know that the stock market does NOT have a vendetta out against you. Yet, so many traders feel that no matter what they do that the result of the trading will always be negative. What these traders are doing is placing the blame and responsibility for their trading results not on their own actions but on outside factors they believe they cannot control. Yet, successful traders realize that it is indeed within out ability to control what types of trades we take. Or, when to take a trader or even how to manage a trade once triggered.
In his book, High Probability Trading, Marcel Link defines High Probability Trading as taking trades with low risk/reward ratio that are backtested to have a positive expectancy with predetermined money management strategies. This is a long way of developing a personalized trading plan that matches your investing goals with your risk tolerance.