After a great win streak, it is always good to sit down and review the top priorities.
1. Money Management
It is easy to think that you are invincible after series of wins. Winning can be due to the fact that
your style matches with current market context, improvements in your execution, and sometime just luck.
However, never forget your sole goal as a trader... TRADE WELL.
Focusing on becoming a better trader, managing risk well, understanding market better, and better emotion control... Then winning will take care of itself in the long run.
Don't rush. Don't raise trading size. Just focus on the task list as always.
2. Right Expectation
We often raise expectation of ourselves and market after good run.
Pressing too hard and expecting to make more can be mentally very harming.
Keep study goals high but return expectation low will keep a developing trader in a good shape.
3. Learn from wins
When you lose, you should not lose the lesson. Same applies to winning trades.
You can always find the good portions of what you did good, rewind and replay it, and make it
part of you for the future.
4. Reduce Size
This is linked to the first priority. I often find it is good to reduce size to 1/2 to 1/4 of your normal size.
It will make sure you don't get over excited, and keep in sync with market context.
Another way is to diversify the instruments you trade.
It is not about how much money you can make in the short period of time.
It is about how much you can KEEP in the long run.
Wednesday, April 4, 2012
Tuesday, April 3, 2012
Vital Components of Open Trade Management
There are a lot of techniques in play in open trade management.
Based on my experience, they make a huge difference in terms of trading results.
On the fly, in the face of non-stopping flow of the movement of instruments,
interweaving with news and events hitting the wire, how to manage your open positions can be very intense. Not to mention that changes your account balance.
Four important skills to train:
1. Initiative profit taking
Don't passively waiting for your target to be hit.
set a target zone and scale out.
Expecting to exit at precise top/bottom can be poison to traders.
If you hold that unrealistic expectation, your mind is anchored to some precise location.
If you miss it, chance is, you will want to wait for it for too long till you are wrong.
2. Exit before stop get hit
Before you build position, you need to have conditions attached to your positions.
When X happens (or does not happen) at Y time, then you will exit or reduce.
Waiting for stop getting hit and proven to be totally wrong is mentally damaging.
Often you will miss the time to re-evaluate market and good chance on others,
not to mention the extra loss.
3. Multiple Strikes in planned direction
Depend on multiple timeframe analysis, you can get a good idea on the rhythm of different groups of market players. Thus making odds in your favor.
Enter/Exit positions (partially) multiple times can reduce your mental stress and improve the winning.
Don't sit still unless it is proven strong trend in the making. 80% of time market stays in range.
Striking multiple times reduce your risk to a large extent.
Improving your entry price in this way will keep you in the right trend without too much cost of mentality.
4. Mentality of re-entering position
Wanting/Planning to enter and re-enter your positions is different from actual EXECUTION.
Often it means re-enter an instrument which you have win or lose money on.
Neither case is easy.
After winning on one instrument, you will get torn between two opposite feeling depending on your personality. One is that you are afraid of it taking back your gain. The other one is that you worry that you are too confident and become careless.
After losing on one instrument, you will have flashing memory of past losing on same thing again and again.
All the right mentality comes from your training. When you are in the market, you always focus on the basic sizing rules, patience to control entry, open positions. And most importantly, treat it as another new trade. Nothing more, nothing less. Just one trade. Win or loss, as long as it fits in all your trading criteria.
Training makes all the difference, but it is easier to say than to do.
Based on my experience, they make a huge difference in terms of trading results.
On the fly, in the face of non-stopping flow of the movement of instruments,
interweaving with news and events hitting the wire, how to manage your open positions can be very intense. Not to mention that changes your account balance.
Four important skills to train:
1. Initiative profit taking
Don't passively waiting for your target to be hit.
set a target zone and scale out.
Expecting to exit at precise top/bottom can be poison to traders.
If you hold that unrealistic expectation, your mind is anchored to some precise location.
If you miss it, chance is, you will want to wait for it for too long till you are wrong.
2. Exit before stop get hit
Before you build position, you need to have conditions attached to your positions.
When X happens (or does not happen) at Y time, then you will exit or reduce.
Waiting for stop getting hit and proven to be totally wrong is mentally damaging.
Often you will miss the time to re-evaluate market and good chance on others,
not to mention the extra loss.
3. Multiple Strikes in planned direction
Depend on multiple timeframe analysis, you can get a good idea on the rhythm of different groups of market players. Thus making odds in your favor.
Enter/Exit positions (partially) multiple times can reduce your mental stress and improve the winning.
Don't sit still unless it is proven strong trend in the making. 80% of time market stays in range.
Striking multiple times reduce your risk to a large extent.
Improving your entry price in this way will keep you in the right trend without too much cost of mentality.
4. Mentality of re-entering position
Wanting/Planning to enter and re-enter your positions is different from actual EXECUTION.
Often it means re-enter an instrument which you have win or lose money on.
Neither case is easy.
After winning on one instrument, you will get torn between two opposite feeling depending on your personality. One is that you are afraid of it taking back your gain. The other one is that you worry that you are too confident and become careless.
After losing on one instrument, you will have flashing memory of past losing on same thing again and again.
All the right mentality comes from your training. When you are in the market, you always focus on the basic sizing rules, patience to control entry, open positions. And most importantly, treat it as another new trade. Nothing more, nothing less. Just one trade. Win or loss, as long as it fits in all your trading criteria.
Training makes all the difference, but it is easier to say than to do.
Monday, March 26, 2012
Importance of Emotional Bank Accounts
Stephen Covey started the concept of "emotional bank account" in his book to describes the trust that's built up in a relationship.
Another type of emotional bank account is our own personal account.
Are we aware that we are depleted of our own account, when we try to fill others?
Very often, we try to give to others but we fail, because we are empty.
How we talk to ourselves? How we manage our mind? How we manage our emotions? Fear, anxiety, stress, criticism, anger, self-blame?
You must achieve private victory (your relationship with yourself and your mind) before you can achieve public victory with others.
Another type of emotional bank account is our own personal account.
Are we aware that we are depleted of our own account, when we try to fill others?
Very often, we try to give to others but we fail, because we are empty.
How we talk to ourselves? How we manage our mind? How we manage our emotions? Fear, anxiety, stress, criticism, anger, self-blame?
You must achieve private victory (your relationship with yourself and your mind) before you can achieve public victory with others.
Sunday, March 25, 2012
Don't waste your time
“Time is really the only capital that any human being has, and the only thing he can’t afford to lose.’” – Thomas Edison
I've seriously started to reflect about time management lately. How I can improve the quality of work and life by more effectively using my time.
Multitasking is one thing I am doing. When I run in gym or doing household work, I start to listen to audiobooks and podcasts. It makes tasks more enjoyable.
With the time saved, I can balance out different aspects of life a little better.
Here is a handy iphone tool to track your time to get more conscious about of the time spent.
http://itunes.apple.com/us/app/atimelogger/id358979305?mt=8
I've seriously started to reflect about time management lately. How I can improve the quality of work and life by more effectively using my time.
Multitasking is one thing I am doing. When I run in gym or doing household work, I start to listen to audiobooks and podcasts. It makes tasks more enjoyable.
With the time saved, I can balance out different aspects of life a little better.
Here is a handy iphone tool to track your time to get more conscious about of the time spent.
http://itunes.apple.com/us/app/atimelogger/id358979305?mt=8
Attitude toward trading and life
Back to some light writing as I can...
Helen Keller once said,
When one door of happiness closes, another opens; but often we look so long at the closed door that we do not see the one which has been opened for us.
Often we regret about the bad trade and decision we made. We loathe the mistakes.
We put our emotion and focus into blaming ourselves or any outside force.
But we ignore two important things: learn from past and stay focused on the present and the future.
Ironically, when we beat up ourselves about the past, we reinforce the bad cycles... unless we have a new solution and work consciously toward the new ways to deal with the problem.
So is our life.
Helen Keller once said,
When one door of happiness closes, another opens; but often we look so long at the closed door that we do not see the one which has been opened for us.
Often we regret about the bad trade and decision we made. We loathe the mistakes.
We put our emotion and focus into blaming ourselves or any outside force.
But we ignore two important things: learn from past and stay focused on the present and the future.
Ironically, when we beat up ourselves about the past, we reinforce the bad cycles... unless we have a new solution and work consciously toward the new ways to deal with the problem.
So is our life.
Tuesday, September 20, 2011
How to get out of a trading slump?
From time to time, it will feel like nothing is working.
How to get out of the trading slump?
To be written...
How to get out of the trading slump?
To be written...
Monday, September 19, 2011
Play good defense or good offense?
In trading, just like sports, one question keep coming to us is, shall we play good defense or good offense?
No easy answer. To be written....
No easy answer. To be written....
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