Chat With Traders
Look at the big picture and always trade with the overall trend. Why? Because if you fight the system, you will lose. Manage risk and trade with the big money.
Take emotion out of the trade by following your plan (entry, stop, target). Confidence takes away the emotion.
- Have faith in your system, don't trade too large, and execute flawlessly
- Keep your position size small so there will be no stress in the trade
If you have a passion for something you will find a way to make it work.
Understand why your strategy makes money.
Stick to the strategy/plan, DONT'T DOUBT the strategy.
Understand that you have no idea where the market is going to go. Own that, don't assume you do.
Prevent drawdowns by risk management + smaller position sizing.
★ Trade what's in front of you, don't try to be right.
Have a professional attitude. There is no room for amateurs in the game of life.
★ Be patient in all forms. If you force any situation it has unintended consequences. Let the trades come to you and allow trades to breathe. Don't force anything.
Create a strategy for yourself.
★ It's not about the money. It's all about the trade, make the right decision based on the price action you see. Don't be so fixed on the money.
Don't think about making money when trading, only focus on the trade.
Follow the trading plan whether it is to stay in or exit the trade.
Focus only on a few setups, cut down the number of setups to trade. Master a few setups before adding other strategies.
Always cut losers early when shorting momentum runners.
Protecting the account is more important than avoiding a small loss.
With experience comes patience.
★★ If you miss the move, just move on, realize there's always another opportunity. Don't chase the move.
★ When you get emotional and chase, you get into a mindset where you miss what's going on so when a real opportunity comes along, you're not ready.
Don't wait for complete confirmation, by the time a chart shows full confirmation, it should be time to take profits already.
To trade successfully, have a probabilistic mindset knowing that anything can happen so focus more on the risk.
Focus on the probability and remove emotion.
★★ If you have a setup that you can't explain to a 12 year old, it's too complicated.
★★ You have to develop confidence in a situation where the result is always uncertain.
Be patient, you don't always need to be in a trade.
★ If you're looking at the markets and there is nothing to do, don't do anything.
Underlying with short interest ~20% → possible short squeeze with new buyers
★ Don't believe the hype, trade charts and price action only.
Focus on the why and the thought process behind the trade.
Overcome emotion by hiding unrealized P/L.
Think about the trade and the setup instead of money.
Be self-reflective, try to improve on every trade.
Learn chart patterns and which ones repeat to develop your own strategy. Respect the trend and cut losses. Identify and focus on your niche.
You're always going to miss stuff in the market, understand that it is ok.
Cut losses intelligently, not necessarily quickly, base it off of chart lines (support or resistance break).
Trade the ticker not the company, focus on what price action is doing.
★ Don't follow trade alerts or hot tips.
Make your own trades, make mistakes, learn from your mistakes, be self-reflective, and learn from what you did right or wrong.
You can't possibly win every trade, trust in the process.
Some days you have to be the mouse (small details), some days you need to be the eagle (visionary), and some days you need to be the donkey.
Be more honest with yourself and be self-aware, master your strategy.
The best traders make it look so easy.
You don't need to time the top or bottom, just capture the direction.
Reason why traders fail: Absence of mastery of one subject.
★ Don't get so down on yourself. One day you're going to be the professional trader taking money from a sucker like you. Don't put so much pressure on yourself.
You have to sit tight.
Learn to beat the impatient/doubtful feeling when the market takes its time doing as it’s expected to do.
Traders are hopeful in a losing position and fearful in a winning position. Instead of hoping a trade goes your way, fear that your losses may get bigger. Instead of fearing your profit may turn into a loss, hope that your profit becomes a big profit.
How price moves: Determine when, if you buy people will buy after you or when you sell, people sell with you.
★ If you damage your mindset/confidence/clear-mind/self-belief then its game over. Protect your mindset.
Trading is a process of growth and development and deliberate practice. Become a subject matter expert at your strategy.
Understand that losing trades are part of the process.
★★ Don't take trades that you like, only take trades that you love. Don't just take a trade if there is a setup, it also has to align with the overall trend. Don't trade in a vacuum, be aware of the overall market. Be selective in taking trades, don't lower standards and trade less frequently. You don't need to take the best of a bad bunch.
★ Success is rooted in failure. If you're afraid to fail, then you're not going to succeed. It's part of the process. Don't feel rushed about needing to succeed.
Keep it simple and don't overwhelm yourself, just focus on psychology.
★ Getting out of a losing trade for a manageable loss is the key to long term survival. It's not being wrong, it's staying wrong that gets you hurt. Don't let a small loss turn into a big loss. The more stubborn you are, the more you will lose.
★★ Successful traders specialize in doing one thing really well, and they do it over and over.
Take into account group strength, if one does well in a sector then similar names will also do well.
It doesn't matter how much homework you do, the market is always right.
Don't fall in love with any one stock, if it is going against you, sell it.
Never overreact to a gain or a loss.
The mental aspect of trading is 90% of the challenge.
Keep the trading plan simple. Simple works very well.
Treat trading as a business.
The trading plan is there to prevent you from making silly trades. A trading plan is simply: How do you get in, risk, and how you get out. How to stick to your plan with discipline: Take small steps, one trade at a time.
Don't be so conditioned that markets only go up or only go down.
★ A combination of time and perseverance will lead you to become desensitized with losing trades.
★ How to manage risk: If you're not trading well, just walk away, don't snowball the loss.
Resilience will pull you out of the slumps every trader experiences.
★ As soon as you need the market to do something and you're forcing yourself on it then you're losing the ability to be opportunistic.
★ Requirement to live long: Money management - Trade small enough where you won't get blown out from one hit but big enough the trade matters.
Degrees of success:
- No longer losing money (breakeven)
- Covering costs, same number (commissions)
- Make money
One edge: find strength in individual names, but broad sector doing nothing.
Edge: Simply an advantage over randomness, something that is not random. Could be a pattern, fundamentals, related market, or intuition.
Technical Analysis: When condition `A` exists then there is a probability that `B` happens in the future (not random so can place a bet with correct position sizing and risk management).
Understand what your best trades are and trade them bigger. Once you identify these trades, continuously fine tune them.
2-5% swing rule, 30% active trade, 25% giveback rule.
Make sure that your trading/product/timeframe fits your personality and thinking talent.
Build yourself a playbook of the setups that you like to trade.
Potential setup: post earnings announcement drift. Any company that receives favorable market reaction to ER continues to trend in the same direction for several weeks. Gap up/down then consolidation then continued move.
There is no trading setup that has a 100% success rate, you need to take into account market environment.
Stocks are in a range 80% of the time and move in the other 20%.
★ Find just one great setup, learn absolutely everything about it and when to trade it. Become a master of one particular setup. Over time, add new setups for various market environments.
What causes big short term moves: industry momentum. Trade with the market and industry trend. It is more important that the industry is doing well than it is for the index to be moving up.
Swing trade setup: Already established momentum, now consolidating, wait for breakout. If there are many signals, give priority to setups with momentum. Most swings move in 3-10 days then consolidates and usually breaks out again (buy in anticipation of breakout).
Review trades and missed opportunities so you can understand how to catch them next time.
Being more risk adverse doesn't have to be a bad thing, it can mean you're more consistent.
★ Instead of looking at all of your trades and analyzing what you did wrong, only write down what you did right or what you wanted to do but didn't do.
You need to have the willingness to do anything it takes even though tough times.
When you understand something that works, trade larger. When you're not trading well, cut trading size.
★ Look for the trading method that's right for you and fits your nature, it's not going to be the same for everybody. The trading method can be simple or complex, do whatever works for you.
Know where to get out before you get in.
★★ How do you know if you have an edge: Rising equity curve, high confidence, and making money with consistency.
★ A chart pattern that fails is equally important as a chart pattern that is successful.
Once you're in a position, you lose objectivity. You need to decide ahead of time, so you're thinking with an objective mindset.
Profitable trading is not about your ability to predict.
Know when you're wrong, usually a point that has exceeded your expectations.
When you trade higher time frames, you generally make less frequent trades (less signals).
★ Your willpower has no power in the markets. You can't enforce your will on the market. The market is different from real life. You can’t apply success in real life to the markets, the market doesn't follow the same rules.
The more often you have to make a decision in the market, the more likely emotion will be involved in the decision making process.
You need to take individual responsibility (take the data, examine it, then place orders with discipline).
You have to psychologically live with the intraday movements and how the trade evolves.
How to maintain calm mindset: Systematic plan, keep it simple, don't get stressed out.
★ Success comes from the head, it's truly all in the mind.
★ The greater enemy of the trader is fear. He who is afraid loses.
★ Assume every position you have is wrong, so you force yourself to be in the now (be critical and objective). View life as a movie, focus on the now, keeps you separated from the actual trade.
When someone asks how do you trade: You say why do you care? You should be designing the strategy that works for you.
You can't blame the market for your problems, you have to take it on yourself. You're responsible for finding out what went wrong and what you should do next time (it's all on you, no one else is responsible).
★ Take low-risk trades with a high potential payoff where the risk-to-reward ratio is at least 2:1, preferably 3:1.
★★ Trade the setup, not your PnL.
You should care about trading right, rather than being right.
★ Avoid playing catch up if you miss your window of opportunity, tomorrow is a new day.
★ Trading is not a major thought-out process; its reaction and instantaneous reaction.
★ You can chase the alpha in the afternoon (letting your emotions lead), or sit on your hands having conceded that you've missed your sweet spot.
★★ All have turning points in their careers — that signature trade — the "white knight". While I had no strategy at the time or risk management, the turnaround trade bought me time. The modern new trader is all about enduring the struggle until you develop strategies that will consistently give you results. Keep chatting. Keep backtesting. Ask questions and think big.
★★ If you are in the NFL, you can't play at half speed because you will get hurt. You also can't be a little bit pregnant. Don't be a schmuck, education is not boring and education is not a waste of time. Most importantly, it's for adults too — not just the youngsters. Idiots need not apply.
★★ When the blinders are on, the horse is so focused that its task is the only thing that matters. Most aspiring traders fall victim to the noise rather than putting on the blinders. You don't need to be good at all aspects of trading. Nor do you need to trade thirty stocks a day; you'll miss the four or five that are in your sweet spot.
★★ Never settle for playing bad cards. The ability to recognize a great hand or a bad hand is crucial to your development and to your PnL.
★ Trading is a byproduct of your process.
★ There's nothing the market can do to you that you can’t do to yourself.
★ Recognize what you're doing wrong, stop it, and figure out how to fix it.
★ Trading is nothing but a job, there are no highs there are no lows.
★ Figure out what you're doing wrong, what are you not seeing, what is the correlation, what is the advantage, what is your edge.
Figure out how you can make $100 before you can make $1000.
You have to figure out who you are, you can't be somebody else (ignore alerts and social media). Once you figure out who you are, look to trade only premium setups. Play the premium hands, not everyday is tradable.
Supply zone - where emotional buyers meet technical sellers, if you don’t know it’s there, you will get rejected, and the stock will fail.
Trading is the only business where you could want it as bad as you want, but you may not be successful.
Once you figure out what NOT to do, you'll be okay, it'll buy time to figure out what your edge is.
How to handle a run of losses & grind through slumps, while keeping your emotions intact?
- To mentally state afloat: turn off your PnL
- Trading is emotion vs reality, the more emotionally attached you are to a trade, the higher change you will mistrade it
- Once you trade your PnL instead of the setup, you're done for the day
Anytime you have raw emotion going into a trade, you're going to mess it up.
When you go through a slump, just take a step back, get mentally centered.
When you don't know what to do, do nothing.
★ Instead of snowballing a loss into another loss, clear your head, take a break and come back.
Once you identify your edge, ride it until it stops working.
People are chasing the rainbow in the first 3 hours, biggest emotional movements happen in the morning.
★ Price action dictates everything, your opinion means nothing. Price action is king, you're not smarter than the market.
Don't fight price action, don't fight the market, don't over analyze a headline, be proactive.
If you are committed, turn off social media, read what veteran traders have done and have gone through.
Everybody blows out, has rough patches in their life.
You don't need to be good at everything, just be good at one thing.
Wait for premium setups, wait for premium hands.
You can't compromise your process.
Trading is a routine, a business, trade with your personality/principle. Be your own person and trade what fits your personality.
When you can be honest with yourself, that’s when you make a massive leap in the right direction.
Mindset challenges are the early roadblocks for a beginner. If you're stuck on the "beginner’s cycle", focus on yourself and your own trading strategy.
As your trading experience grows, continue to run through old material.
You don't need to trade a lot or everyday to make really good money. You don't need to risk a lot of money to make a lot. Have faith in your system and in what you're doing.