A Strong Trading Mind
- Thread starter amitrandive
- Start date
Money Management: Why Market Wizards Claim It’s the Secret Sauce
http://blogs.stockcharts.com/journa...arket-wizards-claim-its-the-secret-sauce.html
In his Market Wizards books, Jack Swagger interviews an outstanding collection of renowned investors, traders and money managers. The single most common thread that each mentions as being a major contributor to their success is their money management skills.
Each individual investor needs to answer in writing in a manner most appropriate for him or herself on what is money management.
“Money management is a written, personally-appropriate financial framework describing the types of investments and strategies that you feel will align with your personal goals, objectives and priorities. These guidelines describe the rules and tools you deem appropriate in managing your wealth. They acknowledge your risk tolerance and the risk management techniques you employ to protect your assets. Finally, they provide an ever-changing lifelong timeline and roadmap recording the methodologies and resources you use to ensure disciplined stewardship of your assets as you attempt to maximize the return on your investments.”
The key take-aways for all you budding market wizards are these:
A. Get organized and put it in writing.
B. Put the odds in your favor by having clear goals, routines and an investment methodology.
C. The roadmap to success requires that you know yourself and know enough to stick to your rules.
Trade well; trade with discipline!
-- Gatis Roze
http://blogs.stockcharts.com/journa...arket-wizards-claim-its-the-secret-sauce.html
In his Market Wizards books, Jack Swagger interviews an outstanding collection of renowned investors, traders and money managers. The single most common thread that each mentions as being a major contributor to their success is their money management skills.
Each individual investor needs to answer in writing in a manner most appropriate for him or herself on what is money management.
- How do you get your money? What are the sources of your cash flow and are they dependable or variable?
- How do you feel about money? Did you inherit your wealth and see money management as a burden or part of your lifestyle? What is your tolerance for risk?
- Where do you move your money? What percentage of your assets are you comfortable placing in various asset baskets? Do you see yourself as an investor, a trader or a watcher?
- How do you move your money? What are your investment analysis routines and which trading methodology do you employ?
- Why do you move your money? How will you decide it’s time to invest?
- How do you protect your money? What sell disciplines do you have in place? Have you adequately insured yourself and your family to protect all your assets?
- How do you spend your money? What are your lifestyle priorities? How much money will you invest, spend and distribute?
- When will you spend your money? What is your time horizon and does your current estate plan reflect your present wishes?
“Money management is a written, personally-appropriate financial framework describing the types of investments and strategies that you feel will align with your personal goals, objectives and priorities. These guidelines describe the rules and tools you deem appropriate in managing your wealth. They acknowledge your risk tolerance and the risk management techniques you employ to protect your assets. Finally, they provide an ever-changing lifelong timeline and roadmap recording the methodologies and resources you use to ensure disciplined stewardship of your assets as you attempt to maximize the return on your investments.”
The key take-aways for all you budding market wizards are these:
A. Get organized and put it in writing.
B. Put the odds in your favor by having clear goals, routines and an investment methodology.
C. The roadmap to success requires that you know yourself and know enough to stick to your rules.
Trade well; trade with discipline!
-- Gatis Roze
The Lazy Man’s Guide to Forex Trading; Let the Market Do the ‘Work’
http://www.learntotradethemarket.com/forex-articles/lazy-mans-guide-to-forex-trading
Excerpts:
When we think of a “lazy person” we typically imagine someone laying around at home watching TV on the sofa with a bag of potato chips in one hand and a cheap beer in the other. One thing that we almost never associate with a lazy person is success or wealth.
The word “lazy” is often associated with negativity in most social circles, but depending on what you’re being lazy about, it can actually be a good thing. When it comes to trading or investing, it could even be said that being “lazy” or relaxed can actually increase your chances of success.
The lazy trader concept I am using for today’s lesson is simply a metaphor for trading in a manner that is relaxed and unemotional, but the theory behind it makes sense.
Lazy traders aren’t glued to their charts all the time
The best traders I know don’t bother analyzing the market or watching their charts all the time. They know they can’t change where the market is headed, so they just set orders/alerts when certain prices are reached or they look at the market in the morning and in the evening briefly. Successful traders take a relaxed and no-stress approach.
The most profitable traders and investors don’t addictively watch their positions all night while they should be sleeping. They make a decision and let the market determine the outcome without interruption or interference.
It feels “right” to sit there and watch the markets and watch your trades tick away. But this really accomplishes nothing except making you more likely to do something stupid like enter another position, close your position before it really gets moving, etc.
Lazy traders have bigger winners
Lazy traders don’t sit there and watch their trades after they are live, thus they are not looking at every up and down move during the intraday session, and thus they eliminate most of the temptation to interfere with their trades. This leads to bigger winners and a higher overall risk reward return over the long run.
The Lazy trader goes to sleep whilst the obsessed trader is sleep deprived
Lazy traders are relaxed and calm; they get a good night’s sleep and let the market do its thing. When they wake up in the morning they turn on the computer and look at the overnight price action for a few minutes and then carry on with their lives.
The longer you sit there and “think” about the markets and your trades, the more likely you are to make a stupid / emotional trading mistake.
Lazy traders develop confidence in their trading ability
There are basically two types of traders; those traders who are happy trading around their current job and schedule and those who look at trading as their only option for income and put all their eggs in the trading basket right from the start. What this means is that one trader is starting from a point of no pressure or emotion and another trader is already putting pressure and emotion into the mix before they even make their first trade.
Putting pressure on yourself to make a lot of money from your trading right out of the gate is going to flood your mind and body with emotion and adrenaline which is naturally going to cause you to do stupid things like over-trading and over-leveraging your account. Whereas, if you take a lazy trader approach and just check the market before and after work each day, you will slowly but surely gain confidence and also have better longer-term results since you will have largely eliminated emotion from the mix.
The “true” market picture can easily be seen after analyzing the price action on the charts for just a few minutes at the close of each trading session. (end of day chart analysis). However, when obsessed traders sit there and continue to analyze the market, they inherently make up all kinds of things that “could” happen and they manifest patterns and trade setups that are nothing more than low-probability random price movements.The lazy trader develops a better “gut feel” for the market because he is just looking at what’s there and then moving on, rather than sitting there manifesting different combinations of things that could happen.
Lazy traders develop positive trading habits
The lazy trader flicks open a EURUSD chart, looks for something obvious to trade and either trades or passes on the opportunity. He is not worried about news events or what the media is saying; he is not over-thinking it and he does not care if he enters a trade or not. Trading in this manner develops positive trading habits because you are reinforcing a minimalist trading approach.
It is often the case that the more serious and obsessed traders typically develop addictive and self-destructive personalities, or they already have these personalities when they start trading and they aren’t willing to change.
The key to lazy trading
You should only be risking an amount that allows you to forget about the trade, when traders start risking more than they are comfortable with losing per trade they put themselves at a very high risk of becoming over-attached to their trades…and this is not the lazy trader approach, this is the obsessive / addictive approach that never works.
Be sure you’ve mastered an effective trading edge like price action strategies and that you fully know how to trade it.
Lazy = better trading and a better life
Whether it’s business, trading, relationships or life in general, we often destroy them by trying too hard, doing too much, over-thinking, over-analyzing and simply stressing ourselves or others to death.
Don’t lock yourself in the office or in your trading room and think that the more hours you put in the better the outcome will be, that kind of thinking will destroy you, blow up your trading account and possibly destroy your relationships with others. Your wife/partner will probably notice a huge change in your personality if you make the commitment to be more relaxed.
I encourage you to pursue a change in your trading & life. It’s life changing.
http://www.learntotradethemarket.com/forex-articles/lazy-mans-guide-to-forex-trading
Excerpts:
When we think of a “lazy person” we typically imagine someone laying around at home watching TV on the sofa with a bag of potato chips in one hand and a cheap beer in the other. One thing that we almost never associate with a lazy person is success or wealth.
The word “lazy” is often associated with negativity in most social circles, but depending on what you’re being lazy about, it can actually be a good thing. When it comes to trading or investing, it could even be said that being “lazy” or relaxed can actually increase your chances of success.
The lazy trader concept I am using for today’s lesson is simply a metaphor for trading in a manner that is relaxed and unemotional, but the theory behind it makes sense.
Lazy traders aren’t glued to their charts all the time
The best traders I know don’t bother analyzing the market or watching their charts all the time. They know they can’t change where the market is headed, so they just set orders/alerts when certain prices are reached or they look at the market in the morning and in the evening briefly. Successful traders take a relaxed and no-stress approach.
The most profitable traders and investors don’t addictively watch their positions all night while they should be sleeping. They make a decision and let the market determine the outcome without interruption or interference.
It feels “right” to sit there and watch the markets and watch your trades tick away. But this really accomplishes nothing except making you more likely to do something stupid like enter another position, close your position before it really gets moving, etc.
Lazy traders have bigger winners
Lazy traders don’t sit there and watch their trades after they are live, thus they are not looking at every up and down move during the intraday session, and thus they eliminate most of the temptation to interfere with their trades. This leads to bigger winners and a higher overall risk reward return over the long run.
The Lazy trader goes to sleep whilst the obsessed trader is sleep deprived
Lazy traders are relaxed and calm; they get a good night’s sleep and let the market do its thing. When they wake up in the morning they turn on the computer and look at the overnight price action for a few minutes and then carry on with their lives.
The longer you sit there and “think” about the markets and your trades, the more likely you are to make a stupid / emotional trading mistake.
Lazy traders develop confidence in their trading ability
There are basically two types of traders; those traders who are happy trading around their current job and schedule and those who look at trading as their only option for income and put all their eggs in the trading basket right from the start. What this means is that one trader is starting from a point of no pressure or emotion and another trader is already putting pressure and emotion into the mix before they even make their first trade.
Putting pressure on yourself to make a lot of money from your trading right out of the gate is going to flood your mind and body with emotion and adrenaline which is naturally going to cause you to do stupid things like over-trading and over-leveraging your account. Whereas, if you take a lazy trader approach and just check the market before and after work each day, you will slowly but surely gain confidence and also have better longer-term results since you will have largely eliminated emotion from the mix.
The “true” market picture can easily be seen after analyzing the price action on the charts for just a few minutes at the close of each trading session. (end of day chart analysis). However, when obsessed traders sit there and continue to analyze the market, they inherently make up all kinds of things that “could” happen and they manifest patterns and trade setups that are nothing more than low-probability random price movements.The lazy trader develops a better “gut feel” for the market because he is just looking at what’s there and then moving on, rather than sitting there manifesting different combinations of things that could happen.
Lazy traders develop positive trading habits
The lazy trader flicks open a EURUSD chart, looks for something obvious to trade and either trades or passes on the opportunity. He is not worried about news events or what the media is saying; he is not over-thinking it and he does not care if he enters a trade or not. Trading in this manner develops positive trading habits because you are reinforcing a minimalist trading approach.
It is often the case that the more serious and obsessed traders typically develop addictive and self-destructive personalities, or they already have these personalities when they start trading and they aren’t willing to change.
The key to lazy trading
You should only be risking an amount that allows you to forget about the trade, when traders start risking more than they are comfortable with losing per trade they put themselves at a very high risk of becoming over-attached to their trades…and this is not the lazy trader approach, this is the obsessive / addictive approach that never works.
Be sure you’ve mastered an effective trading edge like price action strategies and that you fully know how to trade it.
Lazy = better trading and a better life
Whether it’s business, trading, relationships or life in general, we often destroy them by trying too hard, doing too much, over-thinking, over-analyzing and simply stressing ourselves or others to death.
Don’t lock yourself in the office or in your trading room and think that the more hours you put in the better the outcome will be, that kind of thinking will destroy you, blow up your trading account and possibly destroy your relationships with others. Your wife/partner will probably notice a huge change in your personality if you make the commitment to be more relaxed.
I encourage you to pursue a change in your trading & life. It’s life changing.
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