Being Right and Making Money......Dr Tharp

[Saint]

Thanx Ragh...

Saint

 

[saigon]

Dear Traders,

Famous traders have the same idea. Reading many books and extracting the successfull strategy that could be used for individual trader in a particular market. Great idea helps to make "planing your trade and trading your plan" and that reduces your fear or emotion when trading. Another famous author who wrote many trading book in stock is Larry Williams with his famous book "Right Stock at a Right Time" that i think help stock traders as well.

BR

 

[GauravC]

If you’re trading well, there are no losing trades: only trades that make money and trades that give you the information to make money later.

gold ... thanks for sharing !

 

[Prabhjeet]

Thanks Gaurav for digging out this Golden Thread, a must read for every trader

 

[munde_77]

Very nice. Thanks

 

[munde_77]

hi saint,here it is
""

how to take a loss

brett n. Steenbarger, ph.d.

www.brettsteenbarger.com


there are quite a few books written on how to make money in the market. Some of them are even written by people who have made money as traders! What you dont see often, however, are books or articles written on how to lose money. cut your losers and let your winners run is commonsensical advice, but how do you determine when a position is a loser? Interestingly, most traders i have seen dont formulate an answer to this question when they put on a position. They focus on the entry, but then dont have a clear sense of exitespecially if that exit is going to put them into the red.

One of the real culprits, i have to believe, is in the difficulty traders have in separating the reality of a losing trade from the psychological sense of feeling like a loser. At some level, many traders equate losing with being a loser. This frustrates them, depresses them, makes them anxiousin short, it interferes with their future decision-making, because their p & l is a blank check written against their self-esteem. Once a trader is self-focused and not market focused, distortions in decision-making are inevitable.

A particularly valuable section of the classic book reminiscences of a stock operator describes livermores approach to buying stock. He would sell a quantity and see how the stock responded. Then he would do that again and again, testing the underlying demand for the issue. When his sales could not push the market down, then he would move aggressively to the buy side and make his money.

What i loved about this methodology is that livermores losses were part of a grander plan. He wasnt just losing money; he was paying for information. If my maximum position size is ten contracts in the es and i buy the highs of a range with a one-lot, expecting a breakout, i am testing the waters. While i am not potentially moving the market in the way that livermore might have, i still have begun a test of my breakout hypothesis. I then watch carefully. How are the other averages behaving at the top ends of their range? How is the market absorbing the activity of sellers? Like any good scientist, i am gathering data to determine whether or not my hypothesis is supported.

Suppose the breakout does not materialize and the initial move above the range falls back into the range on some increased selling pressure. I take the loss on my one-lot, but then what happens from there?

The unsuccessful trader will respond with frustration: why do i always get caught buying the highs? I cant believe they ran the market against me! This market is impossible to trade. because of that frustrationand the associated self-focusthe unsuccessful trader does not take any information away from that trade.

In the livermore mode, however, the successful trader will see the losing one-lot as part of a greater plan. Had the market broken nicely to the upside, he would have scaled into the long trade and likely made money. If the one-lot was a loser, he paid for the information that this is, at the very least, a range-bound market, and he might try to find a spot to reverse and go short in order to capitalize on a return to the bottom end of that range.

Look at it this way: If you put on a high probability trade and the trade fails to make you money, you have just paid for an important piece of information: The market is not behaving as it normally, historically does. If a robust piece of economic news that normally sends the dollar screaming higher fails to budge the currency and thwarts your purchase, you have just acquired a useful bit of information: There is an underlying lack of demand for dollars. That information might hold far more profit potential than the money lost in the initial trade.

I recently received a copy of an article from futures magazine on the retired trader everett klipp, who was dubbed the babe ruth of the cbot. Klipp distinguished himself not only by his fifty-year track record of trading success on the floor, but also by his mentorship of over 100 traders. Speaking of his system of short-term trading, klipp observed, you have to love to lose money and hate to make money to be successfulits against human nature what i teach and practice. You have to overcome your humanness

klipps system was quick to take profits (hence the idea of hating to make money), but even quicker to take losses (loving to lose money). Instead of viewing losses as a threat, klipp treated them as an essential part of trading. Taking a small loss reinforces a traders sense of discipline and control, he believed. Losses are not failures.

So heres a question i propose to all those who enter a high-probability trade: what will tell me that my trade is wrong, and how could i use that information to subsequently profit? if youre trading well, there are no losing trades: Only trades that make money and trades that give you the information to make money later.
""

thanks,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,

 

[hitesh]

Thanks Saint and ragh_ash ......

 

[tvrssvk]

Where can I fine Saint's swing trading strategies, tips, advice. Have searched a lot and could not find. Please help me to find out

 

[amit_dangi]

Secrets of successful investors

1. Herd mentality: They sell their holding when others are buying. These investors sold their stocks when herds were buying at 20,000 levels in January. Successful investors will never follow herds and go against tide.

2. Work hard: One should systematically work hard on research if you want to make money in stock markets. It is surprising to find that even intelligent people with good analysing capabilities will invest in stock markets just basing on brokers tips. Successful investors will never put their money without enough research.

3. Fundamentals: If you are an investor, it is better to focus on fundamentals. Technicals are for traders. If you invest in a good company with sound fundamentals with reasonable valuations, you will never lose money in long term. Never buy penny stocks.

4. Volatile growth stocks: These stocks with very high beta give exceptional returns in bull markets but may give sleepless nights in the current situation. Diversify your portfolio. Successful investors will never put all their money in one stock or one sector.

5. Initial obstacles: All great investors lost money in their initial days including Warren Buffett. You should ready to face losses in the initial investment days. Go slow initially and learn from losses. Many new investors who lost their money in the Reliance Power IPO will never return to market for another 3-4 years or when Sensex makes new highs and once again burn their fingers. Stay cool in the crisis.

6. Greed and fear: These two characters are biggest enemies for every investor. Unless you overcome them, you will never become a successful investor.

7. Go long: Day traders will never beat long term investors in the earnings. Stay away from day trading. Never put you money in speculative stocks and Z,S and T group stocks.

8. No sentiments: Dont become sentimental with your stocks. Successful investors sell their stocks when they reach target. There should be specific reason to hold your stock even after it attains your target price.

 

[del_66]

Hi saint heard that its your birthday tomorrow... wish you many many happy returns