Sunday, February 11, 2007

Predicting the Future

That's what we are always trying to do, learning from the gurus, experts and geniuses, but how many times were they right?

The truth is:-
No one knows where the market is going
No one knows when the market will move

When you try to predict where and when the market will move, you will not be objective anymore and get frustrated when the market don't move in the direction of your prediction.

Most expert make money not because they have predicted the market correctly, but because they traded the market correctly using sound trading practices and developing good trading habits.

The key to profits in trading is not in the prediction or the indicator, but how well the trading strategy is designed and executed. The ability to achieve risk control and cash management will make the difference between a successful trader and an unsuccessful trader.

The correct attitude for successful trading is to let the market tell you what to do. We always like to believe that we can be in control. We want to be in control of our trading and of the market. If you accept the notion right now that you cannot control the market, that all you can control is your execution of trades, you will take a great step towards being a successful trader.

Most traders failed because they don't have a TRADING PLAN to manage risk and control one's emotion.

One of the biggest problems new traders have is that they think they will make a large amount of money right away. They think they will get rick quick. They tend to be impatient, this will not work in trading. The only way you will really know whether you are successful trader is to be successful over time.

Most successful traders will tell you that the most difficult thing about trading is accepting the losing trade. We all have the desire to be right, to be correct all of the time. For novice traders, the losing trade means that something is not working and that you have somehow made a mistake. For experienced traders, losses are just the cost of doing business.

Thursday, February 8, 2007


Came across this interesting article from Charlie Wright,

Probably the most interesting rule for successful trading is to Buy High and Exit Higher, and Sell Low and Exit Lower. This is counter-intuitive to what we all have a natural inclination to do, which is Buy Low, Sell High. Most great trading strategies are counter-intuitive. They are not based on our normal human nature and the normal human reaction to the markets.

They consistently make money because they are designed with market sense not human sense.

Any market is just a collection of individuals making decisions and placing money in the market based on these decisions. Most of these individuals are doing what comes naturally to humans, buying low and selling high. Statistics show that 95% of these people lose money.

To be successful trader, you have to do the opposite of what this 95% is doing. It isn't easy, because it goes against your human nature. But any strategy that is successful over time will most likely follow the rule of Buy High, Exit Long Higher and Sell Low, exit Short Lower.

Do you agree with him?

You don't have to.

But, if you are in the 95% group, then think hard about it.