SUCCESS!!!???
SUCCESS!!!???
Success demands you stay focused. Going on tilt over losses due to small stop losses, bad timing, having full time job, etc. – are excuses to humans seeking excuses. True professionals understand stalking currency pairs and managing risk management until finding Zero Risk trades that run.
Do you spend quality time sulking over bad trades for an extended period?
History and many in-house surveys suggest students that experience at least three consecutive bad trades begin to seriously doubt their abilities. Reader’s Digest version: They FREAK out and start to revert back to old habits, due to inexperience.
Humans revert back to old habits, a comfort zone when times go bad learning a new craft. I’m amazed at amount of people throwing money around for software searching for easy access to profits. Most never withstand the onslaught of understanding how to deal with losses.
Without learning how to deal with losses, traders will never fully grasp or understand the wins. Risk management is vital to one’s continued success. Embrace losses. Don’t accept them, but embrace losses as part of the journey.
This will be a key to those trading live accounts. Learning to accept losses without fear, self-doubt, regret and knowing your trading plan will produce over the long haul. Another term I use is called the Laws of Probability. My strength is in using numbers where I have the edge in advance.
This brings calm and confidence to seasoned traders.
How can you make the best of a setback?
First, identify what you did right and what you did wrong. Sometimes a trade goes wrong because you were in a bad mood. Perhaps you were stressed out or tried to risk too much money. Perhaps you didn’t prepare far enough in advance for a trade. Maybe your trading approach was inappropriate for current market conditions. You may had a small stop loss and bad timing caused a reversal to take you out before the pair turned around and went in direction you thought.
Things may have not gone your way because you did not trade under optimal conditions. It’s necessary, however, to identify those conditions where you trade at your best and to trade under those conditions
Second, don’t be afraid to identify what you did wrong and admit it. The biggest obstacle to improving your trading approach is to deny you have limitations and to try to cover them up. We usually engage in such deceptions because we believe that we cannot overcome our limitations. If we have the courage to admit what we did wrong, however, we can be more open to change.
Third, it’s vital to be committed to making a change. You must be willing to do whatever it takes to change. Making a change is difficult, and if your heart isn’t it in, you will find a variety of reasons to not change. In the end, you must make the decision to change in order to actually change. You cannot just think, “I would like to change or it would be advantages to change,” but you must think, “I am determined to make a change.”
Finally, you must maintain optimism. You must believe that change is possible and that if you work hard enough, you will achieve the change you desire.
When searching for success as a trader, it’s vital to continue to improve. You must pick yourself up after a setback. When your ego is hurt, you cannot wallow in self-pity. You must get up and fight. Losses are only setbacks if you think of them that way. Rather than see a loss as a tragedy, look at it as a stepping stone on the path to more profitable trading.
Success is a lousy teacher. It seduces smart people into thinking they can’t lose.
–Bill Gates
Success demands you stay focused. Going on tilt over losses due to small stop losses, bad timing, having full time job, etc. – are excuses to humans seeking excuses. True professionals understand stalking currency pairs and managing risk management until finding Zero Risk trades that run.
Do you spend quality time sulking over bad trades for an extended period?
History and many in-house surveys suggest students that experience at least three consecutive bad trades begin to seriously doubt their abilities. Reader’s Digest version: They FREAK out and start to revert back to old habits, due to inexperience.
Humans revert back to old habits, a comfort zone when times go bad learning a new craft. I’m amazed at amount of people throwing money around for software searching for easy access to profits. Most never withstand the onslaught of understanding how to deal with losses.
Without learning how to deal with losses, traders will never fully grasp or understand the wins. Risk management is vital to one’s continued success. Embrace losses. Don’t accept them, but embrace losses as part of the journey.
This will be a key to those trading live accounts. Learning to accept losses without fear, self-doubt, regret and knowing your trading plan will produce over the long haul. Another term I use is called the Laws of Probability. My strength is in using numbers where I have the edge in advance.
This brings calm and confidence to seasoned traders.
How can you make the best of a setback?
First, identify what you did right and what you did wrong. Sometimes a trade goes wrong because you were in a bad mood. Perhaps you were stressed out or tried to risk too much money. Perhaps you didn’t prepare far enough in advance for a trade. Maybe your trading approach was inappropriate for current market conditions. You may had a small stop loss and bad timing caused a reversal to take you out before the pair turned around and went in direction you thought.
Things may have not gone your way because you did not trade under optimal conditions. It’s necessary, however, to identify those conditions where you trade at your best and to trade under those conditions
Second, don’t be afraid to identify what you did wrong and admit it. The biggest obstacle to improving your trading approach is to deny you have limitations and to try to cover them up. We usually engage in such deceptions because we believe that we cannot overcome our limitations. If we have the courage to admit what we did wrong, however, we can be more open to change.
Third, it’s vital to be committed to making a change. You must be willing to do whatever it takes to change. Making a change is difficult, and if your heart isn’t it in, you will find a variety of reasons to not change. In the end, you must make the decision to change in order to actually change. You cannot just think, “I would like to change or it would be advantages to change,” but you must think, “I am determined to make a change.”
Finally, you must maintain optimism. You must believe that change is possible and that if you work hard enough, you will achieve the change you desire.
When searching for success as a trader, it’s vital to continue to improve. You must pick yourself up after a setback. When your ego is hurt, you cannot wallow in self-pity. You must get up and fight. Losses are only setbacks if you think of them that way. Rather than see a loss as a tragedy, look at it as a stepping stone on the path to more profitable trading.
Success is a lousy teacher. It seduces smart people into thinking they can’t lose.
–Bill Gates
Trading Glossary - Part I (A-F)
ADX:
Trend strength oscillator originally developed J. Welles Wilder Jr. that fluctuates between 0 and 100.
BEAR FLAG:
Classic bar chart pattern that occurs in a trending market, a bearish continuation pattern.
BEAR TRAP:
A bear trap occurs when the market breaks below chart support, bringing traders in on the short side, then quickly reverses, trapping traders with losses.
BREADTH:
The difference between the number of advancing issues and the number of declining issues on the NYSE.
BREAKOUT TRADE:
A trade that occurs when the market breaks above or below some pre-define range, usually a nearby support or resistance levels such as the previous day's high or low, or the last 60 minutes high/low. Breakouts are often associated with low volatility readings.
BULL FLAG:
Classic bar chart pattern that occurs in a trending market, a bullish continuation pattern.
BULL TRAP:
A bull trap occurs when the market breaks above chart resistance, bringing traders in on the long side, then quickly reverses, trapping traders with losses.
CREEPER MARKET:
A market that slowly creeps higher without a significant retracement. One of the strongest types of trending action that does not catch people's attention.
DIVERGENCE:
A divergence is indicated when momentum fails to confirm a new low or new high in the price. Divergences usually show up best with oscillators such as the 3/10 and 5/35 MACD.
EDGE:
Term used to describe when a trader has the advantage or a favorable margin. It is even better when this margin can be quantified statistically.
EMA:
Exponential Moving Average. We generally use a 13 or 21-period setting.
EQUILIBRIUM LEVEL:
The point at which buyers and sellers are in balance. Coincides with a neutral chart point that is often at the end of a consolidation period.
EVENT RISK:
The risk that some unexpected event will cause a substantial change in the market value of a security. For example, missed earnings, lawsuits, crop failures, war, etc.
FADE:
A countertrend trade.
FAIR VALUE:
Fair value reflects the relationship between stock index futures and the index's current levels. It is a theoretical estimate of where the futures should be trading based on their underlying cash index with short-term interest rates and dividends factored into the calculation. Determining the fair value relationship between the Nifty futures contract and the underlying Nifty index requires adding the cost of borrowing the money to buy the Nifty stocks, while subtracting the gain these stocks pay in dividends.
FILL OR KILL:
This means do it now if the stock is available in the crowd or from the specialist, otherwise kill the order altogethe
Trend strength oscillator originally developed J. Welles Wilder Jr. that fluctuates between 0 and 100.
BEAR FLAG:
Classic bar chart pattern that occurs in a trending market, a bearish continuation pattern.
BEAR TRAP:
A bear trap occurs when the market breaks below chart support, bringing traders in on the short side, then quickly reverses, trapping traders with losses.
BREADTH:
The difference between the number of advancing issues and the number of declining issues on the NYSE.
BREAKOUT TRADE:
A trade that occurs when the market breaks above or below some pre-define range, usually a nearby support or resistance levels such as the previous day's high or low, or the last 60 minutes high/low. Breakouts are often associated with low volatility readings.
BULL FLAG:
Classic bar chart pattern that occurs in a trending market, a bullish continuation pattern.
BULL TRAP:
A bull trap occurs when the market breaks above chart resistance, bringing traders in on the long side, then quickly reverses, trapping traders with losses.
CREEPER MARKET:
A market that slowly creeps higher without a significant retracement. One of the strongest types of trending action that does not catch people's attention.
DIVERGENCE:
A divergence is indicated when momentum fails to confirm a new low or new high in the price. Divergences usually show up best with oscillators such as the 3/10 and 5/35 MACD.
EDGE:
Term used to describe when a trader has the advantage or a favorable margin. It is even better when this margin can be quantified statistically.
EMA:
Exponential Moving Average. We generally use a 13 or 21-period setting.
EQUILIBRIUM LEVEL:
The point at which buyers and sellers are in balance. Coincides with a neutral chart point that is often at the end of a consolidation period.
EVENT RISK:
The risk that some unexpected event will cause a substantial change in the market value of a security. For example, missed earnings, lawsuits, crop failures, war, etc.
FADE:
A countertrend trade.
FAIR VALUE:
Fair value reflects the relationship between stock index futures and the index's current levels. It is a theoretical estimate of where the futures should be trading based on their underlying cash index with short-term interest rates and dividends factored into the calculation. Determining the fair value relationship between the Nifty futures contract and the underlying Nifty index requires adding the cost of borrowing the money to buy the Nifty stocks, while subtracting the gain these stocks pay in dividends.
FILL OR KILL:
This means do it now if the stock is available in the crowd or from the specialist, otherwise kill the order altogethe
Trading Glossary - Part II (G-O)
GOLF:
A mechanical trade that is made in the index futures that is entered on the close of the day.
GRAIL:
A trade set-up based on a pullback to the 20 period EMA after the 14 period ADX has risen above 30. Pullback in rallies are bought, and pullbacks in declines are sold short. This pattern was discussed at lenght in Street Smarts book.
IMPULSE:
Increase in the market momentum. Impulse moves tend to happen in the direction of the trend. On a bar chart they have the appearance of a sharp markup or markdown.
INSTITUTIONS:
Mutual funds, pension funds, banks, and large commercials.
KELTNER CHANNELS:
A 'trading band' indicator that is displayed on top of price charts. Similar to Bollinger Bands but calculated differently, using true-range rather than standard deviation.
LAST CALL:
Trade that setups up in the last hour of a trend day.
LOAD THE BOAT:
Use full line of leverage.
MACD:
An oscillator based on the difference between two moving averages. We use the difference between a 3 and 10-period simple moving average or 6 and 13-period simple moving average.
MARK UP:
A Wyckoff term, used to denote the phase of the market where prices rise, from the beginning of a bull market to its top.
MARKET LEADERSHIP:
Market leadership refers to those sectors and industries that are currently bringing in the best returns.
MARKET ORDER:
An order to buy or sell a stock immediately at the best available current price. A market order guarantees execution.
MIT:
Market-if-touched order. An order which becomes a market order if the specified price is reached.
MOC:
Market-on-close order. A buy or sell order which is to be executed as a market order as close as possible to the end of the day.
MOMENTUM:
The difference between the last price and the price N-numbers bar. A 2-period Rate of Change (ROC) is the same as a 2-period Momentum.
NR7:
The narrowest high-low range of the past seven days.
OOPS TRADE:
A term originally coined by Larry Williams which refers to a market that gaps below the previous day's low (or above the previous day's high) and then quickly reverses its direction.
OOZE:
Down trending price action that slowly inches down without any upward reactions of any magnitude. One of the strongest forms of trending action.
OPENING BULGE:
Period after the opening when the public has a tendency to pay too high a price.
OPENING PLAY:
The markets first tendency of the day.
OUCH SETUPS:
When a market Closes in the upper 75% of its range but then gaps lower the next day around the previous day's low (vice versa to the upside).
OVERHEAD SUPPLY:
Are where the market had found support in the past but the price is currently trading lower.
A mechanical trade that is made in the index futures that is entered on the close of the day.
GRAIL:
A trade set-up based on a pullback to the 20 period EMA after the 14 period ADX has risen above 30. Pullback in rallies are bought, and pullbacks in declines are sold short. This pattern was discussed at lenght in Street Smarts book.
IMPULSE:
Increase in the market momentum. Impulse moves tend to happen in the direction of the trend. On a bar chart they have the appearance of a sharp markup or markdown.
INSTITUTIONS:
Mutual funds, pension funds, banks, and large commercials.
KELTNER CHANNELS:
A 'trading band' indicator that is displayed on top of price charts. Similar to Bollinger Bands but calculated differently, using true-range rather than standard deviation.
LAST CALL:
Trade that setups up in the last hour of a trend day.
LOAD THE BOAT:
Use full line of leverage.
MACD:
An oscillator based on the difference between two moving averages. We use the difference between a 3 and 10-period simple moving average or 6 and 13-period simple moving average.
MARK UP:
A Wyckoff term, used to denote the phase of the market where prices rise, from the beginning of a bull market to its top.
MARKET LEADERSHIP:
Market leadership refers to those sectors and industries that are currently bringing in the best returns.
MARKET ORDER:
An order to buy or sell a stock immediately at the best available current price. A market order guarantees execution.
MIT:
Market-if-touched order. An order which becomes a market order if the specified price is reached.
MOC:
Market-on-close order. A buy or sell order which is to be executed as a market order as close as possible to the end of the day.
MOMENTUM:
The difference between the last price and the price N-numbers bar. A 2-period Rate of Change (ROC) is the same as a 2-period Momentum.
NR7:
The narrowest high-low range of the past seven days.
OOPS TRADE:
A term originally coined by Larry Williams which refers to a market that gaps below the previous day's low (or above the previous day's high) and then quickly reverses its direction.
OOZE:
Down trending price action that slowly inches down without any upward reactions of any magnitude. One of the strongest forms of trending action.
OPENING BULGE:
Period after the opening when the public has a tendency to pay too high a price.
OPENING PLAY:
The markets first tendency of the day.
OUCH SETUPS:
When a market Closes in the upper 75% of its range but then gaps lower the next day around the previous day's low (vice versa to the upside).
OVERHEAD SUPPLY:
Are where the market had found support in the past but the price is currently trading lower.
Trading Glossary - Part II (P-Z)
(P-Z) PIVOT:
A market reference point. Our most frequently used pivots are swing highs and swing lows such as the high and low of a daily bar or the highs and lows of the hourly cycles.
PREMIUM (Nifty's):
When the price of an index future is trading greater than Fair Value.
RAT TRADE:
An afternoon breakout trade that is made in the generally taken place after 02:15 PM.
RESISTANCE:
Area where Sellers have come in the past.
ROBUST:
Refers to a method or system that is profitable across a variety of markets, time frames and parameters. It is the opposite 'curve-fit' or 'optimized.'
SCALP:
A Short-term trade that capitalizes on the market's smaller fluctuations.
SHAKEOUT FAKEOUT:
A sharp downward move following an area of distribution that quickly reverses itself and comes back up through the distribution area.
SHORT SKIRT:
The name of a very short term pattern trade taken on a one-minuteNifty futures charts. A form of pullback trade on a very short time frame.
SKIDS:
Slippage or the difference between the price that a stop order was placed and the actual fill price.
SLOP AND CHOP:
Action in the market when institutions are absent and liquidity is poor.
SMA:
Simple Moving Average.
SPRING:
Originally a Wyckoff term, is used to denote an impulsive move often associated with a test of support. See also 'Upthrust.'
STOP ORDER:
An order that becomes a market order when the price touches that level.
SUPPORT:
Area where buyers have stepped in the past.
SWEET STUFF:
Nickname for the sugar futures.
THREE PUSHES:
A characteristic pattern that occurs near important turning points. Usually three distinct 'test' of a high or low level, followed by a reversal.
TICK:
Smallest increment that a price can change. 1 tick on an Nifty contract = .05 points, which is the equivalent of Rs. 2.50.
TICKS:
The difference between the number of issues on the NSE that are trading UP from the last trade versus the number of issues that are trading down.
TREND DAY:
A day where the market opens on one end of its range, closes on the opposite end, shows range expansion and has an increase in volume.
TRIGGER:
Level at which a trade will be initiated if a market trades to that price.
TRIN:
The TRIN (also know as the Trading Index and the ARMS Index) was invented by Richard Arms in the 1970s. It is calculated as follows: (Advancing issues / Declining issues) divided by (Advancing volume / Declining volume). If the index is above one, the average volume of stocks that fell on the NSE was greater than the average volume of stocks that rose. If the index is below one, then the converse is true.
UPTHRUST:
Originally a Wyckoff term, is used to denote an impulsive move often associated with a test of resistance. See also 'Spring.'
VIX:
VIX is a weighted measure of the implied volatility for put and call options. VIX represents the implied volatility for this hypothetical at-the-money option.
VOLATILITY:
The range of the price action over N -Number of bars.
WEDGE:
A low volatility point in which a triangle type formation can be drawn on the bar charts. The market can break out in EITHER direction from this formation.
WHIPSAW:
Is when the market rapidly reverses its direction several times in succession.
"Z" DAY:
A consolidation day that typically follows a trend day
A market reference point. Our most frequently used pivots are swing highs and swing lows such as the high and low of a daily bar or the highs and lows of the hourly cycles.
PREMIUM (Nifty's):
When the price of an index future is trading greater than Fair Value.
RAT TRADE:
An afternoon breakout trade that is made in the generally taken place after 02:15 PM.
RESISTANCE:
Area where Sellers have come in the past.
ROBUST:
Refers to a method or system that is profitable across a variety of markets, time frames and parameters. It is the opposite 'curve-fit' or 'optimized.'
SCALP:
A Short-term trade that capitalizes on the market's smaller fluctuations.
SHAKEOUT FAKEOUT:
A sharp downward move following an area of distribution that quickly reverses itself and comes back up through the distribution area.
SHORT SKIRT:
The name of a very short term pattern trade taken on a one-minuteNifty futures charts. A form of pullback trade on a very short time frame.
SKIDS:
Slippage or the difference between the price that a stop order was placed and the actual fill price.
SLOP AND CHOP:
Action in the market when institutions are absent and liquidity is poor.
SMA:
Simple Moving Average.
SPRING:
Originally a Wyckoff term, is used to denote an impulsive move often associated with a test of support. See also 'Upthrust.'
STOP ORDER:
An order that becomes a market order when the price touches that level.
SUPPORT:
Area where buyers have stepped in the past.
SWEET STUFF:
Nickname for the sugar futures.
THREE PUSHES:
A characteristic pattern that occurs near important turning points. Usually three distinct 'test' of a high or low level, followed by a reversal.
TICK:
Smallest increment that a price can change. 1 tick on an Nifty contract = .05 points, which is the equivalent of Rs. 2.50.
TICKS:
The difference between the number of issues on the NSE that are trading UP from the last trade versus the number of issues that are trading down.
TREND DAY:
A day where the market opens on one end of its range, closes on the opposite end, shows range expansion and has an increase in volume.
TRIGGER:
Level at which a trade will be initiated if a market trades to that price.
TRIN:
The TRIN (also know as the Trading Index and the ARMS Index) was invented by Richard Arms in the 1970s. It is calculated as follows: (Advancing issues / Declining issues) divided by (Advancing volume / Declining volume). If the index is above one, the average volume of stocks that fell on the NSE was greater than the average volume of stocks that rose. If the index is below one, then the converse is true.
UPTHRUST:
Originally a Wyckoff term, is used to denote an impulsive move often associated with a test of resistance. See also 'Spring.'
VIX:
VIX is a weighted measure of the implied volatility for put and call options. VIX represents the implied volatility for this hypothetical at-the-money option.
VOLATILITY:
The range of the price action over N -Number of bars.
WEDGE:
A low volatility point in which a triangle type formation can be drawn on the bar charts. The market can break out in EITHER direction from this formation.
WHIPSAW:
Is when the market rapidly reverses its direction several times in succession.
"Z" DAY:
A consolidation day that typically follows a trend day