Original Traders Corner

Original Trader's Corner      
                                                               

 

By Sam Shenker, Professional Trader

 

samshenker@gmail.com

 

Meditations of a Trader
:

 

I'm
a trader, that what defines me as me. In order to become a trader, a
person must identify him or herself as a trader. In order to be a
trader one must become one with the market, with the price, with one's
self. As I meditate on the price there is nothing else, no time, no
distractions, and no world outside of the purity of the price. As I
mediate on the direction of the price and ask market for guidance, I
remain humble and thankful for every lesson the market is willing to
teach me for I'm a willing student, a trader and myself. As I become
one with the price and seek the future path, I'm a trader and
understand that there is no direct route where I want to get, but I'm
not lost because I follow the price. Only the price knows where it
wants to go, it speaks and I listen, and if I listen correctly I will
be rewarded and if I make a mistake I will be punished, but I remain a
patient and willing student, a trader and myself. And I thank the
market for every lesson that I learned, continue to learn and will
learn in the future, for I'm a trader and that is my true self.

Original Traders Corner:

 

It's
hard to take a loss, but as a trader that what you do, you take losses
along with profits, its how you handle them, that is the ultimate
resolve. Cut your losses and let your profit run, but over 95% of
traders tend to grab a quick profit and let the losses run, and in the
long run they run out of trading capital and move on with their lives.
It's easy to take profits and hard to let them run and it's easy to let
the losses run and hard to take them, because psychologically it's not
a loss if it's not taken, but reality dictates otherwise. In order to
become a successful trader you must go against the human nature of
hopes and dreams and learn how to face reality.

 

It
is psychologically hard to take a loss, most traders try not to take
losses and let them run, but an unrealized loss is still a loss and by
not covering it a trader will face a dilemma of shirking capital.
Capital is trader's inventory, something to be deployed when the right
opportunity comes around, but by letting the loses run and hanging to
such notions as hopes and dreams, which do not exist in a market,
something that this trader learned the hard way, the trader will
eventually run out of trading capital and will face a dilemma of taking
a loss or adding more money to a losing position. In order to become a
successful, a trader must first learn how to take the loss, loses are
inevitable no matter if you are professional or a novice, its how the
trader deals with them that what separates novices from professionals.

 

What
fascinates me the most about traders is how they deploy their capital,
they will nurse losses and quickly grab profits, but that just negates
the risk/reward ratio. Risk/reward ratio is something a trader must
establish before he or she enters and exits the trade. Always keep the
risk/reward at least at one, because if the trader takes a loss it will
take one successful trade to recover the loss. If the risk/reward is
below one it becomes negative and unfavorable as trader need to make a
higher number successful trades to make up the loss and by doing so
once again exposes the capital to a higher loss. I as a trader I never
enter a trade unless I can have at least between 4 to 10 risk/reward,
but I do not trade often and wait for extended periods of time for a
potential trade to surface. The tradeoff is this, if the trader trades
short-term keep the risk/reward lower, anywhere between 2 and 3 to 1
when entering a large number of trades. The reason behind the lower
risk reward is lower profit targets and shorter holding period because
it's very hard to make more than you can within lower timeframe. This
trader trades long-term, I can be in a position for weeks and months at
a time, that is why I seek a higher risk reward, but once again the
downside is I trade less frequently and my stops sometimes exceed over
100 pips.

 

As
a trader one of the hardest lessons I learned is humility and how to be
humble when trading the market. When the trader becomes successful he
or she feels invulnerable that is when the market will remind you who
you are. The best trade sometimes is the one not taken. The best thing
to do sometimes is to walk away. Always be humble, no matter if you are
running a $10,000 mini account or a multi-billion dollar hedge fund,
the market will take your money equally, and it does not discriminate.
As a trader I always treat the market with respect, because if you
respect and listen to the market it will give you the answers that you
seek, always remember that in a market you are alone, its only you and
the market no matter what happens the market is always right, it's the
trader who can be on the wrong side of it. Learn humility and be
humble, respect and listen to the market and in turn you will be a
successful trader, but never let success go into your head because the
market will punish you for your arrogance and always be thankful for
the lessons the market teaches you, no matter what the price is.

 

Why
do we trade? Money, financial freedom, recognition, success, maybe.
Those all good reasons to trade, but they ultimately lead to vanity and
greed and that leads to devastation. Greed is the worst motivation for
trading; market will always punish greed and will always reward
moderation. Never try to make all of the money in one trade; you can't
place everything on the outcome of one trade, if the trader does that,
than I see no future for that trader, because he or she is not trading,
but gambling. There is a fine line between traders and gamblers,
because when there is money there are always those taking blind
chances. If you want to succeed as a trader, do not think like a
gambler, do not take blind chances and do not rely on luck because luck
comes and goes just like a gambler, it's the trader who remains.

 

As
a trader I learned never to add to a losing position, a common mistake
made by most traders. Yes I will agree with critics that will say that
is will lower the breakeven level for the trade, but that only works
when the price reverses its direction and heads in the direction of the
trade. But what if the price continues to go against the trader, what
now, losses are beginning to mount at a greater pace because trader
increased the size, most traders just add to the position and hope for
a break and a reversal, and that is where they get their break, its
called a margin call, not the best stop a trader can use. The worst is
seeing the market reverse direction and "runaway" from the trader. So
the trader is now sitting with a big loss, being right in his or her
initial judgment and seeing the market move their way adding an insult
to the injury. DON'T BLAME THE MARKET FOR YOUR MISTAKES, BLAME
YOURSELF. Mistake number one is adding size to a losing position, (if
you are long/short and wrong don't add size until position shows you a
profit) and next mistake blaming the market for your own mistakes.

 

As
a trader I'm the only one responsible for my own decisions and for my
own actions, because I'm the only one who has to live with the
consequences of the decisions that are made by me. It does not matter
whether you will be right or will be wrong, eventually you will be
proven to be either way, the trick is to understand and accept the
consequence of the decision. When I trade I know that there are two
outcomes, a gain or a loss and mentally ready for both, because if you
can't accept the responsibility for your own actions that you should
not be in the market to begin with. As a trader I rely on my own
choices and draw my own conclusions, I will listen for an advice but
will act according to my own judgment; I never let someone else make
decision for me. Why do most traders instantly turn to someone else for
help when their trades go bad, the answer is simple, it's a human
trait, shift the blame on someone else, let someone else make the
decision for you. What happens when there is no one around to stop you,
learn to make your own mistakes, learn how to learn from them and learn
to make your own decisions, only than you will become a real trader.

 

Reality
or wishful thinking, it's a very delicate balance when it comes to
trading. As a trader I always learned not to let the wishful thinking
cloud my judgment. I never let such notions as hopes and dreams distort
the reality of the market. At one point when I found myself grasping at
straws in a sinking trade I realized that no matter what I think, wish
or hope, the market will do what its need to do, the only thing I can
do is accept reality of being wrong, close the trade, take a loss and
stay out until I can get myself to think rationally. Most traders
instantly feel the urge to get their money back from the market and
start trading with a vengeance and by doing so make even more mistakes
and sink their account deeper into loss. Never let emotions cloud your
judgment, never try to instantly make your money back, you will only
lose more. The best thing to do is to walk away and try again after
clearing your head no matter how long it takes, that what separates
professionals from amateurs.

 

As
a trader, I learned not to force trades. I learned the hard way not to
push the trades just because I'm bored and there is nothing to do.
Market does not always have a trade available, so the best thing to do
in situation like this is not to do anything and be patient. Sometimes
the best action is the one not taken. But what happens when you go
ahead and push anyway, answer is simple, you lose and if you push again
you will lose again. The key to becoming a successful trader, knowing
when to stop yourself. A trader must, MUST, know how and when to stop
trading and stay out of the market. It's hard to stop, but it's
important to stop and walk away for sometime when the trades are not
going your way, because losing on a couple of trades can turn into a
losing streak.
  If the trader can't stop trading, he or she will stop eventually when the account runs out of the money. 

 

One
of the most common mistakes traders seem to make is position size. Most
traders instantly size up their positions after only few successful
trades that they were lucky to be involved in, and that is a bad
mistake. Size is a double-edged sword, which can cut the trader with
either edge, because size will not only magnify profits, but will also
magnify loses. Another common mistake is increasing the size of the
next position after a losing trade in an attempt to recover the losses.
That is when the trader is most vulnerable, because he or she is not
only emotional because of the loss, but also an increased size can push
the account deeper into loss. As a trader I learned the hard way to
bring my size down when my trades are not going my way, not the other
way around, because when my trading is suffering, my account should
not. Loss of capital will hinder the trader's ability to recover the
losses and eventually will force the trader out of the market. Size
does matter when it comes to trading; initial position size must always
reflect the size of the account.

 

As
a trader I learned that it is always important to understand the
failure of success and I mean exactly the failure of success. As trader
becomes more and more successful in his or her trading, there is a
moment when the trader believes that he or she is a great trader and
nothing will ever again go wrong, WRONG, that is when the trader is
most vulnerable to him or herself, because that is when the trader has
the biggest position size he or she ever traded. But that's is where
disaster might strike because the trader's success can cloud the
judgment by what I call a self-proclaimed invulnerability, a thought
that the trader knows everything that he or she needs to know about
trading the market. A thought such as this is ultimately will lead to
the trader's demise, because if something stops working or the market
conditions change and trader still believes in his own hype, he or she
will become a victim of own success. Never think that if you are that
good, you can always be better, there is always room for improvement.
Markets change and in order to remain successful, the trader must
change as well, remain humble, never become a victim of a
self-proclaimed invulnerability and remember to learn from the market
and be thankful for the lessons.

 

As
a trader, one of the lessons I learned the hard way is to not
overtrade. Overtrading will lead to a substantial loss, because every
time the trader enters the market, he or she exposes the capital to the
market, because an increased number of trades will not instantly
translate into profits and may increase the amount of losses the trader
will sustain. Also with an increased amount of trading activity,
increases the amount of execution cost, which includes spread,
commissions and slippage. The most common misconception amongst the
novice traders is that the trader has to be constantly in the market,
but by being in the market all the time the trader does not give him or
herself a chance to pause and will eventually lose because of the
unfavorable market conditions. There are times when I trade, and there
are times when I stay out, because if I don't see any trades I will not
trade. Trading out of boredom is the worst reason to be in the market.
Patience, patience, patience. Patience is one of the keys to becoming
successful trader, patience will keep the trader from overtrading and
by being patient a trader has enough time to observe and look for a
potential setup for the next trade. Remember it's not the quantity of
trades, but the quality of a trade.

 

A
lesson that I learned as a trader is never to chase trades, because by
chasing the trade and entering at another level alters the original
risk/reward and violates the trade setup. Traders who chase the trade
will most of the time find the price going against them, which
instantly increases the probability of being stopped out or even taking
a larger than anticipated loss, and its all due to the eagerness of the
trader to establish a position. Never chase trades, because by the time
you catch it, the trade is not the same that your original setup called
for, and that makes the risk/reward unfavorable. Other mistake traders
make is becoming "hang-up" on a missed trade. Key to success in trading
is not to pay attention to the trades that the trader has missed, but
rather keep the attention focused for the potential trades that will
occur in the future. A missed trade serves as a confirmation that the
trader is correct in his or her analysis and missed setup should be
used to look for potential trade in the future. Remember: "Loss of
Opportunity is Better than the Loss Of Capital". 

 

As
a trader I learned how to learn from my own mistakes and from the
mistakes made by other traders. The most common mistake is not to admit
that you are wrong, accept the consequence of the wrong decision and
close the trade. Instead what most traders do, they let their pride
takes over and they hang on to a losing position because they are
afraid to admit that they were wrong. Pride has no place in the market,
pride can lead to devastating losses, especially when the trader had a
successful run and feels invincible. I'm only proud of one thing, that
I have no problem admitting when I'm wrong and move on to another
trade, which is why I use stop loss to minimize the damage of my
mistakes. Mistakes should be used as a learning experience, I may not
know all of the things that work, but I do know what does not work and
will not repeat the same mistake twice, or at least not the third time.

 

As
a trader I have learned that size of the position does matter, because
size is a double-edged sword, it magnifies both profits and losses. The
most common mistake made by the novice traders is to instantly increase
the size of their positions in an attempt to magnify their profits, but
instead they mishandle the size and increase the loses, and by doing so
the trader gets aggravated and yet once again increases the position
size of the next trade in an attempt to bring back the account balance,
thus exposing the account to a bigger potential loss. Another downfall
of an increased position size is that any normal price fluctuations
will be magnified proportionally by the size of the position, and if
the trader has leveraged his of her account in an attempt to maximize
the profits, he or she will face a possibility of a margin call, loss
of capital and loss of a position. The worst outcome of overleveraging
and sizing up is a margin call, a loss of capital and subsequent move
in the right direction, thus leaving the trader to blame him or herself
for the mistake. The key to trading is to know that profits do not
happen instantly and by increasing size of the position, the trader
will not only maximize profits, but will also maximize losses. In order
to stay in the market and withstand the short-term volatility, a trader
must learn how to adjust the position size according to the account. In
order to maximize the profits and minimize the losses, this trader uses
a "perfect" leverage technique, where the size of each individual
position will not affect the overall account, even in times of extreme
volatility.
 

 

As
a trader I learned that one of the cornerstones in trading, and I mean
successful trading is money management, and what fascinates me about
most traders is how they trade without protective stops. A stop is not
an option when it comes to trading, its mandatory for preserving the
capital and must be used to take out the guessing of should I close the
losing trade or maybe it will turnaround, This type of thinking can
sink trader's account deeper into loss, because no stop and no decision
combined with hesitation and wishful thinking is a recipe for disaster.
Stop is a hard loss, a trader MUST NEVER TRADE WITHOUT THE STOP LOSS.
Trading without a stop exposes trader's capital to an unlimited loss;
trader must never enter a trade with potentially unlimited loss. Key to
trading is to keep the losses to the minimum, while maximizing profits.
Losses are inevitable; it's how soon the trader is willing to deal with
them, because a small loss without the stop can easily snowball into an
avalanche and wipeout the trader's account. Do not be proud, use stops;
no one is right 100 percent of the time, NO ONE, including myself.
Every time I enter the trade, I already have a predetermined stop;
because the only known in a trade is how much I'm willing to lose, and
I never lose more than I risk. A trader must never lose more that he or
she risks on a trade while keeping the risk/reward positive.

 

As
a trader, the most valuable lesson I have learned is to adapt to
changing market conditions, because what worked yesterday will not
necessarily work today or tomorrow. Most common mistake made by traders
is to stick to the strategy that stopped working, it does not matter is
the strategy produced favorable returns in the past, now is the present
and tomorrow is the future. As traders we do not trade the past, we
trade the future. As time progresses market participants change, rules
change, price action changes, so why does the trader persists on doing
something that does not work anymore, answer is simple human pride, do
not be proud, admit that you are wrong and change what does not work.
My advice has always been to traders, "If it works use it, if it does
not change it". I utilize an adaptable and self-learning fully
discretionary trading system, which I constantly adjust to changing
market conditions, because if the trader does not change with the
market, he or she will be left behind. My advice for my readers is to
follow the 3C's and 3L's of trading and you will be successful. "3C's:
Confidence, Consistency and Compounding and 3L's: Levels, Leverage and
Liquidity".

 

As
with any markets there are times for action and there are times for
inaction. This trader believes that in order to be successful, trader
must remain vigilant and not tire him or herself out by chasing
everything single price tick. Price chasing must be replaced with
caution, patience and vigilance. As a trader I learned that it's
impossible to trade every day, I do not trade every day, I trade when
there are trades and I stay out of the market when I do not see any.
Trader must not be in the market when there is nothing going on, do not
trade if you do not see any trade setups or the market conditions do
not conform with your trading methodology. Trade only when you see
something; do not trade when you don't see anything. NEVER TRADE JUST
TO BE IN THE MARKET

 

As
a trader I'm constantly reminded by the market to remain humble and
respectful, because when I forget and fall into a trap of thinking that
I'm better and more skillful than I'm actually am the market will
remind me and give me a warning. Most common mistake made by traders
after they make just a few successful trades is to fall into a mental
trap and think that they are good, really good and that they can do
anything and the market is their playground. WRONG. The market has a
tendency to warn and remind you of whom you are, the key to becoming
successful trader is to listen to the market and heed to the warning.
It's important for the trader to remain humble and learn the limits and
capabilities that he of she posses. Because going beyond individual
limits and capabilities will only lead to a loss, or even worse a
series of losses, which can have a devastating impact on a trader both
emotionally and psychologically. NEVER THINK THAT YOU ARE BETTER THAN
YOU ACTUALLY ARE, NOBODY IS THAT GOOD, NO ONE, NOT ME, NOT YOU, NO ONE.
Always be humble and you will become successful.

 

As
a trader one of the lessons I learned is how to take losses. Learning
how to take losses is one of the most important lessons a trader must
learn if he or she wants to remain in the market. Losses are
inevitable, no one is 100 percent right all the time. There will be
trading streaks where trade can have a number of successful consecutive
trades, but sooner or later the streak comes to an end and he or she
will take a loss. As that point it's very important not to lose one's
head, a trader must remain in control of him or herself. After taking a
loss, take a break and after regaining clear mind and an ability to
think logically only than trader can choose to reenter the market.
Don't hang up on a loss and never carry a prejudice against a loss, the
key to handle losses is to cut them quickly before a small loss becomes
a large one. Never think that you will escape losses, losses are just
like profits, it's all part of the trader's universe. LOSSES ARE
INAVITABLE, GET OVER THE LOSS AND MOVE ON TO THE NEXT TRADE.

 

As
a trader one of the lessons I learned the hard way never to be eager to
enter the market. Eagerness tends to lead to excitement and in turn it
tends to cloud rational thinking, which can lead to a loss or a series
of losses as trader did not allow him or herself enough time to asses
the market for potential trades and just entered the market because
it's moving and the trader does not want to be left behind. Its ok to
miss a trade, in order to be successful a trader must learn how to
control his or her emotions, never be eager to establish positions and
never enter the market on a whim, just because it's moving. Trader's
strongest asset is patience to wait for a high probability setup to
materialize, because if the trader is not patient, he or she will not
be trading for very long. If you feel the urge to trade just because
you are bored, get a cheaper hobby. Be patient and listen to the market
and you will be successful. PATIENCE IS A CORNERSTONE OF SUCCESS FOR A
TRADER.

 

As
a trader I learned the hard way that not every trade will be profitable
there will be losses, it's inevitable. One of the most common mistakes
made by amateur traders is that profits are easy to come by; WRONG
losses are easy to come by, not profits. Every time when I enter a
trade I know that I can and will lose on some of my trades and I accept
the reality of trading. Key to successful trading is to differentiate
what kind of trades dominate your trading, losing trades or wining
trades. If my losers exceed my winners I stop trading because its
obvious that something is not working or my trading strategy is not in
tune with the market. If I'm wrong on high number of my trades I
liquidate everything, because if I hold on to the positions in a
situation where my losers exceed winners, it's only a matter of short
period of time before my winners will also turn into losers. The best
thing to do is to take a break and start with a clean slate. IN THE
MARKET LOSSES ARE EASY, PROFITS ARE HARD.

 

As
a trader I learned the hard way that if I want to become a trader I
must first unlearn everything I knew about the market. As I began my
trading career my first lesson was never assume anything or take
anything for granted in the market. Most common mistake made by novice
traders is to think that trading is easy and fun, WRONG; trading is
hard and grueling task. Yes, I agree with my critics that trading can
be extremely rewarding, but it can also be devastating, both
financially and emotionally, for both experienced and inexperienced
traders. In market only the strong survive, and by strong I mean
consistent traders, consistency is one of the pillars of successful
traders. By being consistent trader will overtime build up his or her
confidence as well as the trading account. It's important to remember
that it's not how big the profits are its how consistent the trader is.
Always remember 3'C of trading: CONFIDENCE, COMPOUNDING AND
CONSISTENCY.

 

As
a trader I learned through my experience that there is no bull or bear
side of the market, there is only one side, which is the correct side.
Most of the novice traders lock themselves into one way thinking, they
make the most common mistake of choosing a side. As a trader I'm
neither bull nor bear, but a trader, I do not have a favorite side, I
trade the side that moves, and it does not matter whether the price is
heading up or down, as long as it moves in one direction and has a
follow through. As a trader I'm constantly on both sides of the market
at the same time, because in order to succeed I always maintain a buy
and sell scenario. I do not sell when the market goes up and do not buy
when the market goes down; I trade with the market and never against
it. In order to become successful a trader must remember, THERE IS NO
BULL OR BEAR SIDE IN THE MARKET, BUT THE CORRECT SIDE.

 

As
a trader I learned the hard way that there is no instant gratification
in the market. The most common mistakes made by novice traders are that
they expect constant price action and instant profits. Market does not
always move and there are periods where the price action is almost
non-existent, and as a trader I learned to stay out of the dull market
or at least not to carry a large position during those periods. But
what a novice trader does, he or she instantly sizes up the position in
order to maximize the potential return, because the market is not
moving and there is a need for gratification, price action and instant
profits. That is where the trader becomes a danger to him or herself,
because if there is an unexpected move against the trader, he or she
will be devastated by the size of the position. A trader must remember
that bigger size not only magnifies potential profits, but also
magnifies losses; never trade size in a dull market, patience is a key
to success because nothing ever happens instantly. THERE IS NO SUCH
THING AS INSTANT PROFITS, ONLY INSTANT LOSSES.

 

As
a trader one of the lessons I learned the hard way is never try to
trade everything I see and to keep my trading universe limited. Most
common mistake made by novice traders is trying to take on too many
positions at once. A danger of trading too many positions at one time
is losing one's focus thus increasing a chance of a loss. A trader must
understand that he or she is only human and must focus on a limited
number of opportunities. A higher number of instruments traded does not
necessarily translate into higher profit, instead as trader adds more
and more positions while trying to keep track of the previously opened
positions and the price action, he or she will eventually burnout and
lose focus. A loss of focus for a trader will translate into a loss in
the account because if he or she can't keep track of positions no one
else will, remember only you as a trader have vested interest in your
own success. Remember KEEP YOUR TRADING UNIVERSE LIMITED AND DON'T LOSE
FOCUS.

 

As
a trader one of the lessons I learned is to keep my trading strategy as
simple as possible. The most common mistake made by novice traders is
to use everything they learn at once and to keep strategies that do not
work. Another mistake is to make strategies to complicated, which can
be compared to a mechanism that has too many parts. A strategy that has
too many rules does not necessarily translates into a profitable
strategy, on the contrary the more moving parts the mechanism has the
more it's prone to failure. I personally keep my trading strategies
simple; I just don't deploy them all at once. The key to successful
trading is to know which strategy is appropriate in particular market
conditions and to discard the strategies that do not work. Never keep a
strategy that does not work, if it works use it, if it doesn't discard
it, keep it simple and don't make things more complicated than they
are. Remember KEY TO SUCCESSFUL TRADING IS SIMPLICITY.

 

As
a trader one of the lessons I learned the hard way is to never move my
stops against the position. One of the most common mistakes made by the
novice traders is to move the stop against the position once the trade
start going against him or her. As the trade keeps going against the
trader and once again approaches the stop, what do most of traders do,
they move the stop again, thus increasing an unrealized loss, but
unrealized loss is still a loss and a real one at that. In order to
become successful, a trader must learn that the initial stop most of
the time is a correct stop, because if the stop is triggered it usually
means that the trader is on the wrong side of the market and by moving
the stop he or she only increases the loss. The reason why traders move
stops is hope that the market turns around and goes in the direction of
the trade, but hope has no place in the market, protective stops do.
Remember:
  NEVER MOVE THE STOP AGAINST THE POSITION, BECAUSE BY MOVING STOPS AGAINST YOUR POSITION YOU ONLY INCREASE THE SIZE OF YOUR LOSS.

 

As
a trader one of the lessons I learned the hard way is to never let my
emotions and feelings interfere with my trading. Trading can be
emotionally draining experience for those who are not prepared for what
can happen in the market. A trader is constantly subjected to an
avalanche of data, price action, volatility, emotions and feelings of
greed, fear, elation, joy and pain. Emotions and feelings are an
integral part of human nature, but can be very expensive luxuries a
trader can ill afford to hold on to, especially for a novice trader. In
order to become successful, a trader must learn self-control, he or she
must put aside all of the feelings and prejudices one had before
becoming a trader. A successful trader must always be in control of
oneself, one's emotions and feelings. It is always important to
remember that it is a trader who runs a position, not the other way
around, because when the position begins to run a trader instead, that
is where trader is lost to the emotions and feelings and in turn that
will lead to a devastating loss. REMEMBER SELF-CONTROL IS KEY TO
SUCCESS.

 

As
a trader I have come to understand that trading setups do not always
exist in the market and during those periods I stay out of the price
action. The most common mistake made by novice traders is to "imagine"
a setup that is not there, just because a trader wants to get involved
in a price action. Many traders have fallen into a trap of their
imaginations, which is further a bolstered by wishful thinking and lack
of patience, and lost on trades where they thought was potentially
great trading setup, when in fact there was nothing there. Another
common mistake that costs dearly is anticipating a potential setup, bad
mistake. I personally follow a rule; it is not a trade setup until it
becomes one, never anticipate the price action, instead react to it and
act upon it. REMEMBER: TRADE WHAT YOU SEE NOT WHAT YOU THINK.

 

As
a trader I have learned to keep hard stops instead of mental stops,
because mental stop is not a stop until it's executed by the trader.
Most common mistake made by the novice traders is to keep a mental stop
instead of a hard stop, because an inexperienced trader lacks the
discipline to follow-through with the original mental stop when facing
a possibility of a loss. It's psychologically hard to take a loss, but
an unrealized loss is still a loss and a real one at that. Hard stops
take the hard decision of taking a loss out of the trader's hands, but
with mental stop, trader must make his or her own decision to take a
loss, and that is where most traders will let their loss run because of
the inability to face reality and accept that he or she was wrong and
close the trade. In order to become successful a trader must learn to
keep hard stop instead of a mental stop. REMEMBER LOSS IS STILL A LOSS
EVEN IF IT IS AN UNREALIZED ONE.

 

As
a trader I have learned never to envy anyone's profits and never to
brag about my own. Most common mistake made by novice traders is to pay
attention to someone else's profits instead of his or her own P/L and
by doing so a trader becomes a danger to him or herself, because if
another trader is doing better, that where greed takes over the trader
and he or she feels compelled to catch up. As trader tries to match
someone else's profits, he or she will start taking unnecessary risks
with trades, too much size and overtrading as the most common one's,
and as number of mistakes mount due to the loss of self-control and
trader simply "blows up" the account due to greed and completion. In
order to become successful a trader must understand that the only
profit and loss he or she must be concerned with are the one in his or
her account, not someone else. Someone else's profits should not be a
source of envy, because that leads to greed and competition, and that
in turn leads to ruin, instead pay attention to your own account and
P/L and you will be successful. REMEMBER A TRADER WHO PAYS ATTENTION TO
SOMEONE ELSE'S PROFITS WILL NEVER RECOVER FROM HIS OR HER OWN LOSSES.

 

As
a trader I learned never to assume anything and to differentiate
between the continuation and reversal setups and to never trade
continuation during a reversal and to never to trade a reversal when
the market calls for a continuation. The most common mistake made by
novice traders is to think that the market has to reverse because it
has gone to "far" or continue to trade in the same direction just
because the trader thinks it will. WRONG. Nothing has to do anything.
In order to become successful, a trader must never assume anything and
to never anticipate the market, but to react to it. Price does not
reverse or continue just because the trader thinks it will and has a
position on in anticipation the move. A key to successful trading is
understanding that the price will move in a predetermined direction
until it stops moving in that direction and reverses, only than trader
should enter the market after understanding whether price is going to
reverse or continue, and trade after the confirmation, not in
anticipation of it. REMEMBER: NEVER ANTICIPATE THE PRICE ACTION, REACT
TO IT AND YOU WILL BE SUCCESSFUL.

 

As
a trader one the hardest lessons I have learned is how to get back on
my feet after being crushed by market. Most common mistake made by
novice traders is misconception that learning to trade is easy and fun.
WRONG. Yes learning to trade is certainly rewarding, but it's a long,
hard grueling and emotionally wrecking task. Every successful trader
has experienced failures, no one ever escapes it. Every failure brings
you one step closer to success, if you are willing to learn from it.
After being crushed by the market twice I took a step back and
revaluated my strategy, my trading style and myself. I unlearned
everything I knew about the market and trading, keeping only the
knowledge of what did not work and set about on a quest of
self-discovery. I would like to share with you my readers an
interesting fact: I have read my first technical analysis book in
September of 2004 given to me by my close friend and teacher. After
that first book I have learned and unlearned many things since than,
but I never forgot that market can crush anyone, its how you pull
yourself together separates real traders from amateurs. REMEMBER:
MARKET CRUSHES EVERYBODY; IT'S HOW YOU PULL YOURSELF TOGETHER
AFTERWARDS, THAT WHAT REALLY COUNTS.

 

As
a trader one the lessons I have learned is to know when stop and take a
break from the trading, from the markets and from myself. Most common
mistake made by novice traders is to keep trading no matter what,
regardless of whether they losing or winning, especially when they are
losing. Trader is first and foremost is only human and as human he or
she is limited by their own humanity. It is very important for the
trader to learn to stop after a big loss or series of losses, but,
especially after a big profit. By taking a break after a loss, trader
gives him or herself a chance to clear one's mind and reevaluate the
trading strategy and the market conditions. Taking a break from a big
win is even more important, because after a successful trade, trader
becomes very vulnerable to him or herself due to the fact that when
trader takes the next position it will be bigger than the previous one
and at the same time the trader becomes a victim of own success. It's
important to know your limits, to take a break and always remember that
a trader is only human. REMEMBER: TRADER IS ONLY HUMAN.

 

As
trader I learned that it does not matter which trading strategies
trader utilizes for trading whether it's technical, fundamental or
combination of both, that is not very important. Most important
strategies every trader must learn are when to enter the market, when
to exit the market and most important strategy is when to stay out of
the market. Most common mistake made by novice traders is to focus on
entry strategies without learning how to exit the market and take
either profit or loss. An even bigger mistake made by most traders is
never implementing the "stay out of the market" strategy, because of
the simple human need for greed and gratification. I have found that in
order to remain a trader and remain in the market I have learned that
"stay out of the market" strategy is the best strategy any trader can
learn; especially when the market has no potential trades or when I
find myself not in tune with the market. REMEMBER: KNOW WHEN TO ENTER,
WHEN TO EXIT AND WHEN TO STAY OUT AND YOU WILL BE SUCCESSFUL.

 

As
trader I learned that each trader is unique and in order to be
successful he or she must adopt to a trading style that the trader
feels comfortable with. Most common mistake made by traders is to stick
to a trading style that does not suit traders' personality. Some
traders like constant price action and get involved in dozens of trades
on the intraday basis, while other traders sit and wait patiently for
an opportunity to arise to enter into a long term trade. The key to
successful trading is to know yourself, to know what works for you as
both the trader and the individual, if a person is a day trader in
heart than he or she should remain a day trader, but on the other hand
if a person can't day trade, than he or she should look to become a
medium or longer term trader. If anyone wants to succeed as a trader,
one must be comfortable with the timeframe and trading style, which in
turn always translates into a life style. Learning to trade is
extremely hard and challenge and not for everyone, just like any other
profession, but there are rewards for those who are not afraid of the
path and yes it's ok to fall while learning to walk, but only if you
are willing to get up and continue to walk. Learning to trade is first
and foremost is learning about yourself, your true self, who you truly
are, because the market is a true equalizer, everyone is equal in the
market, EVERYONE, and you only lie and deceive yourself when you are
afraid to face reality of the market. REMEMBER: HUMAN NATURE NEVER
CHANGES; LEARNING TO TRADE IS TO LEARN WHO YOU TRULY ARE.

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