"Trade and prosper - it is an attainable American
dream." - Mark. D. Cook
As a trading expert, I’ve noticed different
ways in which people view trading. Some people love trading, some people hate
it. Some think financial websites are great; some feel those websites don’t help
ultimately. Some like to overtrade, some open very few positions. Most souls
are too busy to speculate on a full-time basis, something that doesn’t really
matter… Yes, it’s not possible for everybody to become a trade. There are
conflicting opinions and there are many ways to make money, so to speak. But I’d like to
point out that most of the wealthiest people in the world gain their immense
riches from the stock market and the real estate investment. Victorious
market wizards have been trading the markets for decades, and in those periods
their love for trading hasn’t been reduced. Rather, they have earned a wealth
of knowledge and returns from actively participating in the markets and
sometimes helping neophytes be the best traders they can be. It’s highly
intriguing to see people sharing testimonies about their success in the markets
and making decent income from their trading activities. If you can read the articles in this series and follow
the secrets contained therein, you’d potentially see yourself being ultimately
transformed into a competent trader.
Charles Kirk, quoted at the end
of this article, said recently in an interview that when he looked back,
he was very fortunate in terms of timing in his trading career as he started
trading full time when the market was performing at its very best. What he
lacked in knowledge and skills, a benevolent bull market made up for. They say
bull markets make everyone look like a genius and that was certainly true in
his case. Like many traders just starting out, he traded very aggressively and
those aggressive trades paid off. Unfortunately, at the beginning, he’d zero
respect or any real appreciation for proper risk management because trading was
so very easy for him early on. As things go, the good and easy times where
everything he touched turned to gold didn’t last. He started experiencing
discouraging losses.
Rather than quitting, Charles Kirk began to learn what it
takes to be a successful trader - a process that took him a considerable amount
of time. He eventually achieved him aim, and now, he makes a living from
trading.
Some
who were thought to be trading experts are no longer in the markets. They made
money when trading was favorable to them, but lost heavily when things went
awry. They stopped trading because long-term success eluded them. We can never
be inspired by former traders who have quit trading, but we can be goaded towards
successful by market wizards who have been enjoying success - beating the
markets on annual basis. Their traits can be learned and imitated by you as
well. Those traits are revealed systematically in the articles in this series.
Traits
of Successful Market Wizards
1. Victorious market wizards have found
what work for them in trading: Every successful trader has found trading
ideas that work consistently. Without trading principles that work, any trader
would soon experience significant failure, for it’ll be that they don’t know
what they’re doing in the markets. Those speculating without killer trading
plans might enjoy transient success, but you would need killer trading plans in
order to be a permanently victorious trader. You would save your nerves
by simplifying your trading. Some of
the trading ideas that work would be revealed in my future articles on this
website.
2. Victorious market wizards take
money management serious: For you as an individual trader, it is imperative
for you to ensure that you’re not betting too big on an individual trade. Those
who bet too big may win jackpots, but they tend to loose too big when things
turn against them. There is a clear disparity between trading and gambling.
Personally, I wouldn’t risk more than 1% of my portfolio per trade. Victorious
traders do that for their permanent victory, and you should be able to do that
too.
3. Victorious market wizards sell short in
downtrends and go long in uptrend: The best trading method remains
going with the flow of the markets, not the other way round. As Dr. Van K.
Tharp puts it, the trader's struggle with the market is the problem. Market
wizards trade only clear market propensities (not going against the
propensities), and they stay out of equilibrium/trendless markets. If the
markets are going south, they go south. If the markets are going north, they
change to a northward bias. Really, you won’t be able to handle your open
positions skillfully, if you’re experiencing problem handling your reactions to
the markets .If you find it difficult to trade the markets with a measure of
success, I would like to give you a simple advice. Switch to bigger timeframes.
Short a predominantly falling market and purchase some contracts in a
predominantly rising market.
4. Victorious market wizards wait for
confirmation of a change in the trend, before they change their bias: They
don’t rush to take the opposite side of the trend because some fundamental
facts suggest that or because of corrections in the price. They wait for the
market to turn before they change their positions. Market wizard
acknowledge that the market can’t be prognosticated with 100% certainty.
Nevertheless, the position they take when fundamentals change is often based on
tactical speculative method coupled with effectual chart reading techniques. This is one timeless trading
principle, and I’d still write an article to elaborate more on the importance
of trend-following and the danger of going against the trend. Desist from
pinpointing turning points in the markets when you think prices are too dear or
too cheap (using money management based on your safety rules), till the market
has shown that the bias is completely over.
Conclusion: The most important point is
that are many market speculators that possess unhelpful biases prior to opening
orders and prior to sustaining any negativity. Realistically, majority of market
players have good trading knowledge, but often freeze when it comes to
executing trading decisions when needed. This procrastination makes them
exasperated as the time runs out on them. Vividly, this is a great challenge
when they need to be courageous in their trading ideas and in the execution of
those trades. As someone who needs to trade effectively, you would need to
stick to trading principles that work, or else you would be frustrated. The
Part 2 of this series would be made available next week
This
article is ended with the quotes below:
“It wasn’t until my father passed away one month after my
law school graduation that I knew that trading for a career was the right
decision. The very last conversation I had with my father in his hospital room
is one I’ll never forget. In his last moments, he desperately urged me to ‘do
what I love’ as a career. He told me that he’d enjoyed a very happy life
because he really loved his work and how much of a difference that made for
him. He worried that I was making choices that would prevent me from following
my passion and urged me to follow my dreams. Shortly after, I asked my wife to
give me 2 years to prove that I could make a living by trading instead of being
a lawyer as I’d planed.” –
Charles Kirk
Azeez Mustapha
Market Analyst, Trading Signals Provider and Coach
Copyright (C) ADVFN PLC
For more articles, go to: http://www.advfn.com/newspaper/technical-analysis
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