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Wednesday, September 10, 2014

Tom Hougaard: A Superstar Trader/Investor

LEARN FROM THE GENERALS OF THE MARKETS - PART 52

“I have been taught the emotional pain of large losses when my ego wanted me to trade too big, and the pain of missing a huge move due to fear of entering a trade.” – Steve Burns

Born in 1969, in Denmark, Tom Hougaard later moved to the United Kingdom in 1992, where he obtained BA and MSc in Economics and Finance. He worked at Chase Manhattan Bank, but left the bank in the year 2000 to manage his personal portfolios. After that, he was employed by a brokerage company.

In 2002, he was chief market strategist at city index where he made copious market comments on popular media. He’s also handled trading presentations and written many articles. In 2009, he started a website named “WhichWayToday” (whichwaytoday.com) where he posts premium articles, trading commentaries and runs a live trading room. The performances of the trading room have been very impressive.

Tom is a successful trader who’s been showing others how to make money through his trading room services, articles and others. He owns a website named TraderTom.com. On that website, one would see some wonderful articles that reveal some of the greatest trading truths.

Lessons
These are some of the lessons you can learn from Tom:

1.      One of the fastest ways to make money in the markets is to copy what successful traders are doing, either by social trading or trading rooms services or signals strategies services.

2.      There are money management, trade management, and risk management styles that are at variance with the mainstream ideas; yet they’re successful in the markets.

3.      The extremely popular analytical tools like Fibonacci extension and retracement levels, Gann’s line and grid, Elliot Waves, Andrew Pitchfork and some others are far from being the Holy Grail. In fact, many traders lose money with those popular tools in spite of them being venerated by the so-called gurus. The secrets to success don’t lie in those analytical tools. Rather the secrets to success lie in what most traders can’t do.

4.      Our mind is our enemy! This is true in most critical aspects of life as well as trading. We want good results and we’re very enthusiastic about getting those results. Nevertheless when it comes to facing the realities that have to do with the process of getting those results, we compromise – we even give up. Those who want to start a strict program to lose weight aren’t discipline enough to deny themselves of some things so that they can achieve their goals. Those who need to fast to achieve some spiritual and/or health goals quickly compromise when their body reacts violently to lack of food (we’re addicted to food). Most of us can’t help staying away from foods and habits that are dangerous to our health. We want to go to gym to stay fit, but we’re reluctant to go when the time comes. We know it’s bad to make/receive phone calls while driving, but we can’t resist the temptation. We know what’s good, but we find it more agreeable to do what’s bad. The same is true of trading. We tend to do those things that aren’t in our best interest as traders. We stay away from the markets or even quit trading altogether when we face challenges in the markets; whereas the way we deal with the challenges is what makes the difference between a successful trader and a failure who’s no longer a trader.

We hear sweet talks from those who motivate us to do exploits in life, including the markets, but we can’t follow their recommendations. Tom says: “The chemical boost of imagining the outcome, to say the outcome out loud is essentially all the motivational speakers are facilitating to create success for themselves. Very few of them actually help people, not for the lack of trying, but because of who we human beings are. According to him, motivational talks are good enough to give us the feeling of achievement, but never take us to the full potential. One moment the mind is your friend, and the next moment it is the enemy, standing in the way of you achieving your goal. This is also true of trading.

5.      When the trend changes, one needs to admit that and trade accordingly. It is not logical to think that the market would trend in a direction forever. We should be able to take advantage of the biases in the markets at any time. Great trading instruments must be cheap enough for buyers or expensive enough for sellers.

Conclusion: Tom makes money in bear and bull markets, and you can do the same. It’s worrisome that some traders still dread bear markets, while preferring only bull markets. Bear markets are also great for making money – you simply need to go short. A downtrend is usually accompanied by common dread and worry on the part of the speculator. While this kind of reaction is not a surprise, for the average speculator doesn’t think that the market may go bearish before they actually go bearish. However, instead of staying out of a downtrend, one can employ trading approaches that work in bear markets.

This article is ended with a quote from Tom Hougaard:

“However, the most important lesson I learned was why 99.9% of people fail at reaching their goals in life. We are addicted to pleasure and will avoid pain like the plague.”


Learn from the Generals of the Markets: Market Generals


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