What Do You Consider As The Most Important Aspect Of Trading

[CYOF]

Precisely my view - you have hit the nail on the head.

Just Do It - BUT - one must not forget that one must know what one is doing and how to do it in order to become successful, so one should not overlook the benefits of papertrading.

Simple for one person can be difficult for another - so finding a simple approach that suits oneself is also important - but again - as you rightly say - the best way to find the right approach is to Just Do It.

 

[Charlton]

Precisely my view - you have hit the nail on the head.

Just Do It - BUT - one must not forget that one must know what one is doing and how to do it in order to become successful, so one should not overlook the benefits of papertrading.

Simple for one person can be difficult for another - so finding a simple approach that suits oneself is also important - but again - as you rightly say - the best way to find the right approach is to Just Do It.

CYOF

I think papertrading should only be used to get used to the broker's platform (especially if ii is IB !!!!!!), the charting package and any other software used. After that I think it is necessary to experience the pain and elation of trading, albeit on small accounts, in order to eliminate pain and elation from trading decisions.

This is really what I mean by doing it. I am a procrastinator at heart. I am risk-averse at heart. I am intellectual at heart - I want to pontificate and analyse until the cows come home. That is my particular bete-noire, which is why it is important to just do it.

Others might have other issues

Charlton

 

[CYOF]

Yes Charlton,

And this next point is very important.

I actually think that papertrading is extremely important - once you behave in exactly the same way as you do with real trades - hard to do, but nevertheless it can be done.

As always, every trader will have their own opinions, but it is what works for the individual trader that matters most. For another trader to do what I do, would require that trader to think exactly as I do - which is not possible - for we are all individual and no one can do our thinking for us.

Regards,

 

[fibonelli]

I voted for having sufficient capital because it enables you to properly risk manage and money manage your positions. You can then set realistic profit taking and stop loss levels when applying your trading strategy.

 

[CYOF]

Hi fibonelli,

As mentioned by several traders in previous posts, with which I agree, is that all may well be of equal importance.

We, as individuals, then attach our own conditions and rules to trading which tend to make us focus on some aspects more than other - understanding why we do this may help us improve our trading?

For instance, although I agree that all aspects (and more that are not listed) are of equal importance, I personally think that the best thing that I can do to improve my trading is to get out of a trade if it does not move as I thought it would very soon after getting filled - sometimes the exit will be very quick as the price may start to go the other way - othertimes it may be based on a set time if the price stalls and does not move much in any direction (say trading in a tight range of 2-5 cent for a stock).

Although this is based on a certain style of trading - daytrading - the fact is that when that price stalls and consolidates for any considerable lenght of time - say 10-15 mins - the direction it will go next can be dependant on a lot of factors - such as overall market bias, time of day, intra day or outside day, TICK levels, Future levels, etc,etc.

As Rule No.1 states (P.O.P - Phantom of the Pits), we must never let the market prove us wrong, but only let the market prove us right.

So now, this becomes for me, the most important aspect of trading in relation to my understanding of what it can do for my bottom line.

Having sufficient capital is a must for trading effectively, but if for some reason your strategy or system has a losing streak (as all systems do), and you let your stops be hit all the time, then your capital will slowly dwindle away. You are letting the market prove you wrong - which means you are not using Rule No.1.

This, as noted by P.O.P, is one of the biggest mistakes that the majority of traders make and for some reason fail to recognise this very important fact - it is always better to get out and re-evaluate your position if it does not develop as anticipated - the anticipation been determined by the strategy and timeframe that the trader is using.

It should also be apparent that timing of entries now becomes a crucial factor in relation to rule No.1 - for if you can perfect your timing then this means that each time you enter the market the probability of the move going in the anticipated direction is greatly improved.

But as we will never know what the market will do next - and as no one can tell the future ( well this may not 100% correct as Edgar Cayce seems to be have been able to do it with astonishing documented results) it may be wise to use Rule No.1

Regards,

 

[vergis92]

The most important asset of winning traders is like that professional winning poker
players have, they know when they have to fold their cards and quit playing til the next round,
which means being patient, not wanting to take revenge on the market on that day by chasing
losses, and that's a very hard thing to do,

what makes the difference between a gambler and a speculator ?
the gambler has an uncontrollable urge to play

:!:

 

[damianoakley]

what makes the difference between a gambler and a speculator ?
the gambler has an uncontrollable urge to play

:!:

Very true.

Any business venture is a gamble if you manage the venture badly and don't do all you can to develop expertise in your chosen field.

Trading is a business venture like any other and, if taken seriously through careful planning and risk management, is not a gamble.

The gamblers in trading (or any other business) are those that take too much risk with their capital and focus too much on what they could gain instead of what they could lose.


Thanks

Damian

 

[FXSCALPER2]

Balls, lots of it.

 

[smbtnt]

Capital and experience.

 

[dwntk]

With gambling, you risk is limited to what you bet.

With trading, your risk should be limited to what you can afford to bet.

For some unknown reason, traders seem to forget that they can actually limit their risk 99.99999999999% of the time.

Alas - Fear and Greed - the scourge of every traders dream.

 

[vergis92]

well gambling in poker games such as '7 card stud' is very similar to trading, if you are dealt the 4th
card and have not yet improved your hand it means someone else does have a winning hand,
if you keep playing you will double or tripple your losses,
also when winning by chance or winning for reasons other than the real ones is a big mistake to make,

I believe the market has a big paradox:

a) The less knowledge you have about it the more successful you will be.

(In real life too the least educated people make the most money just because of a single natural skill they have,footballers, artists, singers, business executives, traders etc., they know something or can do
something no one else can, whereas the highly educated make the minimum money possible)

 

[pssonice]

better think about your questions before posting them

1. investing on the long haul or on a very short time schedule in minutes is the key

2.=3. AND 3.=4. AND 4.=5. AND 5.=6.

2.Having Sufficient Capital
3.Having A System With An 80% Win Rate
4.Understanding The Markets You Trade
5.Knowing Where To Get Out When Wrong
6.Knowing How To Add To Winning Positions

 

[CYOF]

1. investing on the long haul or on a very short time schedule in minutes is the key

2.=3. AND 3.=4. AND 4.=5. AND 5.=6.

2.Having Sufficient Capital
3.Having A System With An 80% Win Rate
4.Understanding The Markets You Trade
5.Knowing Where To Get Out When Wrong
6.Knowing How To Add To Winning Positions

Do I detect a hint of sarcasm or dislike?

It is called discussion - people exchanging their views on the poll topic/s.

No one has to "better do this" or "better not do that".

It is this mentality that prevents a lot of people from posting their views.

All I will say to anyone who may be put off posting due to comments like this is:

Ask yourself, why would someone try to be negative and dismissal to another person's posts - is it because they are unsuccessful and find it difficult to accept that other people may actually know somethings that they don't, or is it just pure ignorance?

Whatever the reason, never be afraid to post your views, and NEVER let anyones else stop you from doing something that you want to do. To do so is to be weak - and the markets have a canny way of weeding out weak traders.

Your emotions can play havoc with your trading account - take the majority of posts for what they really are - discussion topics, no more - no less. If you find yourself getting personal - worried about responses to your posts - then you are starting a cycle of negativity that will only end in one way - less money in your bank account!

Time to introduce myself!

Regards,

 

[CYOF]

The previous post may have been overstated, and if any offence was taken, then I apologise.

Personally, I do not like criticising anyone, but like most I get drawn into replying negatively to certain posts, which then starts a tit for tat. This just wastes everyones' time.

We are here to help each other out, not create negative conditions that will have the opposite effect.

So, lets behave like the adults we are and move on.

Regards,

 

[CYOF]

well gambling in poker games such as '7 card stud' is very similar to trading, if you are dealt the 4th
card and have not yet improved your hand it means someone else does have a winning hand,
if you keep playing you will double or tripple your losses,
also when winning by chance or winning for reasons other than the real ones is a big mistake to make,

I believe the market has a big paradox:

a) The less knowledge you have about it the more successful you will be.

(In real life too the least educated people make the most money just because of a single natural skill they have,footballers, artists, singers, business executives, traders etc., they know something or can do
something no one else can, whereas the highly educated make the minimum money possible)

Here is another take on the 95% versus the 5% - these figures are not just applicable to the trading world, but in all areas of life.

The Master Key System 1912 - Questions & Answers

What is the meaning of the statement, “Only five percent have the vision to annex the strategic position, to see and feel a thing before it happens?”
Ninety-five percent of the people are busy attempting to change effects. Something happens which they do not like and they try to change the situation. They soon find that they are simply changing one form of distress for another. The other five percent are busily engaged with causes. They know that in order to make any permanent change it is the cause which they must seek. They soon find that the cause is within their control. It is the five percent that do the thinking, and the ninety-five percent which merely accept the thought of others. It is those only who think who can see and feel a thing before it happens."

 

[darkwanderer]

'Understanding the markets you trade', it only got 26%, well i guess that just about sums up the majority of traders.

 

[damianoakley]

'Understanding the markets you trade', it only got 26%, well i guess that just about sums up the majority of traders.

Hi darkwanderer,

Your point is interesting and I would tend to agree that understanding the markets you are trading is very important.

Having said that, perhaps it's not as important as we might think. When I take trades in stocks, I rarely have a full understanding of every product that the company sells. I don't know the directors of the company, and I don't always know what their plans for the company are for the next 12 months. In fact, thinking about it, there is a great deal about the company that I don't understand, and yet I have traded my method profitably for the last 5 years.

In the Market Wizards book by Jack Schwager, there is an interview with Larry Hite who was well known at the time for trading a very broad spectrum of diverse markets. He traded absolutely everything from currencies to stocks to commodities. One day he had a meeting with one of the largest Coffee traders in the world who queried Larry Hite on how he could possibly trade successfully in the Coffee market when he didn't know that much about the market. The Coffee trader said that he knew all the buyers in the industry, all the sellers, all the crop rotation systems, all the weather conditions, etc, etc, and so how could Larry Hite compete against him. Larry went on to admit that he didn't fully understand any of the markets he traded - he just studied the charts from a technical point of view, made his decisions and managed his risk well.

Maybe trying to understand the markets too much can work against a trader. I think it can be good sometimes to keep a healthy distance from the markets and not get too embroiled in every small detail.


Thanks

Damian

 

[CYOF]

Very good points Damien - but what darkwanderer has highlighted may also be correct.

For instance, I have just had two consecutive losing days testing out trading on the YM.

My losses are due to several reasons - some of which are due to my current setup which has restrictions -but it also has a lot to do with my understanding of how the Futures market can behave in relation to the underlying stocks.

Today, for instance, I took a short on the INDU chart (I am currently only able to chart the INDU as opposed to the YM -one of my restrictions) and it fell about 20 points or so.

I sat there watching the futures price on my IB Webtrader - and it did not budge!!!!

What the hell, I said to myself, I have never seen this happen before!

This cost me about 20 points or so - and it may be due to me not fully understanding the market I was trading, namely the Futures.

I am sure that someone has an answer as to why this happened - but I haven't got the faintest idea why?

Regards,

 

[chump]

"It is those only who think who can see and feel a thing before it happens."

I'd frame that one.

 

[Legion]

Very good points Damien - but what darkwanderer has highlighted may also be correct.

For instance, I have just had two consecutive losing days testing out trading on the YM.

My losses are due to several reasons - some of which are due to my current setup which has restrictions -but it also has a lot to do with my understanding of how the Futures market can behave in relation to the underlying stocks.

Today, for instance, I took a short on the INDU chart (I am currently only able to chart the INDU as opposed to the YM -one of my restrictions) and it fell about 20 points or so.

I sat there watching the futures price on my IB Webtrader - and it did not budge!!!!

What the hell, I said to myself, I have never seen this happen before!

This cost me about 20 points or so - and it may be due to me not fully understanding the market I was trading, namely the Futures.

I am sure that someone has an answer as to why this happened - but I haven't got the faintest idea why?

Regards,

Do you feel at times like you need to set up pseudo challenges for yourself in life, just to see if you would pull through, or is anyone in your life (significant) calling you or labelling you absolutely wonderful,generally, in most that you say or do ?