KYEOTB - Psychology/Goals/Execution Sytems/Further Help(updated - Classic Reading)
Contents:
A - Attain The Proper Psychology
Components Of Intuitive Day Trading
Judging The Mood Of The Market - Trading In The Moment
Learning How To Win, Learning How To Lose
Don't Isolate Yourself
Further Reading On Trading Psychology
B - Begin With Goals
What Motivates The Successful Day Trader
E - Evaluate Your Execution System
Broker
Data
Analysis/Order Entry Software
Analysis Software
Real Time News Sources
Remote Execution System Failure - Contingency Plan
More On Execution Systems
F - Further Help On Trading
Highly Recommended Reading
Classic Reading
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A - Attain The Proper Psychology (Trader's state of mind)
Short Term trading is very intense fast paced information game that requires a great deal of discipline and experience in which to succeed. You MUST evaluate your own stengths and weakness to determine if you have the proper minset and experience to trade effectively within this most difficult of time frames.
Components Of Intuitive Day Trading:
Intuition plays a key role in effectively processing the large amount of information that a Day Trader is subjected to be able to "Judge The Mood Of The Market" and trade "In The Moment". What follows are the components needed to develop that intuitve faculty:
1) Desire
2) Faith
3) Visualization
4) Specialized Knowledge
5) Organized Planning
6) Decision
7) Persistence
8) Network
9) Sixth Sense
Judging The Mood Of The Market - Trading In The Moment:
Your intuitive ability to determine if the market is in a good, bad or indifferent mood will be the key determinant of your trading success. The longer you are in the market the more aware of this you will become. You should concentrate on identifying the key events and how traders are reacting to them. It is crucial to be trading with the flow of the market to be successful. If you do not feel in tune with the market is best to pull back and not trade until you do.
Ideally you should be able to observe and judge the mood of the market from different time perspectives such as the near term(hourly or by the minute), mid term(daily), and longer term(weekly or monthly).
When you have truly developed the belief that you have the ability to Judge The Mood Of The Market you will begin to act on your intuition without hesitation and ......Trade In The Moment
Learning How To Win, Learning How To Lose:
How to win?.....DON'T GET EXCITED about a big win. Just take it as a normal part of trading. Always close a winning trade and move on.As a Day Trader you can lose as quickly as you can win.
How to lose?..DON'T GET DEPRESSED about a big lose. Just take it as a normal part of trading. Always use stop loss orders. Always close a losing trade and move on. As a Day Trader you can win as quickly as you can lose.
You must learn to take all your trades in stride and focus on you trading plan. Getting excited or depressed just clouds your judgement and prevents you from take the right action at the right time.
This is the biggest difference between successful traders and losers!
Don't Isolate Yourself:
One of the biggest risks of remote online trading is the isolation that can occur and lack of networking intraday. For the trader this can cause problems with keeping their mind on the task at hand, as well as losing their perspective on what is happening with the markets.
To alleviate this problem the Final Frontier Chatroom was created:
The Final Frontier Real Time Trading Room:
exchange2000.com
Further Reading On Trading Psychology:
Trading For A Living - Alexander Elder
Market Wizards - Jack Schwager
New Market Wizards - Jack Schwager
Think And Grow Rich - Napoleon Hill
The Winning Edge 2 - Adrienne Laris Toghraie
TAO Of Trading - Robert Koppell/Abel
Sun Tzu's Art of War For Traders and Investors - Dean Lundell
The Day Trader's Advantage - Howard Abell
Intuitive Trader - Koppell / Abel
The Disciplined Trader - Douglas
Art of Contrary Thinking by Neill Humphrey
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B - Begin With Goals (short/mid/long term)
What Motivates The Successful Day Trader:
1) Money
2) Freedom
3) The desire to maintain control of his/her own mind towards external events, and observe/react correctly to the short term emotional actions of others in the market.
Once you have determined what motives you, you can draw up written goals to review and visualize daily. Visualization is they key to developing the proper mind set needed to react correctly throughout the trading day.
Your goals should be broken down into the short,medium and long term. A good idea is to create financial projections including revenues, expenses and profitability objectives - much like any business plan.
When projecting your annualized revenues remember that to achieve higher rates of return on capital will require assuming more risk. Be realistic in setting goals that are line with your trading method.
A Trader's Business Plan
adtrading.com
Dear Coach,Potty Training for Traders,Brokers and Investors - Adrienne Laris Toghraie
Trader's Business Plan - Adrienne Laris Toghraie
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E - Evaluate Your Execution System (software/news/research/quotes/broker)
Ultimately there is no perfect execution system for everyone. Because each person has a different approach and trading method what is perfect for me, may be terrible for you. Generally speaking, here are some guidelines:
Broker:
Make sure know what you want from your broker. Fast executions, immediate confirmations, reliable data and software, great client service, competitive fees, good website, excellent reporting. Make sure the broker is reputable and has a good capital base behind it.
Analysis/Order Entry Software:
Make sure you know your needs before looking at software. Currently Real Tick III dominates the landscape and is very flexible. Also CyberTrader and Tradecast are as flexible yet not as widely used. A step down from this is a browser based systems offered by Castle Online(a.k.a Market Link). A step below this are the other browser based systems such as those offered by Datek, Etrade etc. Ask around the online trading rooms for opinions on what systems are good, bad and why.
Analysis Software
Omega Trade Station,Supercharts,Windows On Wall Street, and Quotes Plus 2 are the most popular.
Data:
Intraday/End Of Day Data
Will most likely come packaged with the software from the broker. If not consider Quote.Com's Q Charts, S&P Comstock or PC Quote.
End Of Day Data
Try Quotes Plus or Trac Data.
Real Time News Sources:
Reuters, Dow Jones, Bridge, and Bloomberg set the standard for news sources. All are excellent but none are complete.
Remote Execution System System Failure - Contingency Plan:
1)Know how to contact your broker in case of problems. Have several backup numbers in case the lines are busy.
2)Know what your broker's procedures are concerning phone in orders/questions.
3)Discuss your broker's liability with regards to missed trades/opportunites. What will he take responsibilty for and under what conditions.
4)Be sure to follow through on orders regardless of execution problems. Hesitation to follow through on trades could cause many headaches including missed opportunities and larger losses. You may not take a loss at the time but a change in your strategy may lead to larger losses down the road if you hold the trade longer because of execution problems.
5) Be sure you now how to reboot your system as quickly as possible. Always find out what the problem is before you waste valuable time trying to reboot. Sometimes the system may be down for lengthy periods of time.
More On Execution Systems:
From The Trading Desk
Subject 15612
#1 Day Traders Site - The Final Frontier
exchange2000.com
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F - Further Reading On Trading:
For background information on "Keep Your Eye On The Ball" including books, magazines, articles, software vendors, brokers, quote vendors, news sites, research sites, and various educational sources of information useful to Day Traders check out:
The Final Frontier Links
exchange2000.com
Highly Recommended Reading:
Applied Derivative Trading
adtrading.com
Classic Reading:
Intelligent Investor - Benjamin Graham
Contrarian Investment Strategies - David Dreman
The Battle for Investment Survival - Loeb
Reminiscenses of a Stock Operator - LeFevre
Extraordinary Popular Delusions and the Madness of Crowds - Mackay
How I Made 2 Million in The Stock Market - Darvas
The Taylor Trading Technique - Taylor
The Alchemy of Finance - Soros
The Great Crash Of 1929 - Galbraith
The Affluent Society - Galbraith
The Crowd - Le Bon
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