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Strategies & Market Trends : Strictly Buy and Sell Set Ups -- Ignore unavailable to you. Want to Upgrade?

To: chowder who wrote (9795)	6/11/2006 5:40:36 PM
From: chowder	Respond to of 13449

A New Perspective ...................................... Trading is a tough business where setbacks and losses are commonplace. If you aren’t careful, you can feel beaten, knocked down, and afraid to get back up. The winning trader, however, must recover from setbacks and trade with a new perspective every trading day. The winning trader knows how to take losses in stride. As fictional character Jesse Livermore notes in Reminiscences of a Stock Operator, “Losing money is the least of my troubles. A loss never bothers me after I take it. I forget it over night.” Sure, it is important to learn from your mistakes, and to the extent that you can do that objectively and unemotionally, you don't need to worry much about past losing trades influencing your current trading decisions in negative ways. But there are many traders who hold on to losing trades as emotional baggage. They place special significance on losing trades and view them as evidence of their personal inadequacy. They wrongly draw the conclusion that they may never be able to trade profitably. Why does this happen? Some traders allow their net worth to define their self-worth. They allow their profits and achievements to define who they are. When this happens, their ego is on the line with their money. Traders who put their self-esteem on the line with their money are especially prone to let their emotions take over. When everything starts moving against them, they may start to fear that they can't make profitable trades that day, and may feel as if they just want to walk away. Past emotional baggage can intensify these feelings to the point that they start making stupid mistakes and dig themselves even deeper into a financial hole. If you are prone to feelings of inadequacy as a trader, don't let past losing trades overpower you at the wrong moment. There is a lot you can do to put aside these past memories and start the trading day anew. First, acknowledge your past losing trades. The biggest mistake of novice traders is trying to deny their limitations or deny that they have losses. Don't pretend that a losing trade didn't happen or that it has no meaning, when it actually does to you. You don't have to over-analyze things in minute detail and mull over the subtle emotional meaning, but you do have to acknowledge that you feel beaten. Dr. Ari Kiev observes that this mere act of acknowledging a losing trade can do wonders. Once you look at your feelings, many times, they quickly dissipate. Just because you acknowledge losing trades doesn’t mean that you need to believe they have power over you. Your past need not dictate the future. Believing that the past and future are linked is a common misconception. You can determine your future regardless of your past. Remind yourself that you can take decisive steps to overcome a potential losing trade. For example, you can limit your risk so that you will know deep down that it is virtually impossible to have a losing trade in the future that can have any real financial significance. You can also make a list of past winning trades that you can pull out and review while in the midst of a current loser to remind yourself that you can overcome your current circumstances by calming down, thinking positively, and taking decisive action. You can tell yourself encouraging thoughts, such as "It's no big deal. I can endure. I can get through this if I just calm down." There’s no reason to get bogged down by a losing trade. Think positive. Innerworth.com (This message is linked to previous articles.)

To: chowder who wrote (9795)	6/20/2006 11:06:32 PM
From: chowder	Respond to of 13449

The Need to Take Risks .................................. There are many ways to trade, and traders can have as many different kinds of personality traits as there are ways to trade profitably. But if you want to trade chaotic, fast paced markets in the short term, some personality traits are more ideal than others. For example, it is not ideal to be fearful and easily knocked off balance by even the slightest ripple in market conditions. It is useful to be thick-skinned, and not easily distressed by even the most unexpected or dramatic trading losses. You can't be afraid to take a risk. That said, a person who is willing to take risks may also be at a disadvantage. The person who enjoys risk can take too many chances that can lead to significant setbacks or even a major disaster. Consider what happened to Pittsburg Steelers quarterback Ben Roethlisberger recently. He ended up in the hospital after a horrible motorcycle accident in which his unprotected head shattered a car windshield. Many sports commentators criticized Mr. Roethlisberger for not wearing a helmet. Others wondered why he would risk riding a motorcycle in the first place. In his daily commentary on KCBS radio in San Francisco, John Madden suggests that unnecessary risk-taking should be expected among young athletes. He observes that football players routinely take risks every time they walk onto the playing field. It is necessary to have a little bit of psychological denial to take such risks nonchalantly. They must believe that even though they put themselves in harm's way, no harm will come to them. If they weren't willing to take such risks, they would not be able to perform at their peak. It's the same situation with most traders. A trader who is afraid to take risks is a trader who will miss market moves or make trading mistakes. The trader who is willing to take risks, in contrast, may have nerves of steel, but such feelings of omnipotence can be their downfall at other times. There are times when fear can be adaptive. Fear can protect us from harm. It's necessary to not feel so invincible that you feel you can do anything. You can't. It's vital to control risk. It necessary to risk a small percentage of capital on a single trade. It's useful to stand aside until a high probability setup is identified. It's essential to trade with a well developed trading plan and to stick with it. But traders who are fearless tend to have trouble in these areas. Traders who are comfortable with risk are prone to take unnecessary risks or may lack discipline at times. The trait that makes them potentially great traders can also be their downfall if they are not careful. Their demise is not assured, however. All they have to do is be aware of their tendency to take unnecessary risks and make sure they are constantly trying to fight this tendency. If you are a risk taker, limit your risk, and always consider the worst case scenario and whether or not you can survive it. Taking risks is necessary to trade profitably, but at the same time, managing risk is the only way to survive and stay profitable. Innerworth.com (This message is linked to previous articles.)

To: chowder who wrote (9795)	7/5/2006 6:52:17 AM
From: chowder	Read Replies (1) \| Respond to of 13449

Plan The Trade ........................................... When your money is on the line, it's natural to feel afraid. As much as you try to forget, it's hard not to worry about losing money. There are times when you may feel so panicked by the chaotic moves of the markets that you can't think clearly. You may feel agitated and on edge. It is at times like these that you need to do anything you can to keep calm and trade with discipline. One of the best strategies is to trade a detailed trading plan. A detailed trading plan can help you stay calm during the storm of market action. Before you execute a trade, specify precisely how and when you will enter, the signals that indicate that the market may be going against your trade, and how and when you will exit. Many unprofitable traders don't carefully plan their trades. They impulsively execute a trade and then think they can develop the plan as they go along. What usually happens is that they panic easily because they don't know what to do and when to do it. It's hard to think on your feet, especially when your thinking is blurry because you are afraid of losing money. A detailed trading plan helps you stay focused. The more clearly the plan is laid out, the easier it is to follow, especially when you are agitated and upset. And when the plan is easy to follow, it's likely that you'll stick with it. You'll be disciplined and in control of your emotions and thought processes. The difference between winning traders and unprofitable ones is the ability to muster unwavering self-control in response to chaotic, ever-changing markets. Trading is serious business. It's not a hobby, but many traders approach the endeavor as if it were recreational gambling. They don't develop a trading plan, and if they do, they tend to abandon it prematurely. Winning traders, however, are methodical. They carefully develop a trading plan, execute it, and stick with their plan. If you want to trade profitably, develop well defined trading plans and follow them. Innerworth.com (This message is linked to previous articles.)