Doing and Not Doing

Becoming consistently profitable as a trader has as much to do with learning to not do some things as much as it has to do with learning to do some other things.

Overcoming the negative behaviors can be made much easier by making a routine for doing the positive behaviors.

The more you test, you less you trade (this is good). The more you study risk control, the less you feel compelled to increase your trade size erratically. The more you keep records of your trades, the less arbitrary your decisions will become. The more you do your own homework and research, the less you will depend on someone else to tell you what to do. The more often you get up on time, eat what you should, keep your body healthy, the more likely it is that your mind will be clearer. It's the simple routines that matter in trading.

It's not too late for you to change your routine. What are you going to change?

Continue reading "Doing and Not Doing" »

Posted by Rob at 08:30 AM | | Comments (0) | TrackBacks (0) ..............................................................................................................................................


Getting a Routine

I read today about Mikhail Botvinnik, the 5th world champion of chess, and one of the greatest players of all time (although not considered the greatest). This part of what I read struck me as very applicable to traders:

Botvinnik's consistency is something which all chessplayers desire, although not all chessplayers are as disciplined as Botvinnik in their search for this consistency. Most players' superstition, arguably, comes about due to the yearning for consistency: A player might happen to play a good game, after which he sticks to using the same pen until a painful loss occurs.

You can find the full text where I read the above by clicking here.

That is fantastic advice for traders. So many traders switch trading systems on a whim, or just because they experienced a recent loss (especially when they never tested their performance in the first place).

I'll have more to say about this later. We've just scratched the surface on the subject of routine.

Continue reading "Getting a Routine" »

Posted by Rob at 06:57 PM | | Comments (0) | TrackBacks (0) ..............................................................................................................................................


The Fruits of Your Trading Success

I re-read a quote from Jesse Livermore today:

The fruits of your success will be in direct ratio to the honesty and sincerity of your own effort in keeping your own records, doing your own thinking, and reaching your own conclusions.

I find time and time again that losing traders are making the same mistakes:

1. They don't keep any records.
2. They do no testing.
3. They become euphoric about (and increase risk wildly after) wins.
4. They become despondent about (and decrease risk wildly after) losses.
5. They focus on how much money they want.
6. They rarely / never think about how much they stand to lose on a trade.
7. They set their stop loss based on a 1:1 or 1:2 risk to reward ratio, just to make the ratio look good.
8. They discount the importance of psychology.
9. They over-value the importance of the trading "system."
10. They have no routine.

Continue reading "The Fruits of Your Trading Success" »

Posted by Rob at 03:27 PM | | Comments (0) | TrackBacks (0) ..............................................................................................................................................


CFG Trader Shut Down by NFA

Many of you probably haven't heard -- because CFG trader was quite small compared to other firms -- but the NFA shut them down, and forced them to liquidate all positions on March 21. You can read more about the facts of the case, and FXCM's offer to take over all the accounts for CFG Trader clients, at this Forex Factory link:

http://www.forexfactory.com/showthread.php?t=22410

It's a shame that this happened. One of the big issues will be whether there is any money left in these customer accounts. Hopefully there is.

UPDATE: Click here for some additional thoughts on the meltdown of CFG Trader.

Continue reading "CFG Trader Shut Down by NFA" »

Posted by Rob at 11:49 AM | | Comments (0) | TrackBacks (0) ..............................................................................................................................................


Do One Thing Right

Traders do better when they try to do one thing perfectly right. Traders do worse when they spread themselves too thin, between many indicators, financial instruments, time frames, and trading systems.

Do less. Focus more. You'll do everything better.

Continue reading "Do One Thing Right" »

Posted by Rob at 09:20 PM | | Comments (0) | TrackBacks (0) ..............................................................................................................................................


Trade Less

Lately I see more and more people struggling to keep their profits because they overtrade. One thing that every new trader can do to immediately improve his results is to take half as many trades on a weekly or monthly basis.

If you knew you could only trade 3 times per month, would you be more thoughtful about the trades you take?

Continue reading "Trade Less" »

Posted by Rob at 07:22 PM | | Comments (0) | TrackBacks (0) ..............................................................................................................................................


Warren Buffett's Annual Letter

Warren Buffett just released his 2006 letter to shareholders. It's got some great wisdom that I think is useful to traders and anyone who has ever invested in anything. Click here to read the letter.

Continue reading "Warren Buffett's Annual Letter" »

Posted by Rob at 10:38 AM | | Comments (0) | TrackBacks (0) ..............................................................................................................................................


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