Even when everything lines up?

A friend of mine, David made an interesting comment, which is not unique, I’ve experienced it and so have most other traders. He said, “I see a set up I like such as a hammer and everything else lines up, but I just don’t have the balls to pull the trigger”. I proceeded to tell him why this occurs, and I hope it will make a difference to his trading.

Pulling the trigger comes with a variety of emotions, and I’m sure you know what I’m talking about. One of the more powerful emotions is fear, and this emotion alone will prevent traders from entering a trade, despite having everything line up, exactly how they’d like it.

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What do you make of this chart?

Time to dust off your technical analysis skills and take a look at the following chart, and tell me what you think…

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….at the Horses!

Emotional control is important for both sides of trading. It’s been said and written about plenty of times, that keeping your emotions in check when taking a loss is vital. In fact, it’s becoming a monotonous subject in trading literature and educational material worldwide.

But how do you respond emotionally when you have a win? How do you respond emotionally if you have a winning streak, or even better, how do you react? Do you react? How about a big win? I don’t mean one of those home runs that a lot of novices chase after, thinking it will answer all their prayers. I mean the sort of trade that comes once in a while and affords you the ability to take more losses than winners. How do you respond to these?

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Did you enter the trade long?

For those of you that haven’t read the first part of this trading quiz, please look back a couple of posts and do so now.

For the rest of you, read on and see what happened next…

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Trading the markets is a learning game

Are you one of those traders who always needs to be right? Maybe you’re like that in most areas of your life. Novice traders fall into this category more so than any other level of trader. The need to be right stems from not being able to accept criticism, and this stems from having an emotional attachment to criticism.

Think about this for a second; our desire to be right all the time most likely came from our earlier years where we were taught that mistakes are wrong. The biggest problem with this way of thinking is that there is an emotional attachment to the mistakes such as feeling inferior or inadequate. Because of these undesirable feelings, we strive to be correct all the time.

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Would you trade this?

Hi everyone, I think it’s time for a little quiz.

Take a look at the chart below, and tell me what (if anything) you would do, and why you’d do it.

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How long can you hold on for?

100 traders were given a stock pick from a highly reputable trader/advisor. The pick came with entry price, stop loss and method of trail. [His accuracy in the past made him second to none, however very few of his clients can make the sort of returns he does, even though they follow his picks religiously.]

Of the 100 traders that entered the trade (all at roughly the same price), only 5 went on to make double digit returns, and only 1 went on to make a triple digit return. 50 broke even, 40 lost money and the remaining 14 had mixed results but all were less than double digit returns. So what happened?

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Trends for beginners

Despite trying to keep my posts simple and easy to understand, I’ve been guilty of using jargon without always realising it, and in my recent posts on the 1-2-3 breakout trading system I didn’t make much of an effort to clarify trends.

In this post we are going to rectify that and use some basic technical analysis skills to give you a basic outline of trends.

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Here’s your chance

The Dow30 (DJIA) presented a perfect short trade on the 9th on the hourly chart.
What presented as a trade began forming around the end of July and the 1st of Aug, and made its final completion on the 8th where it said to me, Dean, here is a possible short.

I want you to go to the hourly chart of the DOW and tell me exactly what it was I saw. If you can do that I will give you a free copy of my book, the Financial Market Fisherman.

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What are you going to do now?

This morning I woke up to the news that in the US the Dow had fallen 2.8% (387 points) overnight, along with falls in other markets. The ASX XJO, the Australian top 200 index has lost 3.7% today in a 229 point fall.

Having been a member of a private forum that focussed on put credit spreads, I know there are going to be many traders that will have found the last two weeks of trading particularly stressful.

The posts I dreaded reading from members of that forum time and time again after falls like this can be paraphrased in five words; “What should I do now?”

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