Every time you break your trading rules
Your confidence will drop.
Protect your confidence, it's your greatest weapon.
When you have a clear cut position sizing strategy and don't put too much weight on any one trade, the odds are in your favor.
If you don't have winners and only losses, you don't have an edge.
If you have big winners and still lose, you may have an edge but you take too many losers.
If you have big winners and too many small losses it probably means that you lack discipline. If so, work on your mindset.
You have to backtest something you understand, otherwise your backtest will accelerate your failure.
You CAN get rid of ALL the psychological traps detrimental to your success in trading by being aware of them and being able to name them.
The solution is having a systematic approach, even if you are a discretionary trader. Don't try to get rid of your emotions. Control them.
Don't talk about your winning trades if you don't talk about your losing trades.
Don't lie to yourself and to others….
With a risk-reward ratio of 2 you start making money at 33% of winning trades.
With a RR of 3 you start making money at 25% of winning trades.
With a RR of 4, you start making money at 20% of winning trades.
Conclusion: build your trading system around the highest RR possible.
Don't underestimate your ability to be much better a year from now than you are today if your ultimate and only goal is to achieve consistency in trading.
Your trading system tells you what to do.
Your confidence allows you to do it.
Trading is a loop.
Amateur traders get trapped in a loop of fear, greed and anger.
Successful traders get trapped in a loop of edge, risk management and probability.
Trading success is 90% emotion control.
Trading success lies in our ability to build up an unshakable belief in our edge, through successive layers of learning, that ends up being a natural extension of ourselves, taking us into a zone where emotions are perfectly under control and action in sync with whatever happens.
A rigorous backtesting has several advantages.
The first is to determine if you have a real edge. The second is to provide an objective framework for following your trading rules, third to maintain confidence in adverse market conditions and fourth to reduce your profit gap.
If you can't name your setup, don't trade your setup. Period.
Keep the charts of your winners in a database and review them as much as possible.
Keep track of your losing trades and review them as much as possible.
Take more winners and less losers.
Look at a flock of birds or schools of fish moving in an orderly fashion as one man.
You will get a better idea of what the market is: a living organism moving erratically with a few recurring harmonic patterns.
You don't have to change or get rid of emotions to trade better, you have to change your relationship with your emotions…
You need to first understand that your greatest challenge is not the stock market, it's you.
A trader who really knows the strengths and weaknesses of his or her own strategy can do significantly better than someone who knows only a little about a superior strategy.
You don't need a PhD in math or physics to be successful in the stock market, just the right knowledge, a good work ethic and discipline.
Most investors treat trading as a hobby because they have a full-time job doing something else. If you treat trading like a business, it will pay you like a business.
It's more important to make money than it is to be right.
A stock trading strategy is like a marriage; if you're not faithful, you probably won't have a good outcome.
Once acquired, the skill of proficient stock trading can never be taken from you.
No one can fire you from your craft the way a boss can from a job; it's just you and the market.
All you have learned and the experience you have gained can bear fruit for many years to come."
Never let a loss grow larger than your average gain.
Price reactions and pullbacks allow you to determine whether your stock is a tennis ball or an egg.
A spike in price on overwhelming volume often indicates institutional buying.
The trend is your friend. If you try to trade against it, the trend becomes your worst enemy.
Charts enable us to see what's going on in a particular stock as buyers and sellers come together in an auction marketplace.
They distill the clash of emotional and logical decisions into a clear visual display.
Chart patterns are not the cause; they're the effect. Human behavior hasn't changed and isn't likely to change much in the future.
It's people - emotional, imperfect, even illogical - who make buy and sell decisions. Ego, fear, greed, hope, ignorance, incompetence, overreaction and other human errors in reasoning create all sorts of discrepancies and in turn opportunity.
It can be very confusing if you listen to what people are saying instead of paying attention to what stocks are telling you.
No one cares about your money and your future as much as you do. Do the work, own your failures and you will own your success.
Your goal is not risk avoidance but risk management: to mitigate risk and have a significant degree of control over the possibility and amount of loss.
To win in an environment where everyone has the same objective, you must do the things that most investors are consciously unwilling or subconsciously unable to do.
Losses are a part of trading and investing; if you are not prepared to deal with them, then prepare to eventually lose a lot of money.
If you're going to become a stock trader, you will be trading for years, maybe even decades.
If you regard each trade as just one out of a million over time, it becomes much easier to take a small loss and move on to the next trade.
Avoiding large losses is the single most important factor for winning big as a speculator.
You can't control how much a stock rises, but whether you take a small or large loss is entirely your choice.
Lack of patience is killing you.
Stop focusing on the short term. Start focusing on the long term.
Stop thinking about missed opportunities. Start thinking about the next opportunities.
Never give up. Great things take time. Be patient.
@Compiled from Quotes of Anonymous Stock Market Experts
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