During three separate interviews this week I was asked if I was seeing any signs of complacency among investors, markets, or clients.
When you first start trading, the most likely short term outcome bar far is that you will blow up account.And then quit. But it doesn’t have to be this way! If you avoid these simple beginner trading mistakes then I guarantee that you will have a better shot at trading long enough to become consistently profitable.
Ninety percent of traders lose ninety percent of their money in ninety days. Or so we are told. No one really knows if that is true. Avoid these 7 beginner trading mistakes and hopefully you will avoid become a trading casualty statistic!
Trading too large
Blowing up your account need not be inevitable. But if you insist on risking five, ten, twenty…even one hundred percent of your account on your first trade, I can almost guarantee you that you will eliminate your trading account long before the ninety days are up.
The Fibonacci sequence is being used by traders to get some indication of how the market is likely to move.
Advanced trading education sometimes involves figuring out quite strange and seemingly illogical concepts. But these could make the difference in your performance in stock trading.
Can the Fibonacci numbers help predict market moves? According to experienced analyst Martin Tillier, they apparently can, though he was skeptical when initially introduced to the concept. When you think about it, it doesn’t quite seem logical to believe that calculating major stock market levels on the basis of some mathematical sequence actually works. Can the figures thrown up by a numerical relationship affect the real world stock prices?
The Fibonacci Sequence
LiveScience defines the Fibonacci sequence as number series where you get to a number by adding the two numbers just before it. So if you start with 0 and 1, and the sequence is 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, etc. The concept has its origin in the theories of many scholars of ancient Indian mathematics, particularly Pingala in 200 BC, Virahanka in 700 AD and Hemachandra in 1150. It was introduced to the Western world by Italian mathematician Fibonacci in his book Liber Abaci in 1202.
Over 90% over traders will end up losing money in the stock market. Chances are if you are reading this you are probably loser in the Market. In order to encourage you to quit before you lose all your money, I created a list below to make you realize you are terrible at trading and should probably find another dream to pursue.
- You follow “professional” traders on twitter. The truth is many on twitter are complete phonies and have built a fake trading persona to end up selling you something in the end. More on this can be found on my guide on how to identify fraud traders.
- You look at inspirational quotes or quotes given by “famous” traders as part of your trading regimen. This is non-sense, this won’t help you.
- You assume psychology is a major part of trading, much more than an actual system. As such, you constantly remind yourself that you lost money in your last trade because of psychological mistakes and thus you refer to #2 on the list to regain focus (stupid trading quotes). If psychology was such a big part the simple solution would be to write programs that would trade for you (this isn’t a money maker). The truth is, many “professional” traders instill that psychology is big so that they can sell you their products for improving your “weak” psychology. Just to be clear I am sure most of you lack discipline, but even with discipline you still would lose money.
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It’s easy to understand how there might be a pattern in the market that shows we have an edge or a reason to put on a trade. Maybe some combination of factors or patterns shows us that a market is more likely to go up over a certain time period, so we buy it. That’s pretty easy to understand, and it’s how most people think about trading.
There is another way to think about patterns, and I think this is more powerful. We can take a pattern, and then think several steps ahead. Through much the same process a beginning chess player might go through, in which he thinks “ok I move here and then maybe he moves here… and when he moves there I’ll do this… but wait… if he does this instead, then I would do this…” We can play a similar game with the market, looking at how prices and patterns are developing, and thinking a few steps ahead. Take a look at the chart below, which shows the S&P 500 futures a few days after a sharp selloff. I’ve also highlighted two possible scenarios, in light orange and blue, that might have played out. Here’s the chart:
Momentum stocks can grow your trading account exponentially if you know how to manage risk, find good entries, and stick to your trading plan. New and inexperienced traders have to be especially careful because they can destroy there account as quickly as it can grow. Here are some of the best strategies and tips you can use to maximize your profits on these stocks.
Daily Chart Breakouts
Daily chart breakouts are a great daily context to play for momentum plays. The bias is obvious, it is easy to define your risk, and there is usually great risk versus reward. For newer traders, it is easier for most to play setups that are joining an existing trend. You want to look for long periods of consolidation before playing a breakout, like we see with SHOP above. The longer a stock is trading within a range, the more powerful the move will be when it breaks major resistance or support.
Trading with the trend is trading with the flow. When the prevailing trend is up, why would you want to look for short entries when buying might result in much smoother trades? Many amateur traders, even when facing a long lasting trend that has been going on for months, can’t stop trying to predict reversals, whereas they could have made so much more money by simply joining the trend.
But even if you are not a trend-following trader, you can combine the concept of trading with the higher timeframe trend with your regular trading approach: you start on the Daily timeframe and see if the trend its up, down or sideways and you use that information on your lower, execution timeframe to time your trades (read here: how to perform a multi-timeframe analysis). To be able to correctly read price action, trends and trend direction, we will now introduce the most effective ways to analyze a chart.
Intro: The different market phases
Before we start going over how to identify the trend, we should be first clear what we are looking for. Markets can do one of three things: go up, go down, or move sideways.
The picture above shows you the three possible scenarios and how markets keep alternating between the phases. But knowing what has happened after the fact is always the easy part. The hard part is finding out what is currently happening when markets are moving in real time and the space on the right is empty – that’s where this article comes in. To be clear, the article is not meant to show you how to identify trading entries, but to understand price and trends in a more efficient way.
A trading tool is anything that has a function that helps you be a profitable trader.
- Back testing software is a tool that helps you see what type of price action trading signals were profitable in the past price data.
- An entry signal is a tool that tells you when to get into a trade because the odds are in your favor for a winning trade.
- A stop loss is a tool that limits the size of a losing trade.
- A trailing stop locks in open profits when a trend starts to bend.
- Position size determines how big your trade should be based on market volatility.
- A profit target is a tool to measure the potential reward if your trade works out.
- Moving averages are tools for quantifying a trend.
- Passion for the markets is the powerful internal trading tool that gives you the energy to do the needed work to be a profitable trader.
- Perseverance is a psychological trading tool that keeps you going even when you want to quit.
- Self control is an internal trading tool that enables you to follow your trading system regardless of your emotions.
Your greatest trading tools are going to be perseverance and self control. These are the only things that will buy you the time to learn how to build a profitable trading system, and once you have developed a system that works to then follow it long term.
This article was written by Steve of newtraderu.com and can be found here.
A profitable stock trader’s success is not based on picking the right stock at the right time. There are dynamics that determine success other than entries and picks. Millionaires aren’t created because they have a magic system for trading through all market environments. There are a couple of things that influence profitable trading, and they could surprise you.
#1. Having the right mindset to win; psychology.
#2. Managing your risk exposure on each trade; risk management.
No system will work if you can’t trade it consistently. You must stick to your method when you are losing. Whether it’s to keep taking entries, to go to the sidelines and wait for volatility, or to settle down and wait for a trend to emerge.
You must stay in the game and be ready to take your entry signals. The primary reason that traders lose money is that they give up when things get tough because they don’t have faith in their system. A trader must persevere, never quit learning, never quit working, and always be ready to trade.
Lemon Tree Hotels Ltd. (LTHL) is India’s largest hotel chain in the mid-priced hotel sector, and the third largest overall, on the basis of controlling interest in owned and leased rooms, as of June 30, 2017, according to the Horwath Report. It is the ninth largest hotel chain in India in terms of owned, leased and managed rooms, as of June 30, 2017, according to the Horwath Report. LTHL operates in the mid-priced hotel sector, consisting of the upper-midscale, midscale and economy hotel segments. Company seeks to cater to Indian middle class guests and deliver differentiated yet superior service offerings, with a value-for-money proposition. The company opened our first hotel with 49 rooms in May 2004 and as on 31.01.2018 it had 4,697 rooms in 45 hotels (including managed hotels) across 28 cities in India. On the said date it has 662992 members in loyalty programme as “Lemon Tree Smiles” and the number is continuously rising.
LTHL aims to be India’s largest and most preferred chain of hotels and resorts in each of the upper-midscale, midscale and economy hotel segments. Due to the dynamic and evolving nature of Indian guests’ expectations and based on its market research, company has created three brands in order to address these three hotel segments: (1) ‘‘Lemon Tree Premier’ which is targeted primarily at the upper-midscale hotel segment catering to business and leisure guests who seek to use hotels at strategic locations and are willing to pay for premium service and hotel properties; (2) “Lemon Tree Hotels” which is targeted primarily at the midscale hotel segment catering to business and leisure guests and offers a comfortable, cost-effective and convenient experience; and (3) “Red Fox by Lemon Tree Hotels” which is targeted primarily at the economy hotel segment.