Having interviewed many of the greatest ever traders over many years in his Market Wizard series, many of whom expressed the important role personality plays in trading, Jack Schwager dedicated an entire chapter to the subject in his latest offering ‘The Little Book Of Market Wizards’, and even went so far as to say “if you get nothing else out of reading this book than the one following principle, it will still have been a very worthwhile endeavour: Successful traders find a methodology that fits their personality.”
To illustrate his point he contrasted the frenetic style of Paul Tudor Jones with that of the studious Gil Blake, but perhaps the simple yet profound contribution from Colm O’Shea was what stood out the most, as Schwager surmised here:-
“Traders must find a methodology that fits their own beliefs and talents. A sound methodology that is very successful for one trader can be a poor fit and a losing strategy for another trader. Colm O’Shea, one of the global macro managers I interviewed, lucidly expressed this concept in answer to the question of whether trading skill could be taught: ‘If I try to teach you what I do, you will fail because you are not me. If you hang around me, you will observe what I do, and you may pick up some good habits. But there are a lot of things you will want to do differently. A good friend of mine, who sat next to me for several years, is now managing lots of money at another hedge fund and doing very well. But he is not the same as me. What he learned was not to become me. He became something else. He became him.’”
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Because financial matters are rarely covered during high school, many people don’t understand the stock market or how to invest their money properly.
This means that they are more vulnerable to investment scams. With the growth of the internet, and the current frothy state of global markets, these investment scams are unfortunately all too common.
So here are a list of 20 common traps that all traders and investors need to be aware of:
1) Ponzi Schemes
Ponzi schemes involve a cycle of using new investors money to fund the returns of existing investors.
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Successful trading is 90% waiting and 10% execution and that’s the exact reason why trading is so challenging. When people think about trading, they imagine a well-dressed Wall Street guy who angrily shouts at his monitors while being on the phone with London, Hong Kong and Tokyo simultaneously to place the next big killer trade which will make him a lot of money. Dead wrong!
In this article, I will show you my approach to trading and explain how you must trade calmly and in a relaxed state of mind if you want to be successful in this business.
I call myself a reversal or early trend trader which means that I look for established and mature trends that show signs of exhaustion. The general trading literature suggests that new traders start with the trend following approach but from my experience I have seen that the reversal approach does make more sense to most traders.
Reversal trading has a bad reputation because people believe that it’s all about trying to predict the next market turn before it happens which couldn’t be further from the truth. Reversal trading is often nothing but early trend following trading as we will see.
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Price action is among the most popular trading concepts. A trader who knows how to use price action the right way can often improve his performance and his way of looking at charts significantly. However, there are still a lot of misunderstandings and half-truths circulating that confuse traders and set them up for failure. In this article, we explore the 8 most important price action secrets and share the best price action tips.
#1 Support and resistance zones are better than levels
Support and resistance is probably the most popular price action concept, but only very few traders can actually make money with it. The reason is often very simple, although it’s not as obvious at first glance.
Most traders just use single, horizontal levels when it comes to trading support and resistance which look great in hindsight but fail during live trading. The reason is that singles lines are no effective way of looking at price movements. Creating support and resistance zones is much more effective when it comes to understanding price.
The screenshot below shows that the trader who just uses a single line either misses trading opportunities when the price does not reach his lines. Or he gets thrown out during volatility spikes; the trader who uses zones instead can filter out the noise that exists in the zones.
I hope that this concept doesn’t have to stay one of the price action secrets much longer and more traders will start using this technique.
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