Reblog: The Rare Trading Edge


Being a profitable trader is not just about changing what you do but who you are. Unprofitable traders tend to be impulsive, greedy, impatient, and take actions that are random. You don’t need to do one great trade, the odds are that one big trade will cause more damage than good. Like most lottery winners that end up bankrupt most new traders with windfalls from luck give all the money back when the risk of trading too big catches up with them in big losses. The skills a new trader needs to learn is creating good trading signals, proper position sizing, the discipline to follow their plan and the flexibility to go with the price action.

The magic happens after consistently following a quantified trading system day after day and month after month and let profits play out. The sustainable money in trading is learning how to minimise losses, exit winning trades while the money is still there and the compounding of capital over time. The magic happens with the creation of a system that fits your own beliefs and risk tolerance and the repeating of your entries and exits over time.

There are many profitable systems that can make you money, if it was a matter of an idea or a backtest everyone would be rich. It is the execution of the right idea over time with discipline and self control that makes all the difference. The rare trading edge is the trader’s mastery of their own mind and emotions.

stockarchitect September 16, 2019

newtraderu.com / Profitable / Steve Burns / trader / Trading Edge /

Reblog: 7 Expensive Things for Traders


  1. Trading with no stop losses. You can’t control how big your profits are, the market will trend as far as it does. However, you can control and limit the size of your losses with a stop loss and a carefully managed positions size. Not having an exit plan if you are wrong can be very expensive when a trend takes off against your position and you start hoping instead of just cutting your losses and moving on.
  2. Your opinion can cost you money. Trading your opinion against all other market participants can be very expensive. The market goes where it wants and when you disagree with where it is going it will cost you. Going with the flow in your time frame is the best way to make money. Fighting the flow of the market can be expensive.
  3. Egos are expensive things. Inflated egos cause a trader’s #1 priority to be proving they are right and refusing to admit when they are wrong. It is very expensive for ego gratification to be higher on a trader’s list than making money.
  4. Trading off predictions can cost a lot of money when they are wrong. There is more to be made by reacting to what the market is doing instead of predicting what you think it will do later. The future does not exist and it is expensive to pretend like it does.
  5. Stubbornness causes small losses to become big losses. It causes a trader to make the same mistake over and over because they do not assimilate feedback. Instead they keep doing the same thing over and over and expect different results but keep getting the same results. Stubbornness is expensive.
  6. Not having an exit strategy for a winning trade can be very expensive. It is possible to ride a big winning trade back to even. If there is no plan to lock in profits while they are there a winning trade can even turn into a big loser. Trailing stops and targets can put the profits in the bank.
  7. Trading too big of position sizes for your account can be very costly because no manner how good your winning trades are you are set up to give back the profits with a few big losing trades in a row.

The original article posted by Steve Burns appears on newtraderu.com and is available here.

stockarchitect September 4, 2019

Exit Strategy / mistakes / newtraderu.com / Steve Burns / Stop Loss / Trading /

Reblog: Where Do Our Greatest Trading Mistakes Come From?


Where do our greatest trading mistakes come from while we are trading the financial markets? They arise primarily from within. It is not the price action that causes our missteps and mistakes but our response to the price action.

  1. Your ego will cause you to allow a small loss to grow into a big loss because you do not want to be made wrong by exiting with a loss. Ego wants to hold on until you can at least get back to even. Not locking in a loss but holding it until it gets back to even gives the ego some gratification. This is also what creates many resistance levels at old support when people are given a second chance to get out at even.
  2. Trading what you think is going to happen instead of what is happening can keep people on the wrong side of trends for days, weeks, and months. Imposing your own opinions on price action instead of following it can cause big losses or to miss big trends while think the market is wrong and we are right.
    Continue Reading →

stockarchitect August 21, 2019

newtraderu.com / Steve Burns / Trading Mistakes /

Reblog: 6 Technical Indicator Signals Basics


Chart Courtesy of StockCharts.comChart Courtesy of StockCharts.com

Signals help traders filter out their opinions and focus on price action. These tools help capture trends in your own time frame.

  1. The 200 day SMA measures the long term trend. Price above long term bullish, prices below signal long term bearish.
  2. The 10 day EMA measures the short term trend. Price above short term bullish, prices below signal short term bearish.
  3. The MACD crossover can signal an intermediate swing trade.
  4. The Slow Stochastics crossovers can signal short term reversals in the trend.
  5. A declining ATR shows volatility decreasing and an ascending ATR shows volatility increasing. This is a signal to help calibrate position sizing.
  6. The RSI shows the risk/reward ratio increasing and decreasing. The 30 RSI favours the bulls risk/reward for entry and the 70 RSI favours the short sellers risk / reward ratio.

The magic of these trading indicators comes when you combine them to create your own trading methodology that fits your own risk tolerance levels and then trade your system with the right risk management and discipline.

The original article is posted by Steve Burns on newtraderu.com and is available here.

stockarchitect August 14, 2019

ATR / EMA / MACD / newtraderu.com / RSI / SMA / Steve Burns /

Reblog: 10 Things A Trader Needs to Give Up


It is easy to become obsessed with adding to our trading arsenal with knowledge, books, chart patterns, indicators, moving averages, and gurus, that we forget to analyse what we need to remove from our plan.

One of the largest determining factors as to whether a new trader ends up as a winning trader, is how well they can filter out what doesn’t help them make money. Traders can’t follow every indicator, trade every method, and endlessly add to their trading methodology. As traders we have to make choices. We must know what makes money and what to remove from our trading strategy.

  • Give up your need to be right: The market is always right, don’t strive to be right in your predictions and opinions. Strive to go with the flow of the market.
  • Give up control: No matter how long you watch a live stock stream, you have no power over the movements. Save your emotional energy by not trying to cheer on your positions and get wrapped up in every price tick.

Continue Reading →

stockarchitect August 7, 2019

newtraderu.com / Steve Burns / trader /

Reblog: A Guide To Stop Losses


“Whenever I enter a position I have a predetermined stop. That’s the only way I can sleep at night. I know where I’m getting out before I get in.”- Bruce Kovner

The biggest reasons traders end up unprofitable is simply because their big losses knock out all their previous gains.

If you went back and removed your biggest losses over the past few months or year what would your trading results look like? Many of the best traders I know did this at some point in their trading careers and had an enlightening moment. The major factors that made them unprofitable or caused them big draw downs in capital were the big losses. The roots of the big losses were usually based in emotions and ego not a market event. A big loss is almost always caused by being on the wrong of a trend and then staying there.

What are the top 10 root causes of big losses in trading?

  1. Too stubborn to exit when proven wrong: You just refuse to take a loss; you think a loss is not real as long as you do not exit the trade and lock in the paper losses.
  2. Too much ego to take a loss: You are on the wrong side of the market trend but think if you hold a losing position you can be proven right on a reversal. While you are waiting to be proven right your loss gets bigger and bigger.
    Continue Reading →

stockarchitect July 31, 2019

newtraderu.com / Steve Burns / Stop Loss / Trading /

Reblog: Ray Dalio Trading System Explained


This is a Guest Post by AK of Fallible

AK has been an analyst at long/short equity investment firms, global macro funds, and corporate economics departments. He co-founded Macro Ops and is the host of Fallible.

In this video we’re going to discuss how Ray Dalio created his investment strategy and how you can use the same principles to create your own!

Continue Reading →

stockarchitect July 22, 2019

Fallible / newtraderu.com / Principles / Ray Dalio / Steve Burns / strategy /

Reblog: 10 Reasons Moving Averages Work


10 Reasons moving averages work as trading tools.

  1. Moving averages filter trends in different timeframes.
  2. Moving averages can create entry signals at the beginning of a trend.
  3. They can be used as exit signals when price dips below them.
  4. Moving averages can be used as trailing stops so you can exit with profits when a trend starts to bend.
  5. Moving averages can be used in crossover combinations for slower signals.
  6. Moving averages can help filter volatility.
  7. You can do historical back tests of price action to develop price action trading systems using moving averages.
  8. Moving averages are reactive technical trading tools not predictive.
  9. When price falls below and then breaks back over a moving average it is a great signal for a potential reversal.
  10. Moving averages are better gurus than talking heads on financial television.

Moving averages have a place in any trader’s or investor’s strategy. They are my favourite filter for price action.

The original post is written by Steve Burns, appears on newtraderu.com and is available here.

stockarchitect July 8, 2019

Moving Averages / newtraderu.com / Reversal / Steve Burns /

Reblog: 10 Great Technical Trading Rules


Only price pays. In trading, emotions and egos are expensive collaborators. Our goal as traders is to capture price moves inside our time frame, while limiting our drawdowns in capital.

The longer I have traded, the more I have become an advocate of price action. Moving away from the perils of opinions and predictions has improved my mental well-being, and my bottom line. It also makes it easier to create and adapt to trading rules.

“WE LEARNED JUST TO GO WITH THE CHART. WHY WORK WHEN MR. MARKET CAN DO IT FOR YOU?” – PAUL TUDOR JONES

In developing a trading system of your own, you must begin with the big picture. First, look at the price action and then work your way down into your own time frame. You need to create a systematic and specific approach to entering and exiting trades, executing your signals with the right trailing stops, setting realistic price targets and position sizing, and limiting your risk exposure. Relying on fact, rather than being tossed around by your own subjective feelings, will insure your long term profitability.

Continue Reading →

stockarchitect February 20, 2019

Education / Investing Research / seeitmarket.com / Steve Burns / Stocks & Bonds / Strategies & Setups / Technical Analysis /

Reblog: 7 Habits of Highly Successful Traders


There are seven things that I believe are pretty common in the successful traders I have known, read about, and seen in action. Whether it is stock trader Nicolas Darvas in the sixties, commodity trader Ed Seykota in the twentieth century, or Jesse Livermore at the turn of the last century, many of their principles hold true to this day. The closer I get to these principles, the better I trade. The farther I stray from them, the worse I do. In trading, discipline pays. Adopt these seven habits of highly successful traders.

  1. Traders must have the perseverance to stick to trading until they are successful. Many of the best traders are the ones that had the strength to push through the pain, learn from their mistakes, and keep at it until they made it.
  2. Great traders cut losing trades short. The ability to accept that you are wrong and put your ego aside is the key to personal and professional success.
    Continue Reading →

stockarchitect May 2, 2018

7 habits / habits / newtraderu.com / Steve Burns / success / successful / trader / Trading / Trading Psychology /

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