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Posts Tagged ‘trading profits’

In the trading business, don’t discount your own personal skills and gut instinct. Try to set up a business environ that is comfortable for you and tailored to your unique talents and personal traits. There is no one method that is set in stone to turn trading losses into trading profits. There are many unique paths to financial success and you can find the way to success that works for you.

In order to make money, you need to approach trades like any business and maintain your senses. In order to accomplish this you require worthwhile and practical knowledge which you can grasp in a minimum amount of time.

My goal with this sequence of articles is to drastically abbreviate the amount of time required to take you to the point you wish to be in your trading, preventing distressing losses and changing them into money-making opportunities. This information will provide you with a shield so that you along with your investment are secure on the market battleground.

Time is money. So let’s begin. After doing some research on trading, I learned a very subtle, almost a secret, phenomenon which gave me a better insight as to why hundreds of thousands of known successful people who have an intelligence level that is above average cannot seem to get in as traders. I’m speaking of something which happens–not a character trait.

I know several experienced brokers who have dozens of clients who are astute, successful individuals–outside of trading. They seem to have all the right characteristics, yet for some unknown reason they do things while trading that they wouldn’t dream of doing in a profit making business. The brokers wonder why so many people seem to lose their minds when trading.

The solution is hard to find and frustrating for both the broker and the trader. It is after all the trader who is loosing their invested cash with their behavior that does not make any sense.

The reason for this is what I say is The Subtle Trap of Trading. It is located in Futures, Stocks, and Forex markets. After you are finished reading, you might share some of the same thoughts that came to me:

It sounds like a conspiracy!

While I’m not convinced that it does, the “system” certainly appears to operate to the advantage of a small number at the cost of the majority.

Everything involved in the trading industries seems very upfront, but when you take a deeper look at how things work together, you come to understand something that very few others do, and you’ll begin to see why so many people end up frustrated, confused and losing money in the markets.

It is with valid cause that I refer to it as a trap, since the majority of traders will battle and still lose funds until their account is erased. Occasionally they are so ensnared that not only their account is devastated but their non-risk assets are threatened.

It depends how the trap is set.

Back when you first heard about stock investing –long term investing, not day trading– you were cautioned to do research before investing and to learn the things that made for a good company to invest in.

You discovered there’s a lot to learn before investing in a company. You need to learn about the industry, their market position, the current management, their track record and competitive advantage, how to read the company’s financial statements and annual reports, etc., etc. A lot to learn.

Be careful and pick wisely, you’re in it for the long haul is some good advice which you have more than likely heard. A fundamental principle going in the right direction to trading profit. It is possible your investing consisted solely of mutual funds and 401k. Safe, easy and having no hard work what-so-ever, and totally in your comfort zone.

But at some point along the way, you heard all about the amazing universe of profitable commodities markets. You also heard about just how easy it is, as well as about the amazing leverage that is involved.

And commodities aren’t companies that require research to understand. They’re goods – things you grew up with. Gold, silver, wheat, soybeans, cattle, corn, sugar, natural gas, oil, etc. It’s all so familiar.

And here is the location for setting the trap.

Several things work in combination to make up the trap, and the first one is familiarity. This one fact is very subtle yet has an incredibly potent effect upon you and your trading.

Intelligent successful people become struggling money losing traders because of unwise decisions made when they fall into certain traps. In the next section we will examine the components of these traps and show how these same people can record trading profits.

A lot of folks who plan on having a winning trading career wind up losing money. This is in spite of the presence of many reliable share trading education businesses, the availability of numerous trading books providing investment tips, and the occurrence of sound trading rules which have withstood the test of time. These rules are not covert-nearly any book will reference at least some of them. But even with all this, countless individuals still find it hard to attain trade profits in the long term.

It took me a long time to figure out that no one really understands why the market does what it does or where it’s going. It’s a delusion to think that you or any one else can know where the market is going. I have sat through hundreds of hours of seminars in which the presenter made it seem as if he or she had some secret method of divining where the markets were going. Either they were deluded or they were putting us on. I have seen many complex Fibonacci measuring methods for determining how high or low the market would move, how much a market would retrace its latest big move, and when to buy or sell based on this analysis. None has ever made consistent money and trading profit for me.

The most valuable stock investing tip that I’ve ever grasped is the one I’m about to explain. One thing a lot of folks battle to come to terms with is their own expectations in regard to their trading. A lot of folks, for instance, have unrealistic expectations and want to make triple digit trading profit on a regular basis.

If you are a person who places high expections on yourself it can be a good thing however, expectations that are not realistic are not. A lot of traders when offered good opportunities which the market offers to receive successful trading results, can easily be drawn into unrealistic goals for their trading. This can cause great devastation.

When one ventures out into gatherings of traders, it is amusing to listen to those who claim anything less than doubling or tripling their cash is not worth their time or effort.  These foolhardy individuals will not even listen to the rock solid plan that can guarantee a 25 – 35% annual return on investment.

Unfortunately for these people, their expectations are often too high and unrealistic. There will be times when they will suffer several losing trades in a row and when this occurs, they potentially will not be able to get back on track. With a slight drawdown in their trading capital and with their unrealistic goals in their mind, they will start to bend the rules and assume unacceptable levels of risk in order to regain the losses quickly and achieve their lofty goals.

A problem that certain traders walk into is even though they set themselves a realistic goal of 20% per year, for instance, they hope to achieve their return within the first few weeks as per say taking a longer term to look over the 12 months. 20% per year is just a tad bit over 1.5% per month and still their are a number of traders who expect to achieve this very fast and possibly take on some of the not so good habits which are mentioned earlier.

In conclusion, some worthwhile advice for investing in stock to guarantee effective trades is to establish objectives for your trades, yet just as importantly to be sure those objectives are quantifiable and feasible. Have fun trading!