Trading Is Not Rocket Science!

Despite what some people may lead you to believe; day trading, swing trading and trend trading is not anywhere as difficult as they would like you to think. It really boils down to two key components.

First, you have to have an approach that helps you identify trades that have a consistently high probability of making money. Once you have this you must exploit this "edge" over and over again.

The only way to do this is to use the necessary discipline to never deviate from your system. The minute you start tinkering or tweaking things is when you will lose your edge!!!

You will most likely be tempted to do this after you have had a few losers. This is the time however to keep your focus and remind yourself that your system has a statistical advantage that has held up over time.

Think about this for a moment? If you go gambling in Las Vegas and can even gain a 1% advantage over the house you can make a literal fortune by exploiting this edge. That little one percent advantage can make the casino lose a whole lot of money over time. As a matter of fact the minute they notice that you have a viable system they will label you a cheat and ban you from the playing. It sure is a good thing that can't happen to traders!

Now consider what happens if you have a trading strategy that produces trades that go into the money more than 60 to 80% of the time?

Now the second step to success is to manage your emotions. Two of the biggest indicators of a trader who is not managing their emotions are FEAR & GREED. These two emotions will wipe out every trader over time, both experienced and inexperienced alike.

Let's talk about them for a minute...

FEAR: Fear of losing money or fear of being wrong is what causes traders to have this emotion.

"Trading with scared money" often causes the fear of losing money. This is when a trader is risking money that should be used for the rent, food, children's education etc. If this is the case the only solution is to find additional funds that you are willing to put at risk. This helps to put the mind at ease and reduces the fear.

Fear of being wrong is simply the part in all of us that just doesn't like to be wrong. The cure for this is to simply realize and accept that losses are part of this game. Think about this? A baseball player only need hit the ball once for every three times at the plate and this will get him into the Hall of Fame.

I feel this every once in a while and remind myself that... My approach for trading has both historically and real-time produced consistent winning trades. This gives me the confidence to step up to the plate and keep swinging. Also I tell myself that the only way to earn the big money is to get into the game.

GREED: Traders who are greedy are often the exact opposite of the ones who are fearful. They have no fear and this can get them into trouble. They will tend to over trade, not follow the rules and basically "wing it". Sometimes this will work, but it always ends up back-firing.

One of the biggest problems when greed sets in is the inability to know when to take profits. These traders are so bent on making a killing that they are never happy. If they are up 10, 20 or 30% they don't even think about cashing out, as they want more. This often leads to the inability to see the trade turning against then and they will allow winning trades to turn into big losing ones.

One solution for this is to realize that making 3, 5, 10 or 15% on a regular short time basis adds up really quick. I know for me personally, once I was confident in my methodology, I no longer felt the occasional feelings of greed. Now I don't worry about "going for broke" as I know that there is always another good trade waiting for me.

This article is courtesy of Dr. Jeffrey Wilde, a trading veteran with 15 years of experience in all major markets. He is a trading coach to over 1400 traders in 38 countries.

For additional info: http://www.win-at-trading.com

---

Exchange Traded Funds

They call 'em ETFs.There are hundreds of them.The mutual funds don't want you to find out about them.Why?Because they beat the socks off mutual funds in so... Read More

Asset Location ? Increase Investing Returns & Reduce Your Taxes

Location ? Once the holy grail only for real estate investors is fast becoming the mantra for every stock, bond, and mutual fund investor. Experts and studies... Read More

Trading Baskets Part I

Q. What is a basket?A basket is a group of up to 50 stocks that you can trade, manage and track as one entity.In another article, I... Read More

Stocks, Oil, and Bonds

A barrel of oil bounced to over $60 Thu, which triggered a steep sell-off in the stock market Thu and Fri, although oil pulled-back to around $59... Read More

The Basics of Tax-Free UK Financial Spread Betting

Financial Spread Betting (or Trading) offers a tax free method of speculating on financial markets.Quite simply, if you think a particular index, share, commodity, currency or sector... Read More

How to Choose the Right Share Class

You'll want to opt for the no-load or institutional share class instead. If you're a no-load investor who is determined to buy a fund that's primarily broker-sold,... Read More

Quit and Retire Three Years Earlier!

For most people, there is a direct correlation between how worried they are about retirement income, and how much they can actually do about it. This is... Read More

Shareholders Meeting Changing With Times

A significant number of corporations that settled accounts in the past year are ready to hold their annual shareholders meetings.In this year's meetings, more than 300 companies... Read More

Finding a Broker

"Hey Joe! I need help finding a broker. I notice that discount commission rates are pretty much the same. So how do I choose?"Commission is definitely not... Read More

June 2005: Weather Forecasts for Weather Traders

If Johannes Kepler, the renowned 17th century astronomer and discoverer of the planetary laws of motion, could speak from the heavenlies, he might have a few words... Read More

Investing in Car Dealerships: How to Do It Right

The financial characteristics of the automobile dealership are attractive:". . . moderate growth and risk and high returns. Franchised new car dealer revenues have grown at a... Read More

Annuity Investment Guide

While there is not a lack of information on annuities, there certainly is a lack of good information. In an age full of information, we are constantly... Read More

Investing in World Markets

There are many different ways to invest in world markets: stocks, bonds, mutual funds, options, commodities or currencies. Sometimes people refer to these options as investment vehicles... Read More

Investing and the Fear of Regret and Greed

People tend to feel sorrow and grief after having made an error in judgement.Investors deciding whether to sell or buy a security are typically emotionally affected by... Read More

How To Start Investing For Financial Independence, Part 1

Today, I am going to start a multi-part series about how to go from being a beginning investor to being "financially independent" in a steady and predictable... Read More

Commodities - The Next Big Wave of Fortune Building

Have you often wished you could have got in on a tremendous money making opportunity before it took off? How would you feel if you had bought... Read More

Asset Allocation Lessons: The 70% Inflation Solution

For investors only... and for speculators who need to invest their winnings.Lesson One: Asset Allocation is an Investment Planning Tool, not an Investment Strategy... few investment professionals... Read More

Begging Your Trust in Africa

The syntax is tortured, the grammar mutilated, but the message - sent by snail mail, telex, fax, or e-mail - is coherent: an African bigwig or his... Read More

Why the Rich Keep Getting Richer

Rich people: fortunate, lucky, selfish, and arrogant? Or highly educated, caring, brilliant individuals? Becoming rich isn't hard, but it does require a bit of time and knowledge.... Read More

Six Principles of Successful Investing

1. Begin investing immediatelyProcrastination is the number one enemy of investing. An early start in investing can make an enormous difference as the investor will be able... Read More

Focus Your Investments on the Long Term

"All human power is a compound of time and patience!" Honore de Balzac (1799 - 1850)Long term investing or "Buy and Hold" is not about hunches, emotions,... Read More

Short Selling for Investors

Shorts. Let's see. If there are shorts there must be longs. Which is best? Longs or shorts?If you are trading in the stock the stock market experts... Read More

The Benefits of Laddering Your CD Investments

If you've decided to stock some money away in a certificate of deposit, why not reap the highest benefit over time by laddering your CD investments? What's... Read More

The Power of Small Numbers: Trading Success is Based on Consistency, Not Home Runs

Online trading is so seductive - just sit, click, and rake in the profits! But as anyone who has ever seriously attempted online trading will probably tell... Read More

Wit and Wisdom on Money, Wall Street and Success - Part #4

Can you concisely summarize your investment philosophy in a few sentences? My experience is that most people can't. The quotes that follow are diamonds that offer a... Read More

Trading Tips No 4: Technical Analysis The Holy Grail Syndrome

Everyone knows that the Holy Grail of investing and trading is a myth. Finding a good technical analysis tool that will give you a trading system that... Read More