Buck the Trade, Less Can be Better and More Profitable

Fewer Trades Can Mean Better Trading

There is a curious relationship between profitability and the number of trades you make. Often, a trader will make more money when trading less and suffer the biggest drawdowns when popping in and out of trades every time the impulse strikes. The latter scenario is the curse of overtrading. 

All market players go through periods of poor performance driven by overtrading. The reason is simple — we feel an overpowering urge to be in the action, regardless of whether there are good setups to exploit. For most traders, overtrading tends to run in regular cycles. It’s normal to increase position size and frequency when things are going well. But it’s vital that we watch opportunity costs closely when taking on more exposure. We assume larger positions will yield bigger profits, while the opposite is often true.

Markets cycle in and out of good trading opportunities all the time. It starts when the crowd gets agitated and bids stocks substantially higher or lower. Those are the wild times in which traders can make a lot of money. But that level of intensity is a fleeting emotion on Wall Street. Markets tend to run in place the vast majority of the time, forcing traders to be selective about their positions.

These dull periods can be particularly destructive when you overtrade. Smaller losses incur more damage to trading accounts over time than deep stab wounds. In other words, you’ll lose more money from small losses triggered by mediocre positions than being on the wrong side of poor earnings, short squeezes or unfavorable FDA decisions. This unpleasant experience is death by a thousand paper cuts.

Sitting on your hands is an excellent way to trade the markets during periods of noise and conflict. It’s also a strong discipline that works well for traders who are addicted to the price action and adrenaline rush it generates each day. Overtrading is a tough flaw to conquer, because it doesn’t disappear with experience. In fact, there are only two possible outcomes when you overtrade. First, you recognize the error, review your plan and get back into a disciplined frame of mind. Second, you ignore the problem and let it escalate until your account blows up.

The heat of the moment can be overwhelming, inducing poor trading choices we regret right away or after the closing bell. Bad mornings are especially destructive because they can trigger a domino effect that spirals into an entire day of overtrading and dwindling capital. Apathy creates special danger when we overtrade. We can lose so much money in a short period of time that endorphins kick in and dull our growing pain. This removes the fear factor but does little to wake up our internal discipline. In fact, many traders wash out when they hit this critical point, because their senses become too dull to take remedial action.

How can you overcome the overtrading monster? Start with these seven remedial steps.

1. Create a trading diary. Write down every position you take and why it is worth the risk. Then keep one eye on your losses at all times. Pull out the diary and study every trade taken on your bad days.

2. Review the environment. Choppy markets trigger more overtrading than trending markets. Step back before the day begins and figure out what type of market you’re really trading. This will lead to profound changes in strategy and discipline.

3. Study the charts. Was that a real pattern, or did you make one up in your head? The cold, hard numbers will keep you out of trouble as long as you’re willing to follow their signals. And they’re the best way to avoid impulsive behavior.

4. Talk to your spouse. It’s hard to fight body chemistry, but dollars and cents need to be separated from thrills and chills. The best reality check I know is to confess my sins to my wife at the end of the day. She understands my trading habits better than I do.

5. Don’t try to get even. The markets have no ego, are not out to get you and don’t care about your opinion. The sooner you realize there is no revenge factor, the easier it will be to establish the discipline required to avoid overtrading.

6. Walk away. No one says you have to be in the market every single day. Take a few days off or shut down the computer when you reach a predetermined daily loss limit.

7. Study your winners. Look for the common theme when you bring home the bacon. Most overtrading is triggered by a fear of missing out on the next good trade. This can set off a series of bad positions because you’re angry that the market isn’t paying off.

About the Author

CFD FX Report is a real time tool for clients with an interest in the trading of stocks, indices and commodities globally.CFDs (Contracts For Differences) are one of the worlds’ fastest growing trading instruments that allows clients to profit from a rising and falling market. The CFD FX Report is a company comprising of expert traders that analyse the market daily and are able to make recommendations for the following day trades based on this analysis. The CFD FX Report is released everyday at 6.30 p.m. (Singapore time) for review by the clients for the next trading day.
We provide sms and email service for our trade ideas as well as full member support. The trading tool that traders needs. Free 1 week trial

singapore trader
http://www.articlesbase.com/day-trading-articles/buck-the-trade-less-can-be-better-and-more-profitable-678116.html

Automated forex day trading

The video that you need to see is at http://snurl.com/forextradingrobot Basically, this video shows you some amazing results from using an incredible automatic Forex trading robot. This trading system and strategy uses the most advanced trading algorithm ever created. It utilizes market knowledge, advanced mathematics and computer engineering to consistently beat the markets. You really must visit this site and check it out. Just go to http://Snurl.com/ForexTradingRobot

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Duration : 3 min 34 sec

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Trading Ferragamo Wingtips and Italian Suits to Tee Shirts and Birkenstocks, Transformation and Home Business

Are you planning on possibly starting a home business? It’s an exciting and liberating thing to do. But it has its pitfalls. My words of warning and caution are not at all intended to turn you away. We my husband and I began our own home-based business four years ago and it was the right decision. But it has been demanding and difficult as well as rewarding and exciting. What is rarely mentioned is the change involved. This article is mostly about that, and mostly about my husband’s transformation as we moved into our own home-based business.

The decision to start our business had been in my mind for about ten years. I had been a schoolteacher and my husband was an investment banker. However, my real interest was in creating dishware, crockery, and all the assorted items that go with a meal in a restaurant. I was especially interested in organic food and cooking and I worked at creating dishware for organic restaurants. That became my passion. I thought about and dreamed about it and hoped that one day I would start a home business.

My husband was not interested in the home business idea, although very supportive of my dream for myself. For years he thrived in the corporate world. He was the essence of the high achieving executive, and he loved it. Then the stress began to build. Then, our son went away to college. It seemed to be time for a change. Over and over we would repeat the pattern: I would suggest that he quite his job and join me in our own business. Again and again he said no.

Then he reached a point where the stress became serious and for the first time he talked about a business. He would market and I would create. We talked and let our imaginations work. We would makeover the house and turn part of it into a set of offices and what I called “creation” rooms. We talked on and off for days. Finally, he said yes. That was how we began; it has been six years since that decision.

My husband left his investment career and we invested a large portion of our savings into a renovation of the house, the creation of offices and the renting of warehouse space.
We were looking at a complete change of life. Not every business involves that level of commitment, but for us, our savings and our future were wrapped up in our business, as well as our dreams of independence. We had cut many ties to our old life and we had to accept the demands involved in entering a new world. But the demands are as exciting as they were difficult. For us, nothing in the work world can compare with creating and selling products that we have made and we are responsible for.

Our new company transformed me into the “creative person”, surrounded by mountains of material and working day and sometimes night to meet deadlines, make changes, create new items and attempt to provide what the customer wants. For me, however, it really has been a dream that has come true. I mean that literally. I have always loved creating these items and I had often daydreamed about selling them. That has come true.

My husband is the “nuts and bolts” person. We soon realized that marketing would not be his only job; all the pickup of materials and all the deliveries, which are often all the same job, went with it. He goes to the warehouse. He stocks the truck. He delivers everything to our customers. He sells and delivers – our product to small stores, restaurants, gift shops and individuals.

We also soon realized that we would have to work very hard to sell products to a specific niche market. The type of person who will items related to organic food is not the type of person my husband worked with in his previous work. The type of company he deals with is very different as well. He spends a lot of time meeting and talking with potential buyers and following up with current customers.

We both do presentations, which are often in our home. We are also both responsible for covering orders that come in over the web, phone and mail.

Now I will describe the beginning of real changes that took place in my husband. It really began with his attempts to sell our products to the organic food market. His first trip to a store owned by self-described “former hippies” was met with distrust and silence. They liked the material but didn’t like my husband’s appearance and manner. He was much too corporate and much too clean cut. They were not impressed with the image that had worked so well for him for so many years.

This happened again, and then again. It was clear that some radical change had to take place. My husband fought it but finally, grudgingly accepted it; unless he made a dramatic change in his appearance, manner and style, we would never build client relationships. So he gathered up his courage and went about transforming himself.

Now, we didn’t plan on that big a change when we started. But the work does require manual labor, and it does require that he work out of our home. It also requires constant contact with people who wear very casual clothes, often have long hair, shaved heards, earrings and beards, and live lives outside the mainstream. As our public relations person, my husband finished changing an image that was already changing. We had to face the fact that in the world of small business, people will relate to and feel comfortable with others who can understand them.

How can I explain the details of the transformation of my husband? I will try to describe the physical change and also the impact on him. There is some humor in it, but it also describes what really happened.

First, picture to yourself a tall, dignified, impeccably dressed and groomed 40-something corporate executive; every hair is in place and he is dressed to the nines, briefcase in hand, and his overcoat is over his arm. He has left his office, and is standing in front of a glass and chrome financial office building. Seveal execs stand there smiling. He pulls out his keys and is ready to get into his Porsche. He is standing in front of the car; it is sleek, dazzling and new.

Do you have that picture in your mind? Good…

Now…snap your fingers. The beautiful office building is gone; in its place is a rundown warehouse. The executive is in shock. He shakes his head in disbelief. He then rushes to get into the safety of his Porsche and its leather seat.

Snap again. The Porsche disappears; it has been replaced by a used and not very clean pickup truck.

Our executive recoils and looks around him, stunned and speechless. Take the opportunity to reach over and take the keys to the car and his office out of his hand and replace them with the keys to the warehouse and truck.

As this happens, the executives wander away. They are replaced by a growing band of people in tee shirts, jeans, sandals and long hair. The men are bearded. The gather around and watch him. The executive looks at them in bewilderment.

Oh, and while he’s preoccupied, slide his wallet out of his pocket: remove all the business cards with the title “Investment Banker”; take his frequent flyer miles card, his American Express corporate card, and then his driver’s license. Replace the license with a truck driving license.

Now, it gets really interesting; unfortunately we have to use more intense shock therapy to recreate the glassy-eyed, shell-shocked look that my husband had for quite a while.

Now, we happen to know that this particular executive places special importance on perfectly-polished and carefully maintained leather shoes. But we’ve got a makeover to do. So…Quickly grab his ankles and just as quickly untie and pull off his gleaming, mirror-shined $700 Ferragamo hand-crafted wingtips, and be sure to snatch those Armani dress socks off him as well. Yes, it has to be sudden, because the look on his face reflects reality (And yes, he wore Armani socks. He was a very dapper man).

As he stands looking at his bare feet, snap your fingers: the monogrammed cufflinks and the tiepin vanish. Snap: his silk pocket square is gone. Another snap: his Cartier wristwatch is replaced with a Timex.

Snap: the Burberry overcoat over his arm is gone, and a polyester jacket with his name on the pocket has taken its place.

Now, you should know that this executive is the poster-man for “suits”. He has not worked a day a job since graduation without a suit. Sorry, makeover time….

Strip that $1600 pinstriped Armani business suit off him, along with the attached paisley braces, and drag off the perfectly knotted Hermes necktie and the starched white Brooks Brothers shirt. Snap your fingers. He is now wearing a tie-dyed tee shirt, battered jeans, and on his feet, his toes poke out through old birkenstock sandals without socks.

Steal his razor and don’t allow him to visit the barber. Snap your fingers again. A scruffy stubble appears on his clean shaven face. His perfect yuppie haircut grows into a straggly ponytail. Add a little dirt under his impeccable fingernails and his palms.

And now the final touch: snap your fingers again. His $1200 briefcase is replaced by a cardboard box; it is full of materials for delivery. He is the deliveryman.

That was and now is my husband. Is this description an exaggeration? Only in terms of the time it took. Every other detail of the transformation is accurate. The change was partly the result of the job itself and partly the result of customer demand. His transformation has not been an easy one for him, and it has been jolt for me as well. It has come in stages, but it is now complete and it has produced excellent results for our business. The same people who turned us down are now our best clients.

Our willingness to change has been combined with perseverance and (we hope) a good product. Our revenues are increasing and we are talking about hiring a person part-time. Our customer list is growing. Our reputation is as well, as we are introducing a new product line soon.

For a long time I wondered what my husband really thought of his metamorphosis from an always dignified, distinguished, dapperly attired, suit-and-tie, shiny-shoed executive into a bushy haired, bearded and often barefoot blue-collar working man with dirt under his nails and a pickup in the driveway. I had been the one to push the idea, and he had long resisted it. He had thrown himself into the work, but I wondered if he missed the life of a corporate high-flyer. We were both so busy that we rarely talked about the changes as they were happening, and he is a very reserved man. Three months ago, I was given a clue.

A man from a charity for the homeless appeared at our door one day. My husband had called him. He met him at the door with a box containing all twelve pairs of mirror-shined leather dress shoes, from Brooks Brothers to Gucci, and a bag containing eighteen pairs of black dress socks; every pair he owned.

I whispered to him: What he would wear if he needed dress shoes? He grinned and said he would buy a pair at Walmart. Now it was my turn to be stunned! The precise and controlled man whose shoes used to gleam like diamonds! Walmart!

The young charity worker looked surprised, and disbelieving, when I mentioned that my husband used to wear those shoes to work every day. He could not connect the shoes with the man. Then my husband produced another bag: all of his white dress shirts, starched and on hangers. Finally, he brought up his suits every one. His suits!

What had happened to my husband? Was this a real inner change to match the outer change? He talked for several minutes, and mentioned to the young man that he had been an executive, a banker, for many years but the blue-collar voice had taken over and he now wanted to get rid of his old life.

The young man laughed, picked up a pair of Italian wingtips and said “You used to have an office, and wear these suits and shoes and now you’re barefoot in the kitchen?”

I glanced at my husband. To my relief, he nodded – and laughed.

Jwellington
http://www.articlesbase.com/home-business-articles/trading-ferragamo-wingtips-and-italian-suits-to-tee-shirts-and-birkenstocks-transformation-and-home-business-74219.html

is the FINRA pattern day trader rule applicable to firms that are not FINRA members?

i want to be able to day-trade freely with an account balance of less than $25K. can i do this through a brokerage that’s not a FINRA member firm? also, is the pattern day trader rule applicable to forex trading the same as it is to trading stocks and options?

thanks!

Let’s see…the question is a little misleading since US based non-FINRA members cannot clear trades for you. There are reporting rules, anti-money laundering, Patriot’s Act, and more rules rules rules for FINRA members. If you wanted to trade equities with a balance of less than 25K, you’ll have to make less than 4 day trades in any 5 consecutive trading days. So if you do 3 round trips a day, it’s ok. Or 4 or more trades in one day but not for 5 consecutive days, it’s ok. Thus, if you ‘day-trade’ M-Th but take every Friday off, it is ok by FINRA rules.

The minimum to start trading FX is much lower. FX is also not governed by the FINRA SRO. You can make whatever trades you want as long as you maintain the minimum balance for the particular FX broker/clearing house of choice.

If for some reason you’re able to find a non-FINRA broker, please let me know (I don’t know of any but it’s possible that there are overseas sites that’ll side step US policy). If you do find one of these, just be careful. You may not be dealing with US business laws any more. Your account may not have the same protection as it would with a FINRA member. So you’ll have to weigh the pros and cons yourself.

GL. And don’t churn tickets!

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Forex Trading Psychology

Forex is a somewhat unique market for a number of reasons. Firstly, it is one of the few markets in which it can be said with very few qualifications that it is free of external controls and that it cannot be manipulated. It is also the largest liquid financial market, with trade reaching between 1 and 1.5 trillion US dollars a day.

With this much money moving this fast, it is clear why a single investor would find it near impossible to significantly affect the price of a major currency. Furthermore, the liquidity of the market means that unlike some rarely traded stock, traders are able to open and close positions within a few seconds as there are always willing buyers and sellers.

However, the key to successful Forex Trading unlike other financial markets, is knowing yourself.

This does not certainly mean enlightenment of self but knowing your behavioral pattern under given circumstances. This becomes all the more important since falling into psychological traps like despair, will lead to furthering ones losses. One should know when to quit.

The most common traps or pitfalls of human psyche in relation to Forex Trading are as follows:

The first, foremost and most prevalent is Over-confidence. It has been found after painful research that most people tend to overrate their capabilities, skill and knowledge when it comes to areas outside their core competencies. Forex Traders should give importance to results and feedback to stay within their areas of competence.

The second is prioritized thinking. Any human being tends to assign more weight to the initial information received than the subsequent ones. It is very important to explore all sources of related information and form ones thoughts around that to arrive at a rational decision in the right perspective.

The third is to look at the circumstance in the right light. Each problem or development has to be viewed in the right light and given enough weight to gauge all probabilities, so that decision making becomes easier and efficient.

Let bygones be bygones. An investor should not make decisions based on similar circumstances in the past, when he mad a right decision. In the volatile market of Forex Trading, circumstances change extremely fast and the investor should be capable of weighing all choices before committing to a decision.

An investor tends to make the mistake of seeking only relevant information supporting the decision. Therefore the decision becomes preconceived. All information contradicting the decision is seen in a critical frame in this scenario. This is also called the confirmation trap and should be avoided at all costs. Decisions are really not made by instincts but by a good combination of circumstances and experience.

Lastly, an investor should know his behavior under duress or stress. Each human being has dissimilar behavior patterns under stress. This knowledge will help in deferring a decision taking process or drive the investor to relax before embarking on the process of making a profit making decision.

Martin Chandra
http://www.articlesbase.com/finance-articles/forex-trading-psychology-82181.html

Will I be identified as a pattern day trader?

I’ve changed my trading style recently, and now instead of buying and holding stocks for a week or two, I’m doing only1 or maybe 2 day trades a week. And that’s all I’m doing. I’m not doing any other transaction throghout the week. And of course my account is under $25,000.

Will they be able to identify me as a pattern day trader with just this?

If you make 4 or more day trades within 5 consecutive business days you will be classified as a pattern day trader. (There are some other rules but with your trading volume they will not apply.)

A day trade means you open and close the position within the same same trading day. (buy and sell or short and cover)

Once classified as a pattern day trader you must maintain a minimum $25K account and have a margin account.

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Does "pattern day trader" rule only apply to trades within a margin account?

If I don’t use a margin account, am I still at risk of being labeled a "pattern day trader" if I do 4 or more day trades in a 5 day period? I only intend to use cash to purchase stocks.

Pattern daytrade applies to all accounts. If you have under $25k in your account you are prohibited from doing more than 3 daytrades per 5 day trading rolling period. If you make 4 daytrades in this period you will be red flagged as a patern daytrader and must bring your account to $25k within 5 days. If you don’t then you will be restricted from opening new positions for 90 days or until your account meets $25k minimum balance whichever comes first.

It applies to all accounts even if you have more than $25k.
If your labeled a patern daytrader and lets say you don’t make any daytrades for 2 months and your account falls below $25k. You will still be restricted from opening new positions until you bring it back to $25k. In other words to clear yourself of a patern daytrader designation you must not make any daytrades what so ever for 90 straight days.

Commodity Trading Systems – This Ones Free and Makes Big Gains!

Today many traders buy commodity trading systems and spent money on expensive software when really all they need is to do a bit of research on the net and build their own.

Here we will show you how to build your own commodity trading system that will help you pile up big gains, even if you have never traded before.

First things first!

Let’s look at the logic the commodity trading system is based on:

1. Catching the big long term trends and these only come a few times a year. These are the ones to focus on not short term moves or day trading, this system is geared for profit not low odds trades in short term market noise.

2. This commodity trading system does not predict, it only acts on confirmation of the tend.

3. The system is simple. Traders think that the more complicated a system the better it is likely to perform, the exact opposite is however true.

4. This system uses the same trading methodology for ALL markets and is based on a psychological flaw most traders have and lose.

5. As this system is based on long term trends it should take no more than 30 minutes a day and will work off the closing price ONLY.

Putting it together

This commodity trading system is technically based, so let’s look at what we Need the package to contain. All we want is weekly and daily charts and two basic indictors Bollinger bands and stochastics.

A good package on the web is available at futuresource.com, but there are many others, don’t buy one! You don’t need to.

Trading rules

Trading rules are simple:

1. Look for important valid (several tests over long time span) resistance and support on the weekly chart and note the trend, then look for the same pattern on the daily charts.

2. Once you have found a market that fits the above criteria look for breaks of support or resistance. Don’try and predict wait for the move to get underway i.e you have confirmation (via the stochastic indicator) this is when the odds of the trend continuing are highest.

3. Check the stochastic indicator supports the move this VERY important.

4. Enter with at the money or in the money. Do not buy out eh money options and remember keep time on your side.

5. Don’t move stops to soon, get stop in below breakout point and move immediately to entry if the position moves your way. Wait for larger profits and cover the position with covered write position.

That’s it; If you are not familiar with all the terms check our other articles.

Why will this commodity system work?

It’s based on sound logic, breakouts are easy to understand and trade, most traders wait for market pullbacks and miss the major moves. This system gets you in on ALL the major moves and confirms strength before buying, to get the odds on your side.

Keep this fact in mind Most major trends develop from market highs, that means you have to trade breakouts.

Most traders get stopped out by volatility, but this system assumes the trend will continue rather than reverse as it’s already in motion, so stops are kept wide. When the profit becomes big you can put in an insurance policy, in the form of a covered write option strategy.

Finally, options can be used but unlike the losing majority you won’t buy out the money options with little chance of success. You will keep time on your side and buy in at or near the money.

The other advantage of this system is it costs nothing and is easy to understand.

This means when you practice it, you will have confidence and be able to trade with Discipline, which is a key to trading success with a commodity trading system.

Don’t listen to traders who try and tell you trading commodity systems needs to be complicated, it does not. A simple commodity trading system like the above, traded with discipline is all you need.

Sacha Tarkovsky
http://www.articlesbase.com/investing-articles/commodity-trading-systems-this-ones-free-and-makes-big-gains-65196.html