The ideas and concepts discussed in this article are based on an extremely popular book series called Market Wizards by Jack D Schwager, an industrial expert and an investment manager. Hopefully, this article will inspire you to change the way to trade, which will effectively improve your trading performance.
End of Day Trading
End of day trading technique is perfect for those who want to trade as a secondary activity next to their primary day job. It’s also an effective way to avoid all the random price action and clutter that form on the intra-day trading.
End of day trading is when the market closes and you are done with your day job. You can spend a few hours after work analyzing charts, evaluating fundamentals, checking up on current affairs and formulate a strategy. Through online trading, anyone can put their order in the market and once the next trading session begins, those trades will be executed based on the orders and strike price.
Position Size
Position size greatly affects how you perform in the markets. If your position size is not appropriated based on your risk appetite, it wouldn’t matter how good of a trader or investor you are, and your overall performance will be adversely affected. Trading a huge position size leads to fear, greed, and all forms of emotional trading mistakes.
Predetermining your Entry and Exit
Whenever a trader enters a position, he/she should have an exit position as well. It’s the only way for a trader to get a good night’s sleep. Analyze the market in the technical dept and never discard your predetermined exit position. Greed is the scourge that plagues even the prodigy traders.
Always Under Trade
Risk management is extremely important and must be understood in depth. The best way to conform to risk management is to always under trade. New traders love to over-trade; it’s probably ingrained in all new entrants to the market, trying to make big money in small time.
Price Action Strategies
Fundamentals in short term trading can be irrelevant. For traders, technical aspect should be the fundamental to their price-action strategies. For example, identifying a long-term trend, the existing pattern and determining a good entry and exit position, these factors will help you come out of the market unscathed. Although fundamentals are important, but in the short term they have been discounted by the market and price action is more based on trader psychology and market forces.
Inherent Passion
Opting to become a trader simply due to the lure of money will help you supplement your income, considering you’ve extensively educated yourself in the discipline and are disciplined in your trades, but you will not become a master trader with huge incomes from the market. People who acquire unprecedented success in the markets are inherently passionate about it, because it is a significant part of their life. It is a passion they feed off, it is their entertainment, and it gives them the high they chase throughout their lives. Although this doesn’t mean you are supposed to be glued to the screen 24/7, a brilliant trader will be genuinely passionate about the market and will be more than interested in the art of trading.
Understand the Limits
No one can be right all the time, especially when it comes to the markets. The statement is true for even the most successful traders. The difference is that they’ve learned to be profitable by being right 20 to 30 percent of the time
Good traders, like bad traders, lose most of their trades and yet come out on top – the winning percentage is irrelevant. At the end, it all comes down to money management and risk award. Learn to make money on the minority of the winning trades you make and your trading activities will be more lucrative than you imagined.
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