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The Seven Secrets of the Highly Successful Trader

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1. TAKE COMPLETE RESPONSIBILITY

The successful trader knows that every action he takes is his/her action. You will never meet a successful trader who is looking to blame someone or something else for his or her losses.

This is a critical step in understand how to become a successful trader because until you take complete responsibility for all of your trades, you will never feel comfortable with your system and you will never reap the rewards.

Additionally, when something goes wrong with a trade or an investment endeavor, the traders who take complete responsibility for their actions will look at those “failures” as learning experiences.

The trader who takes responsibility will try and determine what went wrong and what needs to be done in order to avoid similar mistakes in the future. The trader who does not take complete responsibility will simply say “the market wasn’t right” or “my broker is an idiot”.

That trader will likely make the same mistakes again and will never understand why he/she cannot win in the stock market. This step is critical.

Before all else, you must accept everything that you do as your responsibility. The game can only be won out of luck if you don’t follow this first step.

2. HAVE A SYSTEM THAT FITS YOU

Every successful trader, investor, money manager, etc. has a system that perfectly fits his or her ideals and personality as an investor. The system really doesn’t matter, it’s secondary.

Value investors like Warren Buffet have made millions with their value approach. Day traders have made millions with their system.

I have colleagues who have made millions with momentum investing. So it can’t be the system per se. Instead, it’s the fact that those winning traders have discovered and developed the system that fits them best.

If you are a very worrisome person who absolutely cannot take losses without getting ulcers then I would not suggest day trading as part of your system. On the other hand, some investors would go crazy if they had to buy a stock and hold on to it for a year or two.

So how do you find a system that works for you? You have to work backwards by discovering what your objectives are.

What annual rate of return are you looking for?

Do you want to trade full time or just leisurely?

Would you get stressed with daily gains and daily losses?

Are you extremely patient with your investments?

Do you need to make lots of decisions?

Which trading systems do you know and feel comfortable with?

How much research have you done?

There are so many questions to ask yourself because it is absolutely vital that you choose a system that really works for you.

If you are not comfortable with your system then you will always be tempted to break your rules. Your health will likely suffer as much as your portfolio.

3. PLAN A TRADE AND TRADE A PLAN

The point of this rule is that you must develop a system that is right for you and then stick to it no matter what. As a result, your plan must be able to cater for every eventuality.

Once you put your money down then you no longer can control what happens. You won’t know what the prices will do so you can’t worry about anything except following your plan.

What will your entry be?

What will your exit be?

What happens if there is a merger?

What happens if the price gets close to your stop order?

Do you see what I’m getting at? You don’t want to have to answer these questions AFTER you put your money down! You want everything to be automatic by that point.

So make sure that your system plans for everything. Then you just need to follow your rules and you won’t have to think (or stress) at all.

4. WORK HARD AT LEARNING HOW TO TRADE PROPERLY AND KEEP WORKING

In other words, once you have put the time and energy into determining your system, your work is not done. You have to constantly evaluate and assess your system via education.

Now, I’m not saying that you have to worry about your plan every time you make a trade. That would contradict Secret number 3!

What I’m saying is that if you were a brain surgeon would you stop learning new techniques and new technology after you finished your internship? I certainly hope not!

Hopefully, you’ll keep educating yourself so that, at minimum, you can keep up with the changing times. At maximum, you keep improving until you become one of the best.

Keep learning … even when you think you know everything there is to know about investing.

5. POSITIVE SELF-BELIEF

The top traders know that it is the discipline displayed in following their rules that make all the difference. If you do not believe in yourself and your system then you are going to have difficulty following your rules.

Following your rules is the most important aspect of successful trading. But even if you do follow all your rules, if you are constantly doubting yourself then you aren’t going to have any fun at all, plain and simple. You will be miserable.

Although this step is important, it should come naturally if you follow the other rules because positive self-belief can be obtained through repetition and success.

If you follow your rules and continue to strive towards developing and sticking to your system then the success of your plan will likely improve your belief in yourself and your system.

If you are not believing in yourself then there may be a problem with your system … it may not be suited for you.

6. VIEW TRADING AS A SCORE IN POINTS AND NOT MONEY

Simply put, forget about the money. Follow your rules and pretend you are playing with chips. Be happy that you stuck to your rules and are winning the game.

But if you think too much about the money then the losses will eat you up. You have to look at the big picture and the best way to do that is to forget about the money.

In action terms, it means to stop looking at the newspaper every morning to see if your stock has gone up or down.

If it hasn’t triggered one of your actions (like exit or another entry) then don’t worry about it because it doesn’t concern you until action is required.

If you stick to your rules then you really shouldn’t even need to know anything about your stocks or your money until action is required (and even then you can automate most of those processes).

The top traders never saw their trading as a cash box. They were either running a business or playing a game.

It just is not possible to become a top trader if you view every single tick in the market as money lost or money gained.

7. KEEP TRADING AS PART OF A BALANCED LIFE

This is an extension of Secret #6. Trading is stressful no matter who you talk to. Money is stress. So do everything you can think of to eliminate this stress. You will be happier and you’ll be more successful.

I have met hundreds of successful traders and one thing they all have in common is their lack of stress. They all have hobbies, families, friends, sports, and leisure activities that allow them to follow their rules without stressing about every move. It’s amazing!

I explain the stories in my book but I can tell you right here that my trading results went through the roof once I took a break from trading to pursue other activities.

For years I thought I needed to spend every waking hour thinking about and developing my trading career. I became so stressed when the results were poor and so happy when the results were good.

It was a roller coaster of emotions and stresses. I needed a break so I took a sabbatical for several months (but I left my rules intact and on auto-pilot with my broker).

I returned to the best results of my career. I realized that my constant presence was only hurting my chances.

From that point on I realized that I needed to make trading only one (of many) facets of my life.

Mar

10

2010

Buy Low and Sell High

There is an important financial measure called “opportunity cost.”

Basically, this means that if you spend money on something you automatically lose the opportunity to spend it or invest it on something else.

Or, as my Grand Dad used to say:

“You can’t spend the same money more than once!”

Over time, the stock market has outperformed all other types of investments, including bonds, bank deposits, government securities and mutual funds.

The stock market may not always seem rational, but it’s usually right in the long haul.

Over the short term, the market moves based on enthusiasm, fear, rumor and news. Over the long term, though, it is mainly earnings and dividends that determine whether a stock’s price will go up, down or sideways.

A good stock may go up even when the market is going down, while a stinker can go down even when the market is booming.

Some days stock prices make absolute sense. Other days they seem ridiculously expensive or extremely cheap.

The key to investing is to determine which is which on any given day, and then take advantage of it!

Prices are set by where a company appears to be going, not where it”s been. Investors buy stocks with the expectation that they’ll be able to sell them for higher prices at some time in the future.

That means they expect that earnings will likewise grow. And if they don’t, the best past performance in the world isn’t going to help.

Historically, a well managed and widely diversified portfolio of correctly selected stocks has produced substantial returns with relatively modest risk!

“Buy Low and Sell High” or,

“Buy High and Sell Higher!”

We all heard the above simplistic bits of advice. Unfortunately, as market cycles move up and down, and security prices rise and fall, it’s hard to pinpoint the precise time when it’s the most advantageous for either transaction.

One way to weather market cycles more successfully is with disciplined, periodic investing, often termed cost averaging. This simply means putting an equal amount of money at regular intervals into one or more securities.

Periodic investing can be an easy way to build up your portfolio! Employ this technique by setting aside a fixed amount of savings every month to invest.

When you invest the same amount every time, you buy more shares when the prices are low and less when the prices rise. The result:

You can potentially lower your average cost per share.

Investments allowed to grow over time can increase in value surprisingly fast. The systematic re-investment of stock dividends can be a painless, automatic way to build up a sizeable “nest egg.”

The re-investment method creates a really powerful compounding effect on investments.

This is reflected in the words of Einstein, who once said that, the “Eighth” wonder of the world is compound interest!

Mar

09

2010

Day Trading Strategies – THE TRUTH BEHIND DAY TRADING!

If you’re not already a member of ChartPoppers.com, you’re missing out on some great opportunities! What I’ve decided to do, is summarize “Day Trading” for you, to give you a taste of what our members learn.

You see, at ChartPoppers.com, we’re dedicated to bringing you up to date on the best Trading Strategies, The best STOCK PICKS, and making sure ALL of our members are armed with as much information as possible!

Do you want to PROFIT in the Stock Market?

If you answered YES, then you’ve come to the right place! Read the Article below, then sign-up for our FREE Newsletter to get started! You’ll be glad you did… On the other hand, if you’re not interested in Making Money, then please hit the BACK button on your browser, you’ve definitely come to the WRONG place.

Below is a taste of what our Members receive absolutely FREE in our Newsletter. When you implement these strategies, with our Stock Picks, you’ve found a sure fire recipe to Making Money in the Stock Market, laid out for you in a easy to understand way.

Day Trading Strategies:

PATIENCE:

Wait for all the stars to line up! Good things come to those who wait, be it low buy prices or high sell prices. Sometimes if you had only waited, you could have sold higher or bought lower.

Have patience! It’s without a doubt one of the golden keys to making money in the stock market. The patient trader has self-control and waits for his indicators to tell him when to enter or exit.

Even if the market “appears” to have ended its rally, if it does not meet certain criteria the trader had previously set for himself, he must wait.

REVERSE PSYCHOLOGY:

If patience is the golden key to trading, then the silver key is doing things opposite from the rest of the market! You want to buy when the average investor is selling and driving the price down.

And when good news is driving a stocks price higher, you want to sell your shares at the over inflated price.

Buying when stocks are falling and selling when they are moving into higher ground is one of the hardest things to learn to do when you first start trading.

We don’t have the luxury of holding our stocks for years to help iron out the little highs and lows. We live off the little highs and lows! Buy when there is blood in the streets!

EMOTIONS:

The stock market is very good at playing on your emotions. In order to be a good trader, you must look at the market in a cold, hard way. When the masses are selling in a panic, you must stand fast or step up and buy.

Remember that the market is made up of emotional herds buying and selling in waves. You must be the cold, cunning and calculating wolf looking over the herd for your kill. Don’t panic sell and don’t buy on hysteria.

MARKET ORDERS:

Don’t use them unless you have to. Don’t ever place a market order for a stock at the opening of the market, or when a stock is making new ground fast.

Putting in a market order in the first 15 minutes of the market is a sure way of paying the highest possible price for your stock, because as all the built up orders from the previous day go through, it lifts the stock prices for a few minutes.

You can be pretty sure that your order will go off at the high of the day this way. (but keep in mind it’s sometimes handy to sell during this time).

STOP LOSSES:

These are almost as bad as market orders. Stop losses are a sure way of selling at a loss.

You can only use them when you are “in the money” and would normally sell your stock, but want to retain a slight possibility that it might continue to go higher.

BUYING LOW:

Sometimes the best way to buy low is to put in an order for a stock at “a price you’d love to own the stock at.” Let’s assume for a moment that the stock you want is trading at 100, try putting in an order at 95 and wait it out, what do you have to lose?

You never know when you might hit the low for the day that way. It’s far better than putting your order at 99, only to find it crashed past that, filled your order and continued down to 95.

You’d be surprised what an effective way this can be to both buy and sell. When you get your “dream” price, it’s a great feeling.

SELLING:

Selling is actually harder than buying in many ways. Try to decide what price you want to sell your stock at as soon as you buy it, so when that price does come along, you’ll be ready to move.

FREE LUNCH:

If there is a free lunch in day trading, it’s picking stocks that are making new medium trend highs to trade with. That way if you do get in at the wrong point, there’s a much better chance that your high buy will turn into the next low buy as the stock moves higher in its overall trend.

This is one of the only safety nets you have in day trading, when combined with patience and some extra cash reserves.

IF YOU ARE WRONG:

Then you are wrong! Don’t try to justify a bad trade by convincing yourself it will turn into a good trade.

If you buy on the high side, then sell at break even and buy

Read the rest of this page »

Mar

08

2010

ICBC Plans No Fund Raising; Loans Jump to Record in 2009

Industrial & Commercial Bank of China Ltd., the world’s largest lender by market value, said it has no fund-raising plan at the moment even as it boosted lending by 24 percent to a record last year.

ICBC’s capital adequacy ratio is “sound” and the highest among rivals, and pressure on capital raising is “not big,” President Yang Kaisheng said at a press conference in Beijing yesterday.

China’s banks doled out a combined 9.59 trillion yuan ($1.4 trillion) in new loans last year, helping the government engineer a turnaround in the world’s third- largest economy. The credit binge drained lenders’ capital and sparked concerns about asset bubbles, a higher number of bad loans and increased inflation pressure.

China’s publicly-traded banks have already raised about 131 billion yuan from bond and share sales since the second half of last year to replenish capital drained by loan growth, and they have announced plans to raise a further 127 billion yuan, according to Bloomberg data.

Beijing-based ICBC’s capital adequacy ratio, a measure of the bank’s financial strength, fell to 12.60 percent at the end of third quarter, from 13.06 percent at the end of 2008.

The nation’s policy makers aim to avert asset bubbles and restrain inflation by limiting new credit at 7.5 trillion yuan this year. China’s growth accelerated to 10.7 percent in the fourth quarter, the fastest pace since 2007, and property prices climbed the most in 21 months.

Boost Financing

ICBC said it will boost financing to projects already under construction and to small-and-medium sized firms and cut loans to new projects that are not government-backed and if they’re energy-intensive or polluting. Loans would also be reduced to sectors with overcapacity, Yang said.

Loans by the bank this year will be less than in 2009, Yang said. ICBC’s new loans were 1.03 trillion yuan last year, Yang said. That’s a record, according to calculations based on Bloomberg data.

After a government bailout five years ago, ICBC is now the world’s biggest bank by value. The lender has more than doubled profit during the past three years and has more than 16,000 outlets nationwide and 112 branches outside China, and 190 million personal customers — equivalent to the populations of Russia and Canada combined.

ICBC on March 4 submitted a tender offer to buy all shares in Thailand’s ACL Bank Pcl in a deal that would give ICBC a foothold in the southeastern Asian nation after acquisitions in Indonesia, Macau, South Africa and Canada since 2007. The bank aims to triple the share of profit coming from abroad to 10 percent.

ICBC will be “active and prudent” with overseas expansion this year, Yang said.

Mar

07

2010

Protected: 19 Trading Points

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Mar

05

2010

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