"Try To Remember"

Planned, patient trading always makes more money in the long term over quick, short term manic trading.
Learning a lot about a few things is a marvelous way to make a career as a trader.
Trading begins before you push the “buy/sell” key.
Trading because you want to make money is an excellent way to lose money.
You trade your beliefs, even if you think you are trading a plan.
Knowing yourself will make you more money than “knowing the market.”
Great traders are sometimes lazy people.

"5 Things"

A trading pal of mine recently reminded me of Mark Douglas's 5 essential trading truths, and it seems to me that no. 5 is very relevant re this discussion.

1. Anything can happen.
2. You don’t need to know what is going to happen next in order to make money.
since you cant know what is going to happen...everbody has to make money under the condition of uncertainty..without exeption.
3. There is a random distribution between wins and losses for any given set of variables that define an edge.
4. An edge is nothing more than an indication of a higher probability of one thing happening over another.
5. Every moment in the market is unique.

" Speculator"

A fundamentalist and a speculator go on winter skiing holiday to the Alps. Upon arriving at the cabin the fundamentalist goes to the window and comments, "Look, Snow is falling".
Instantly, The speculator replies, "Sell snow"

Day Trading Mistakes

Day Trading Mistakes
This describes some major mistakes which will almost certainly cause your day trading career to end in failure.
Mistake 1. Lack of a Trading Plan
Many day traders fail because they trade without the benefit of any pre-determined trading plan. It is absolutely critical to have a complete, well-thought out plan of action before entering any trade. If a plan proves to be wrong, so be it. This includes the number of contracts you will trade and when you will enter, when you will exit, and when you will exit to cut your losses. You should decide in advance how long you will hold your position if the price fails to move at all, and at what price you may wish to add to or reduce your position.
Once you develop a plan, stick to it and do not change it solely as a result of your emotions. This is where failure begins for many traders - not sticking to their plan. This mistake is often caused by making false steps, or misjudgements.
Mistake 2. Failure to Control Emotions
It is highly unlikely that you will become a successful day trader if you allow your emotions to control your trading decisions. Greed, fear and pride are the most destructive emotions leading to poor trading decisions.
Greed tends to keep a trader from closing out a position when a reasonable profit has already been made, in the hope that the price will go even higher. Staying in the market for too long (hoping for a big win) will backfire more often than not. Greed also tends to result in impulsive dangerous trades.
Fear causes traders to sell existing positions too soon or avoid entering a signaled position in the first place. In other words, fear leads to trading decisions becoming "paralyzed".
Pride tends to keep a trader in a losing position for too long because of a reluctance to admit that the original trading decision may not have been the right one.
Use the discipline that a good trading plan is designed to foster and try to keep your emotions from unduly influencing your trading decisions.
Mistake 3. Over-Trading
Many traders feel the need to trade constantly at all times on every trading day. There are many occasions, and times of day, however, where it is best to stand aside and avoid holding any position in the markets at all. Always conserve your trading capital for those trading days offering good trading opportunities. Its always a miscalculation to over-trade, no matter how good the opportunity looks.
Failure often results when things look too good to be true.
Mistake 4. Failure to Accept and Limit Losses
Another major contributing reason to day trading failure, is the reluctance of many traders to exit from a losing position. Many traders hold on to losing positions for far too long, in the hope that the price will recover. It is essential to limit and accept losses in advance, in accordance with your trading plan, by pre-determining your exit point if the price moves against you. Stop-loss orders provide a convenient and essential tool to do this. Better to accept an error now than later when losses are much worse.
Mistake 5. Lack of Commitment
Day traders who are unwilling to make a serious commitment of time and effort to study and monitor the markets, engage in training and education so as to enable them to learn about technical analysis, new trading systems and methods, order routing software, etc., will almost always fail. Thinking that you know it all, is the sign of an immature trader. A winning trader cannot afford to be lazy. A simple lapse in judgement or omission of information can cause a big mistake to happen.
The above trading mistakes are avoidable if the trader doesn;t take unnesesary risks or make foolish trading moves.

"Eight Cognitive Biases That Affect Trading"

1) Loss Aversion - The tendency for people to have a strong preference for avoiding loses over acquiring gains.
2) Sunk Costs Effect - The tendency to treat money that already has been committed or spent as more valuable than money that may be spent in the future.
3) Disposition Effect - The tendency for people to lock in gains and ride losses.
4) Outcome Bias - The tendency to judge a decision by its outcome rather than by the quality of the decision at the time it was made.
5) Recency Bias - The tendency to weigh recent data or experience more than earlier data or experience
6) Anchoring - The tendency to rely too heavily, or anchor, on readily available information.
7) Bandwagon Effect - The tendency to believe things because many other people believe them.
8) Belief In The Law Of small Numbers - The tendency to draw unjustified conclusions from too little information.

"The Tortoise And The Hare"

Once upon a time, there was a young hare, a hotshot rabbit investor who would always brag to anyone that would listen and that he was the smartest, fastest, best performing investor in the world. He would constantly tease the old tortoise about his slow, solid investment style.Then, one day, the annoyed tortoise answered back: "There is no denying that you are very aggressive in your investment strategy. You take very high risks and get high returns. But even you can be beaten."The young hare squealed with laughter. "Beaten? By whom? Surely not by you. I bet there's nobody in the world that can win against me, because I'm so good. If you think that you can beat me, why don't you try?"Provoked by such bragging, the tortoise accepted the challenge. Each of them put an equal amount of money into a new account and the race was on. The hare yawned sleepily as the meek tortoise trudged slowly off.As might be expected, the tortoise invested in high quality blue chips, companies with household names.The hare, as anticipated, invested his money in dotcom stocks and options.You know the story. The aggressive hare jumped out to a big early lead. In a rising market, the highest risk stocks perform the best. This is called momentum investing. Money flows into the investments that are performing the best.The hare, having jumped out to such a large early lead, stopped paying attention to the market environment. Basically, he fell asleep. He thought to himself, "I'll have 40 winks and still remain way ahead of that stupid old turtle."The hare awoke from his sleep and gazed around looking for the tortoise, who was nowhere in sight. Unfortunately, while he was sleeping, dreaming about what he would do with his winnings, the market turned against him.His very high-risk portfolio had taken a terrible beating and was now practically worthless.The tortoise, a Warren Buffett style investor, had passed the sleeping rabbit long ago. He had been plodding forward, steadily, since the beginning of the contest. The Tortoise never for a moment stopped, but went on with a slow but steady pace straight to the end of the course.The hare realized that the tortoise was way ahead of him, and away he dashed. He leaped and bounded while gasping for breath, but it was too late. The tortoise had beaten him.There are two very important lessons to be learned here.First - slow and steady wins the race.Second - never confuse your own intelligence with a bull market.

The Ten Trading Commandments

1) Trade for success not for money.

2) Strive for discipline.

3) Know yourself and how well you handle risk.

4) Lose your ego.

5) Know your risk level and when you hit your stop point exit the trade.

6) Know when to trade and when to wait.

7) Love your losers like you love your winners.

8) Losing trades will be your best teachers.

9) After three losing trades in a row, take a break.

10) Don't break any of the above nin rules.