Trading and investing are very simple processes and we human beings try to make it into something much more complex. Unfortunately, we have a lot of biases that enter into trading decisions.

I believe people get exactly what they want out of the markets and most people are afraid of success or failure or both. As a result, they tend to resist change and continue to follow their natural biases and lose in the markets. When you get rid of the fear, you tend to get rid of the biases.

As for risk, most people don't understand it, including a lot of professionals, and what's really interesting is that once you understand risk and portfolio management, you can design a trading system with almost any level of performance.

NB: The statements above are made by a world-renowned trading coach, Dr. Van. K. Tharp. That’s an introduction to this wonderful thread. I’ll be updating it with the secrets of maker wizards.

You are right

mmm

The Greatest Trading Skill in the World

“With every trade or investment there are four possible outcomes. You can have a small win, big win, small loss or big loss. As long as we make sure we eliminate the big loss from happening, we can certainly live with the other three.” – Sam Seiden

What’s the most important thing every trader can/must do? What’s the greatest trading skill in the world?

One market wizard was asked this question, and he answered that there are 3 things you must do:
1. Cut your losses.
2. Cut your losses.
3. Cut your losses.
If you can do these three things, then you may have a chance of becoming a successful trader.

Warren Buffet also has been quoted as saying that there are two most important things you must do:
1. Don’t lose your money.
2. Don’t forget the rule above.

The market has no respect for your educational background or achievements. It has not respect for your high school diploma or a collection of PhDs. The market doesn’t respect your political posts or achievements. The market doesn’t respect any strategy you use whatsoever: whether simple or complicated. The market doesn’t know whether you’re highly experienced or have no experience. The market has no knowledge of your religious background, beliefs and titles (whether you’re a bishop, primate, general overseer, etc.). The market has no acknowledgment of your race, tribe, nationality or region or age or gender. It doesn’t know if you’re a chairman or a president or an administrator or a manager or a CEO or a founder. The market has no sympathy for your poor background or your rich status. You may be a celeb, a star or a hero somewhere else, but the market couldn’t care less. The market couldn’t care less whether you’re a chief market strategist or a currency analyst or a senior analyst or an official analyst or a coach or a funds manager or a website manager or an accomplished programmer or a software developer or a financial journalist. The market has no regards or honor for who or what you’re. The only person the market respects is the person that cuts his losses.

When you see professional traders dashing themselves against the floor of their trading rooms and crying like a baby, it’s because they don’t cut their losses. When you see a pro trader running to a medical doctor for help; while the doctor says there’s nothing wrong with her/him, it’s because she/he doesn’t cut their losses.

The best trader in the world is excellent at cutting his losses. When a trade is opened according to a technical or fundamental signal, the best trader opens his trade. However, if there’s a loss, he quickly closes the trade. There’s no hope or question or argument from the best trader. When a trade doesn’t work, he closes it. But another trader – the crazy speculator – argues in favor of significantly losing positions.

Losses are like weeds in a garden while profits are like flowers in the garden. We want to remove our weeds and water our flowers. We don’t want to water our weeds and remove our flowers, but according to cold reality, many traders remove their flowers by cutting their profits and water their weeds by allowing their losses to run.

Your ability to cut your losses when they’re still insignificant is the most important aspect of your trading career. It’s the greatest determinant of your everlasting success, your ability to survive losing streaks (which all proficient traders must inevitably face occasionally), and the possibility of ending up being profitable.

Someone with 80% accuracy will lose his money eventually for failing to cut her/his losses while someone with 40% accuracy will ends up winning eventually for cutting losses. When 80% profits are cut and 20% losses are run, she/he ends up losing money because the 20% losses that aren’t controlled can take away all the profits and provide further negativity. When the 60% losses are cut and 40% profits are allowed to run, she/he ends up making money.

Triumphant traders focus on what they can really control, i.e. their losses (plus profits), knowing full well that their overall success has nothing to do with their strategy which simply shows them when to buy or when to sell. The knowledge of fundamentals, technicals, Elliot Wave, Fibonacci, programming, etc. can’t help you if you fail to cut your losses. When an Elliot Wave company makes forecasts and loses, they can be saved only by cutting their losses. Decades of experiences can’t help you unless you are good at cutting your losses. Failure to cut your losses will eventually lead to frustration.

Great fundamental figures like Non-farm Payroll have sent some people to their grave because they bet too big and failed to cover their losses. On the other hand, these great fundamental figures have benefitted sane speculators as well.

If you believe in scalping or robots or candlestick patterns, don’t forget that the ability to cut your loss while it’s small is the ultimate thing. When you enter a trade based on a Hanging Man (Hammer), you might later see it as a “Sitting Man (fata morgana)” if you don’t cut your losses. Whether you follow signals or copy trades, cut your losses. Whether you use 5-minute charts, or 30-minute charts, or hourly charts, or 4-hour charts or daily charts, cut your losses.

You shouldn’t bet big in the first place: only bet very small. When the small bet proves to be wrong, then exit with a small loss. This is your life insurance in the market. A small loss that’s allowed to run can metamorphose into a gargantuan negativity.

When I place a trade and it loses, I exit at a predetermined level.
When I place another trade and it loses, I exit at a predetermined level.
When I place another trade and it loses, I exit at a predetermined level.
When I place another trade and it loses, I exit at a predetermined level!
When I place another trade and it loses, I exit at a predetermined level!!
When I place another trade and it loses, I exit at a predetermined level!!!

Anytime I see a weed, I don’t allow it to grow. I can continue losing, and usually, I don’t go down more than 5% in worst-case scenario. After all, the existence of my account is the most needed thing, not the profits on it. When a winning streak comes around, I quickly recover. This is the most effective way to make uncertainties my ally.

With a series of stop loss triggers, breakeven triggers, trailing stop triggers and take profit triggers (alternating themselves randomly), I’m sure to move ahead in the long run, no matter how slowly.

You remain victorious as long as you cut your losses without hesitation. Last month, I made a profit of 950 pips as a result of cutting my losses. I’m not better than other traders – neither is my strategy. I realize that cutting my losses is what I must do in order to make profits consistently and enjoy permanent success as a trader. Ability to cut losses is a huge edge indeed! Please don’t let your competitor know about this.

The quote below ends this piece:

“Cut Your Losses Short and Let Your Winners Run,” is the salvation of our trading plans. Since we will both win and lose, big winners outshine small losses every time… Here’s a rule we can take to the bank: Whenever you identify HOPE as the primary reason for holding a position, CLOSE IT IMMEDIATLY!” – Bob Robertson

Are Top Athletes Richer than Top Funds Managers

“If you understand this way of thinking – that by taking smart risks you can make money over time – it will improve your willingness to take risks.”

What is the answer to the question that forms the topic of this article? The answer is a big NO!

Floyd Mayweather, LeBron James, Cristiano Ronaldo, Tiger Woods, Roger Federer, Lewis Hamilton, Mahendra Singh Dhoni, Cliff Lee, Usain Bolt, etc. Each of these stars is one of the best in their respective fields, and no doubt, they’ve achieved success and fame that billions of people can only dream of. Yet, each of them is still poor when compared to the highest paid funds managers in the world.

If you want to know what each of the star athletes mentioned here earns, you’d need to do the research yourself. On Buzz.money.cnn.com, Jesse Solomon shows a list of the ten highest paid hedge funds managers in the year 2013: David Tepper, Steven Cohen, John Paulson, James Simons, Kenneth Griffin, Israel Englander, Leon Cooperman, Lawrence Robbins, Dan Loebb and Paul Tudor Jones.

David Tepper earned $3.5 billion last year. In the year 2009, he earned some $4 billion. He’s currently worth $10 billion. David’s riches are even far more surpassed by those of some market legends like Carl Icahn ($24.5 billion) and George Soros ($26.5 billion). I don’t even want to mention the Wizard/Sage/Oracle of Omaha.

How much do you think a boxing champion like Floyd Mayweather earned? He earned $105 million, thus currently making him the highest paid athlete in the world. Nevertheless, the 10th highest paid hedge fund manager is Paul Tudor Jones who got a paycheck of $600 million in the year 2013. This means that Paul is more than 5 times richer than Floyd in terms of income last year. Paul’s net worth is $4.5 billion.

The highest paid soccer player in the world is now Cristiano Ronaldo, with less than $100 million in total earnings per annum; yet his income is more than 6 times smaller than that of the 10th highest paid funds manager in the world.

Can you now get my point? The world of trading has produced many billionaires – past and present. These traders are extremely rich, and the incomes of the star athletes pale into insignificance when compared to the earnings of those funds managers.

It’s true that top athletes enjoy heavy glare of publicity and are far more popular because of myriads of fans the world over. Some professional traders aren’t famous because they trade behind their computers in the comfort of their offices. Most people don’t know them, save interested individuals who’re mostly traders/investors. When many football fans talk about how rich their favorite players are, they are often not aware that some professional traders are far richer than them.

With a worth of $1.1 billion, the New York Knicks are the most valuable team in NBA for the year 2013 (with revenue of $243 million for that year). Real Madrid is the most valuable sports team, worth $3.3 billion (with revenue of roughly $700 million per annum). However, David Tepper, who’s not the richest trader in the world (only the highest paid for the year 2013) is far richer than New York Knicks and Real Madrid combined. According to Jesse, the top 25 funds managers took home $21 billion among themselves last year.

You’ve to congratulate yourself on being a trader, irrespective of your experiences in the markets. The richest traders didn’t become rich overnight, nor did the richest athletes, for most of them had very humble beginnings. By adjusting your trading approaches to achieve everlasting triumph, and by sticking to those approaches, you’ll soon reach financial freedom (though you mayn’t attain the list of the highest paid traders).

The quote above is from Bruce Bower. Another quote from him ends this article:

“Focus on making good risk/reward decisions, keeping losses small, and you will start to become profitable.”

Teach Your Teens the Art of Trading

“Children are very precious. Parents are also very caring. Do you know these?”

Most parents want the best for their children, and they strive to achieve their aims, even in the face of stubborn obstacles and difficulties. A serious religious parent teaches her/his children about their faith when they’re still very young. In fact, a famous proverb says: “Train a child in the way he should go, and when he is old he will not turn from it.” When an average child is asked, what do you want to be in life? The common answer is: “I want to be an engineer or a doctor or banker or a pilot or a lawyer or a footballer,” etc. No-one will say, “I want to be an online trader.” Why? It’s because this is the mindset that is impressed into them by their folks, since they themselves are yet to grasp the potential of online trading. Those who know about it think it’s too risky, without knowing the principles that can lead to everlasting victory in the markets.

Forex trading is one of the best vehicles that can be used to shield yourself from the persistent pecuniary uncertainties, widespread unemployment and sudden dismissals from jobs, which are so rampant nowadays. Many were having high aims when young, but now they’ve been disillusioned. The idea of going to school, studying hard to get good grades, and then getting a good job, no longer works always. Why are there very few genius traders? It’s because many people aren’t exposed to the world of trading until they’re very much older. If teens are exposed to trading on demos, as they practice risk-free on the virtual accounts that are subject to the real market data and conditions, their trading genius would be awakened. Wouldn’t you want your child to be a trading genius before the age of 22? Would it be possible for anyone to be a genius in other fields of human endeavors if they’re not yet a genius by the age of 22?

Teens should be taught the art of trading, but they should be restricted to demo accounts only, until they reach the legal age in which they can make independent financial decisions on their own. Yes, teens shouldn’t open live accounts until they come of age. However, they can play with demo accounts (as if playing Nintendo games) until their skills are improved. In this regard, demo accounts are a unique tool in teaching your children. If a child will become great in life, observant parents will notice some traces of greatness in the child while he or she is still young. Your children would learn, by experience that uncomplicated methods of speculation ought to be used. If you really love trading and know that it can bring financial freedom (as it’s done for countless known and unknown people), why can’t you teach your children (especially your teens) how to trade? You can show them how to do this when they’re on holidays or long vacations, and encourage them to do further research on their own and practice their own ideas.

It’s a pity that there are still many people who procrastinate. They don’t know that what can be started today shouldn’t be postponed till tomorrow. Some say: I’m not yet settled down. Once I’m settled down, I’ll start learning Forex.” Others say: “There are some things I’m doing right now. Once I finish those things, I’ll start learning trading.” The fact is that, there’ll always be things you’re doing. So if you don’t start learning, there’ll always be alibis. The earlier one starts the journey to financial freedom, the better. The earlier you start learning about the markets, the earlier you attain the level of trading mastery. My regret is that I didn’t start Forex trading earlier. If I’d started it far earlier, I’d have gone very far in attaining my trading goals and ambitions. But, thankfully, I’m now in the race.

As for me, I’m going to teach my son on demos, while he minds his formal education, I’ll also teach him how to spend less than one hour per week on the markets, and yet be a profitable trader. I want him to be become a market wizard, becoming financially independent in future, unless he chooses otherwise (since I’m not going to force my opinions on him).

Jeff Cooper, when he was still young, learned the art of trading from his father, and he later became a legend of the Wall Street. He had love for trading that kept him searching until he discovered the secret of permanent success. Mike Baghdady learned from his father, and has now become a blessing to the trading world. Peter Soodt learned from his father, and he’s now a celebrated and profitable trader/coach. Joe Ross was taught by his uncle when he was as young as age 14, and he’s now one of the most experienced and the most eclectic traders in the world. He trades for a living and has insatiable passion for teaching how the markets work. Philipp Schroeder and Valentine Rossiwall are both young and highly profitable traders. Philipp and Valentine have other goals in mind, yet they take trading serious. Oh, how bright and beautiful the future of these young men would be! Anton Kreil started trading while in his late teens and he retired from the investment banking industry at the age of 28. He now trades his own money and enjoys financial freedom, and he’s still in his early 30s. Kenneth L. Fisher learned about trading from Philip Fisher, his father (who was a great investor) before he founded his own investment firm. He’s on the 2011 Forbes 400 list of richest Americans. He was worth $1.7 billion in the year 2012. As of 2010, his company manages $41.3 billion in 38,521 customer accounts and has been called the largest wealth manager in the United States.

With time, your kids would be forced to be disciplined – in the face of negativity and uncertainties they face on demos. This really calls for rock-solid discipline, meaning that one needs to stick to one’s time-tested trading plans. Negativity shouldn’t be termed as stupidity, for that notion can’t help their trading mindset. If they follow their trusted trading rules and they make profits on demo, they’d be happy. It’s joyous to see your efforts bringing great results and that your goals are being achieved.

Conclusion: The world needs traders – profitable traders. Would your kid be one of them? Successful traders came from many areas and different walks of life. They have individual personalities, various strong points and weaknesses. As your kids have a feel for the markets, they’ll forever remember their mistakes and a number of beautiful trades – a great experience that’ll pave the way for trading mastery. They’ll quickly metamorphose into mature traders. Sharing trading facts with others bring us more satisfaction than keeping the secrets to ourselves.

This article is ended with a quote from Louise Bedford:

“You see, studies have shown that those who believe that they can alter their behavior and their habits to create a different outcome are happier people. They persist for longer. They score better on tests… Those who think they can’t change, and that intelligence is fixed tend to quit at the first sign of trouble and don’t stick around long enough to master a skill.”

A Woman’s Addiction To Forex

TRADING IS IDEAL FOR A WOMAN!

As I told you in an earlier article, women can be, and are great traders as well. They certainly got admirable qualities that can also help them in trading. There’s no level of success in trading that isn’t attainable by women. I foresee that the number of women in trading would only be increasing geometrically. The purpose of the interview you’re about to read is to encourage women to come out of their comfort zone and embark on their journey towards real financial freedom. N. Hayes is just a woman like you (or your wife, mom, sister, and aunt). But she’s taken a noble decision – to be a successful trader. It’s a wonderful privilege for me to present this interview with her to you. Here we go:

Azeez: Please introduce yourself.

N. Hayes: Hi everyone, my name is N. Hayes, but most people call me N. I am currently living in Europe and I have been trading forex, for more than a year now. Before being a trader, I worked in the hospitality industry, in the Human Resources Department. I enjoyed it very much but I am definitely enjoying Forex more. Trading started out as just a hobby to pass the time and it has now become my full time job and I love it. Travelling is one of my favorite pastimes, other than reading, cooking, gardening, watching movies and TV series. Currently, I am looking at expanding my career by taking a full 10-month intense course in Money Management, Psychology of Trading, Forex Foundation, etc. My goal is to help others get started in trading and to share my knowledge and experience in this business.

Azeez: How did you start your trading career and what really motivated you to start trading?

N. Hayes: I quit my Human Resource Management job a little more than year ago and started trading full time. I have been hooked on trading since early last year when I had to spend so much time at the hospital and at home due to a shoulder injury. I was bored and started to surf around and I came across an informative website on Forex. Coming from a job with administrative and financial background, I became interested in Forex and I immediately opened an account (real account!) and started trading like a pro (no knowledge in FX at all except 2 years in the futures market many years back). I margined out my 2k account in less than a month! That didn’t stop me from funding my account again. I promised myself that I would get my 2k back from the market. But this time, I subscribed to a signals provider and learn how to trade by reading FX websites, forums etc. I was doing well, my account tripled the amount and that was when I decided to be a full time FX trader and said good bye to my well paying job. I love the freedom of being able to work from home and the freedom to travel! My first Forex related holiday was to the Las Vegas Trader’s Expo, last year in November, which I highly recommend to all traders, especially the ones who are new to this business and wanting to gain more knowledge in trading.

Azeez: Do you think women should be seriously encouraged to trade?

N. Hayes: Being a female trader, one must be prepared to accept her position as an outsider – Trading is a man’s world (I heard this often but I don’t see it this way).This is definitely not gender specific. There are definitely more men in this business, but success and failure come from inside oneself. Of course, the circle of “friends” will be more men than women, I can vouch for this. Having thicker skin helps because it does get brutal sometimes, especially when you are trading with a group, sharing ideas and learning from one another. It can get nasty! Anyway, if one’s goal is to become a successful trader, then they need to do whatever it takes to learn a strategy, a method, practice it over and over again until it becomes second nature. You may need to work harder as a woman to prove yourself, but that is just a part of the excitement and challenge. Take the challenge and you will be successful. There are many free educational materials that you can download online and plenty of websites that offer great trading information. You just need to spend time searching for them. If it is tough to be learning on your own, then work with a trading coach or get a mentor to help you and to keep you growing as a trader. Do not be afraid to get help or ask! There is no right or wrong questions. I know some women are scared of sounding silly by asking a specific question. This fear is rather baseless in many respects. I believe it is time for more women to become traders. Contrary to what some might believe, trading does not turn a woman into becoming a non feminine woman or developing a tough personality. Trading is a refreshing change to the female-dominated professions and I do know some women who choose to become a full trader, mainly because of the freedom it offers. A friend of mine who chose to be a full time trader is a great mom to her daughter. She made a deliberate decision to spend more time with her family and less time in the office. It was not an easy choice as she enjoyed her job very much but she realized that Forex can give her the freedom and flexibility of being a mom and a career woman. Being a trader, she does not need to be at the office 8 hours a day.

Azeez: What do you think are the qualities peculiar to women that could help them in trading?

N. Hayes: I think the best qualities we women have is the ability to multi task, use our intuition, and our perseverance. I also believe that our ability to separate our trading lives from our personal lives is a big bonus, as it helps to alleviate the stress of trading… we have other outlets to relieve our stress.

Azeez: What kind of trader are you? What is your style of trading?

N. Hayes: I used to be more of a scalper (very short term trader) but lately, since becoming a full time trader, I am more of a day and swing trader now. This matches perfectly with my method of trading as my trades are based on technical analysis. I am quite conservative in choosing my trades, the ones with high probability set ups.

Azeez: How do you analyze the markets? What are your favorite pairs/crosses and timeframes?

N. Hayes: Being a conservative technical trader, I describe myself as practical, realistic and decisive when it comes to trading. I love facts and what I think is concrete. I have a set of standards (in my trading plan) and I follow them consistently. With rules in hand, I have no problems weighing alternatives and take rapid decisive action. I let my charts speak to me and I listen to them. I started with EurUSd and Usdjpy but now, I am trading most of the majors and the AudJpy and UsdJpy for crosses. For trade set ups, I start at the higher timeframes; daily, H4 and 1 hour. When executing and exiting trades, I will move to the lower timeframes, 30 minute.

Azeez: Could you please tell us how you apply money management?

N. Hayes: Money management is so important, next to a trading plan and psychology of trading. You see, why most traders fail when they come to the market is they rely on their emotions to make their trading decisions. With good MM, I don’t need to worry about my emotions while I am trading. I have in my trading plan how many pips I am willing to risk per trade and how many trades I have to make if I have few losses in a row etc. I cannot emphasize enough how important a trading plan is.
Do keep in mind that all big losses once began as small losses. Moreover, if you let a losing trade turn into a big loss, that’s going to have a detrimental effect on your trading capital, and once you take a couple of big losses, it’s much more difficult to trade and to gain back the money which you’ve lost. These mistakes can be easily prevented if you have a good money management.
How I determine how much money I actually make on a particular trade? Well, it depends on how much money I actually put into the trade. My usual ratio is 2:1 and 3:1 (low and high probability trades)

Azeez: I really appreciate your blog (http://www.smurfette4x.com/). What are the aims behind this blog?

N. Hayes: The aim behind my blog is to help other traders that are just entering the trading world. My goal is to share the knowledge I have gained with everyone in an attempt to make it less intimidating for people considering trading.

Azeez: Do you fancy or at least, would advise the use of trading robots?

N. Hayes: These so called “Expert advisors” have their pros and cons. I do believe that some work but again a trader needs to spend some time looking for the right one. Also, the mentality of the trader plays an important role in this. There is no such thing as earning money without doing any kind of work. Many people get themselves burned by ignoring the fact that research and testing are definitely a must before they link these Expert Advisors to their live account. Learn how these Expert Advisors work first before having your hard earned money totally at the mercy of a program. There is no doubt of the high success rates that these systems hold but while these values are very positive, it is important to realize the risk that accompanies these rates of success. These experts are programs for certain market conditions and not for difficult market conditions that could lead to serious losses. As for myself, I am currently testing an Expert Advisor which is programmed based on the Grid Trading technique and so far, I am quite happy with it (Grid Trading is a trading technique that uses a series of pending orders creating a “grid”.)

Azeez: Everyone has their strengths and weaknesses, what do you think is your greatest strength and, your weakness as a trader?

N. Hayes: I think my strength is that I’m willing to put as much energy and focus into the job as I have to. My greatest weakness would be that I become a little more cautious and doubt my instincts when I have multiple losses, but on the positive side I don’t give up and work towards improving my skills no matter what.

Azeez: How many pips on average, do you make per month?

N. Hayes: I have a daily goal of 20-50 pips. Monthly average is between 500 – 1000, it really varies, depending on the market. Also, I am more of a conservative trader; I would rather wait for the market to give me a trade than jumping in just for the sake of making some pips. There are times that I don’t trade for a few days, when I don’t see any good, solid setups. It is fine with me. Since becoming a full time trader, I realize how much it pays to be patient and disciplined.

Azeez: What do you enjoy doing apart from trading?

N. Hayes: Traveling! My favorite destination is the USA. This is one of the reasons why I decided to be a full time trader, I can work from anywhere in the world, as long as I have my laptop with me.

Azeez: Do you have any advice for traders out there, especially female traders like you?

N. Hayes: I am not sure if I am the right person to give out any great advice here as I am still “learning” myself. This is the best part of this business, one never stops learning. There is always something new and the market doesn’t pause for us. We need to keep updated and try not to fall too far behind. One reminder that I apply to myself and I would like to share with others, is that “If you are satisfied with the kind of work you’re doing and why you are doing it, you will be successful.” I really believe in this. If you put your heart in it and are willing to learn as much as you possibly can, you will open up doors you can’t even imagine. Never let others influence you otherwise, because if you let others define what success is for you…then it is pretty easy to stray and to lose sight of yourself. Everyone has their own dreams and goals, never forget that. Also, don’t let fear get in the way. Trading is ideal for a woman. It takes time to master so one has to have patience in order to be able to succeed in this business. This is a profession that takes a lot of hard work, focus, strength (emotionally) and determination but if you have what it takes and if you are up for the challenge, you can do it!

Azeez: What are your plans for the future, as long as trading is concerned?

N. Hayes: I am described by friends as a flexible person. Not to mention a daring one. I do have plans for my future but my plans are mostly adjustable. I go with the flow. I prefer to tell you about my dreams instead, as they are more concrete and something that I am really looking forward to and working on. My dream is to be among the successful women in this line of business some day, with a good trading portfolio. My trading blog is a start, for me to share my ideas with my followers. I want to expand from here, maybe giving lessons in a subject that is related to trading. My aim is to help new traders in realizing the reality of what Forex can give them and not seeing it behind rosy glasses. In short I would like to help prevent others from making the same mistakes that I have made in the beginning of my career.

Azeez: N. Hayes, thank you very, very much for this insightful interview!

Why we want you to become a successful trader

A STEP BETWEEN PENURY AND SOLVENCY

“Once you take the desire to make money out of your trading and put in the desire to do what good traders do, your mindset shifts and allows you to make more good decisions.” – Craig Cobb

Alan* has reached the end of his tether. His handiwork is not enough to feed him with staple foods, not to mention paying his rent. He’s getting old and he needs to get married so that he can start a family, but he can’t even afford the lowest-key wedding ceremony. He wants to gather some money for his wedding. He applies to a chemical factory and he’s hired immediately. It happens that anyone who applies there will be hired immediately because no educational background is required. Besides, the strongest man in the world can’t work in the factory for one year.

Alan discovers that the working conditions are so ignominiously abject. Apart from the fact that you must work for a minimum of 12 hours per day (84 hours per week), with very hard labor, factory safety is zero rating and the pungent chemical itself carries a major health hazard. If you get injured, you’ll be fired with no first aid. The monthly salary is less than 100 USD. You’ll be penalized for coming late to work and 3 USD would be deducted from your salary per day if you’re absent, even if your absence is due to heath issues.

Alan likes to work hard and he’s hardy, yet he quits the job in less than 3 weeks. The stinking chemical is taking tolls on his health.

Samson’s wife is dead, leaving 3 children for him. Samson believes the only way to honor the memory of his dearly beloved wife is to take good care of her children. Although his income is not that much, he manages the money well so that the children can attend school and have access to basic balanced diet.

Suddenly, Samson’s boss announces that the firm is no longer making profits and all the employees would be laid off in a month’s time. The firm folds up. Since then, Samson has been looking for a job – any job – without success. He lives in a country where over 40% of able-bodied citizens aren’t employed. The kids are now suffering: they’re out of school and malnourished.

Alisa is a full-time housewife and a responsible mom. She’s resigned from her work in order to attend to her kids, for she’s worried that her kids may suffer some disadvantages if she and her hubby have to stay away from home for economic reasons.

Alisa, however, perceives that her husband’s income would be barely enough to sustain the family. Therefore, she needs to look for some passive income to supplement the family’s income and possibly safeguard their future.

Life is full of risk. Someone loses an election after a huge amount of money has been spent. That doesn’t make it improper to spend money on elections. Someone starts a transportation business and ends up running at loss. That doesn’t mean that transportation business is bad. Someone loses his child after spending a fortune to bring them up and educate them. That doesn’t mean it’s wasteful to take care of one’s children. Someone purchases some valuables that are eventually stolen, but that doesn’t mean it’s wrong to buy valuables. A movie or an album is produced, but it does not sell well (a floundering title or a crashing failure). Do we then need to tell people to abstain from movie or album production? A dear Christian brother is ill and hospitalized. We pray fervently for his recovery; yet he dies. Does that mean prayers are useless? Someone’s house is destroyed in a natural disaster, but it doesn’t mean we should be preaching against owning a home. Someone’s marriage crashes after spending huge sums on the union. Does that mean it’s wrong to get married? Someone has an accident with his car. Does that mean one shouldn’t buy a car? The list could go on. Doctors jailed. Ferries capsize. Mines explode, etc. The list of professional hazards out of trading is inexhaustible.

The fact that some people lose in trading doesn’t make it a bad career. This is in a huge contrast to what members of the public believe. If they see one negative trade, they start preaching to people to avoid trading like a plague. These are the people that suffer losses in other areas of life but they don’t see bad things in them. If you don’t know successful traders, there are many of them.

Many people see trading as being risky. Yet, they lose heavily in other aspects of life. Majority of people start small scale businesses; but statistics shows that over 90% of small scale businesses fail within their first 3 years. Think of an easy job, millions of people are also thinking of doing that job. The economy is already glutted. Generally, the jobs and trades that every Tom, Dick and Harry finds easy to do or start scarcely bring financial freedom. The kinds of jobs that bring real financial freedom – like trading the markets – are what most people abhor and find extremely challenging.

Some educated people are suffering because they believe in ‘I beg to apply’ mentality. After all, that’s the reason why most people go to college. One of the most difficult things one can do now is to seek and get a good job. The number of school leavers would continue to outpace the number of jobs created and the situation has high chances of getting worse.

I know somebody who wanted to get employed in a popular oil company. He was told to get a master’s degree, for he’d only a bachelor’s degree then. He enrolled in a master’s degree program. After he completed the program, he went back to the oil company, only to be told that there was no vacancy for him. While his degrees aren’t a disadvantage to him, must he work for an oil company? Can you ask Deron Wagner or Anton Kreil to go for master’s degrees before you employ them?

Without financial freedom, the future looks bleak indeed. Most private companies don’t have retirement plans for their employees, even in developed lands. Most companies and organizations now prefer contract staff. Do you want to put your financial destiny in the hands of your boss?

You may be working right now (or even self-employed), but do you think people will still need your services at old age? If you’re a plumber or a driver, would people still give you jobs to do at old age, when there are numerous young men who’re also competent? Have you even saved enough money for your old age, or do you expect your children to support you then?

Growing older is no offence: it’s a privilege. Nevertheless, some employers wouldn’t consider you if you’re above a certain young age. They’ll tell you: “Applicants who’re above the age of 25 need not apply.” Can they ever say that to David Tepper or David Harding?

Nothing ventured, nothing gained; and to do nothing is to become nothing. If you can become a successful trader, you’ll attain financial freedom. You aren’t going to be retired, for you’ll continue to trade at your old age. You’ll trade leisurely and effortlessly and get rewarded. People like Van K. Tharp and Joe Ross are elderly traders and they’re successful.

The older you become and the more the years of experience you gain, the more valuable and the more sought-after you’ll become.

Trading is as serious business. We want you to become a successful trader. While people complain of economic hardships, you’ll only be smiling to you bank.

This article is ended by the quote below:

“…Trading is the art of paying the price for something you want. It is the art of regarding fear as the greatest sin, and giving up as the greatest mistake. It is the art of accepting failure as a step toward victory.” – Roy Longstreet

*Names in this article have been changed

Forex Trading Versus Binary Options: Which One Is Better?

“Nobody can predict the future. A Harvard PhD and a high school dropout have equal skills at prophecy.” – James Altucher

It’s no longer a secret that Forex market is the biggest and the fastest-growing market in the world. It’s also not a secret that majority of Forex traders end up sustaining negativity, simply because they don’t know or they fail to do what can really make them profitable.

As a result of this, many people have been singing praises of binary options* as a wonderful alternative, casting aspersions on Forex. They think it’s easier to make money from binary options than from Forex. Is that correct? What are binary options? Investopedia defines it as a type of option in which the payoff is structured to be either a fixed amount of compensation if the option expires in the money, or nothing at all if the option expires out of the money. The success of a binary option is thus based on a yes/no proposition, hence “binary.”

“Binary” means “two parts,” since a speculator will only need to predict that an instrument would rise above (Call) or fall below (Put) a certain price level in a given day or week. Unlike Forex, in which you essentially trade currencies, binary options traders can trade indices, Forex, stocks, and commodities.

Sports, markets and businesses are all zero sum games. Then what about binary options?

Is it possible to make money trading binary option? Is it possible to make money trading Forex?
The answer to both questions is yes…. If a binary options trader is much conversant with, say, oil market, he can make money predicting whether the price would rise or fall above certain price level in a day or a week.

However, contrary to popular opinion, Forex has certain advantages when compared to binary options. The seeming simplicity of binary options trading – only Call or Put – doesn’t mean it’s easy for enjoying long-term success.

Forex vs. Binary
I’m a living witness to this fact. A trader who uses a system that has only 50% accuracy can survive in Forex, but there is no way she/he can survive with 50% accuracy when trading binary options. A trader with only 25% accuracy can make money in Forex, but she/he will quickly crash when approaching binary options with a system that has a hit rate of only 25% accuracy.

I can risk $50 or $100 to target $200 in Forex, but that’s never possible with binary options. The risks are always higher than the rewards, and that’s a worse expectancy. In binary for example, you can risk $100 to gain $50 or $70 or $85 or even $90, but no broker will ever give you a risk-to-reward ratio of 1 to 1, let alone 1 to 2. Forex inherently gives you a risk-to reward ratio of 1 to 10 or 20 or 30, depending on how long you’re willing to let your profits run. We can enjoy everlasting success with positive expectancy only.

Let’s say a broker allows a reward of $80 for every $100 you risk for each binary prediction, you’ll then need to achieve at least 70% accuracy to survive in the long-term. Believe me, this is very hard because the future can’t be predicated. With 70% hit rate, you’re likely to experience 4 or 5 losses in a row with 1000 trials, and with this, someone with a small account can deplete it before a winning prediction comes around. With rewards that are smaller than risks, chances of long-term survival using 70% accurate systems are slim indeed. Researchers have confirmed that people have trouble surviving with even 80% hit rate, owing to psychological factors.

In Forex, people have made fortunes with trading systems that have reliability of around 25% – 35%. They do so by following the timeless Golden Rule of trading: Cut your losses short and let your profits run. You can’t do that in binary options. You succeed when an average loss is smaller than an average gain, not the other way round.

We enjoy everlasting success as traders because there are many things we can control, save the market itself. We can control risks and manage our trades effectively. But in binary options, you can’t control anything, for you’re at the mercy of the market forces once a position is triggered.

If a market moves in my favor before going against me, I can eliminate the risk or negativity with a break-even stop, so that a movement against me won’t result in negativity. This is not possible with binary options, for you lose your entire stake irrespective of the fact that a selected instrument first moves in your favor before reversing against you. Though some may say that binary makes you win even if an instrument first moves against you and later moves in your favor, before the expiration. This is also true of Forex; a position that is in a negative territory can later turn positive.

I can decide to cut my loss before my stop is hit, so that my loss is even limited more effectively. If I gain, say about 200 pips in a trade, I can lock part of it and ride the move even further. I can even take part of the profit and ride the move further. These things aren’t possible with binary options. I’m happy when I see that my losses are smaller than my profits. I know if I traded binary, my stakes would be higher than my rewards. Trading binary options is inherently a negative expectancy game. If other financial markets are zero (0) sum games, the binary options is a minus (-) sum game.

For those who don’t agree with the point raised here, only their personal experience after years will prove the point.

Conclusion: I’m not discouraging people from binary options. There are successful binary traders out there, but I’ve realized that Forex gives me far more freedom to choose my fate in the markets. When you trade a market that you’re very good at, you make fewer mistakes and improve your results. Investing in what you’re conversant with is essential to your financial well-being. Genuine wisdom is scarce, and therefore, success is attainable only when you do what you’re good at. That’s why I enjoy trading Forex: that’s my area of competence.

Please read the quotes above and below, and ponder them. The quotes below are from Markham Gross. They end this article:

“A good trader by contrast will be focused on running a repeatable system having positive mathematical expectancy without need or regard for knowing or talking about the future.”

“It would be impossible to have gains without some loss along the way. My strategy actually results in more losing trades than winners, which is sometimes shocking to people. We win by keeping losses small.”

*Please note that there are differences between regular options and binary options. This article addresses Forex and binary options (not regular options, a good investment vehicle). In order to know the difference between binary options and regular options, please see this link: http://www.ibinarytrade.com/whats-the-difference-between-binary-and-regular-options/

Forex Trading Versus Binary Options: Which One Is Better? (Part 2)



BINARY OPTIONS MYTHS VERSUS REALITIES

“To be successful, you must keep in mind that the only way you can continue to operate is
to protect your account from a major setback or, worse, devastation. Avoiding large losses is the single most important factor for winning big as a speculator. You cannot control how much a stock rises, but in most cases, whether you take a small loss or a big loss is entirely your choice. There is one thing we can guarantee: if you cannot learn to accept small losses, sooner or later you will take big losses. It is inevitable.” – Mark Minervini (Source: Tradersonline-mag.com)

This is just to debunk myths surrounding binary options (also called fixed odds), opening our eyes to facts.


Arguments in Favor of Binary Options
Because of its plausible simplicity, many people are attracted to binary options, thinking that Forex requires a bit of getting used to. In fact, many so-called binary options experts have documented some logical arguments in favor of binary options, and to some extent they’re partially correct.

Did you think binary options (BO) have some advantages over Forex? OK, let’s examine a few advantages the experts claim BO has and see whether the advantages aren’t in Forex.

Myth 1
BO is based on time and FX is based on price. Most FX traders overlook time factor in their trading while BO traders are time-conscious.

Reality
The market doesn’t care whether you trade it based on price or time. You may enter with a specific timeframe or a specific price in mind, but that doesn’t guarantee anything. It’ll do what it’ll do without having you in mind, and this can be in your favor or against you, whether you trade BO or FX. You timing may be wrong immediately or later or never. You timing may be correct immediately or later or never. This has little role to play in your success.

Myth 2
BO traders are forced to exit a position in a given timeframe either with win or loss. Since they’re forced to do this, they’ve an advantage over FX traders who can refuse to exit a position with win or loss because of greed and fear.

Reality
Yes novice FX traders can hold onto losing positions and abort winners, which is a bad trading approach. But disciplined traders cut their losses and give their winners some leeway. Being forced to exit at a given time doesn’t make you the richest trader; otherwise, automated systems would be second to none. Being forced to exit always at predetermined levels can’t help if your trading approach is bad and the market has an inherent negative expectancy. The discipline you enforce on yourself is much more satisfying than the discipline someone imposes on you.

BO traders suffer the disadvantage of being forced out against their will, though the most important issue is profitability, which still eludes many in spite of being forced out at expiry periods. In FX, we’re comfortable exiting at our convenient time. We may continue running a profit in order to maximize it. From March 3 – 11, 2015, I’d have gained about 500 pips in case I went long on USDCHF and I let my profit run.

Myth 3
BO helps reduce emotions because risk and reward plus expiry are all fixed and predetermined.

Reality
All traders in all financial markets aren’t immune to emotions, so BO is no exception. Permanent success in trading includes a measure of managerial control of our positions. This isn’t possible in BO, for you remain helpless once a position is open, waiting for expiry.

Considering the myths and realities above, I’d like to chip in some fallacies some BO traders carry in their heads and the facts about the fallacies.


Higher Accuracy Fallacy
According to one source, BO by its nature requires a greater than win rate as each bet is factored 70% - 90% gain against 100% loss. So this means that you need to achieve as a BO trader a win rate above 50% on average 54% - 58% to just break even.

The fact is that in the long run no one can achieve more than 50% accuracy. 80%, 90%, 75% etc. hit rates are false in the end. They might be true in the hindsight, but not in live markets. Even scalpers who risk 500 USD to gain 2 USD per trade in FX trading would seem to have high hit rates, but this would drop significantly when the hit rates are reduced.

It is fallacious to think there are computer, automated, custom, alien, astronomical, spiritual, mental, discretionary, fundamental, manual, etc. strategies that enable us to get a hit rate which is higher than 50% in future. Marketers and novice traders would tell us so, but many people have lost money with systems that are promised to carry very high accuracy because the next moment (the future) can’t be predicted. Something that sounds great in theory can fail in practice and what looks like a perfect plan can be overturned by a factor beyond our control.

BO traders are often fooled into believing they can achieve a hit rate of 70% or more permanently. You might as well do that with a toss of a coin endlessly. No matter how good or how complicated your strategy or indicator is, you’re guaranteed only 50% hit rate or less in the long run. When tossing a coin endlessly, the share between heads and tails will balance off at 50/50.

Albeit, there can be times when heads will be hit more than tails within several weeks or months (or even years). You get heads 10 times, and tails 2 times. Then heads another 8 times and tails 3 times. Then heads 9 times and tails 4 times. This would give you a false impression that you’ve a trading approach with a high accuracy, without you being aware that it’s winning streaks that cause that. On a long-term basis, things would turn the other way and you get leveled at 50% because tails would begin to be hit more than heads (like getting tails 9 times and heads 2 times).

The only way to survive is to make more money in winning periods than you lose in losing periods. Does BO allow this?


Money Management Fallacy
Money management is very important in trading any financial markets, and so BO traders claim they can get ahead with good money management methods. The issue is this: can a good money management method help you in a game in which your risks will always be higher than your rewards? How can you survive in a game in which you’ll be paid only 70 or 80 USD for each 100 USD your risk?

If you win you gain 80 USD, but if you lose, you forfeit 100 USD. Does that appeal to you? What money management can you use?

It doesn’t matter whether you risk 1% or 0.5% or 2% per trade – you simply gain less than you stake no matter what you do. Money management makes sense only when your losses are smaller than your gains, not the other way round.

Let’s say you get paid 90 USD for each 100 USD (because this is the highest the most generous broker can give you) and you place 100 trades in a year.

Let’s use 100 trials with 90% payout ratio (most brokers pay only 50% - 80% of the capital risked). Let’s say you’ve a capital of about 10,000; assuming the money management is 1% per trade. 100 x 100 = 10,000.

You win 50%
90 USD X 50 = 4,500 USD

You lose 50%
-100 USD X 50 = -5,000 USD

Is this ever logical or rational?

In FX, we can risk 50 USD per trade to gain 200 USD. With this, we can lose 75% of our trades and still make money.

-50 USD X 75 = -3,750 USD (loss)

200 USD X 25 = 5,000 USD (win)

Doesn’t this make sense to you?



The Gambler’s fallacy
The only way to enjoy longer term success in BO is to use Martingale position sizing methods, which make you double your next stake to cover the previous loss (and this doesn’t present any huge edge in itself). Please search for information on the Internet in order to know what Martingale is and how it works.

Martingale isn’t ideal for most traders because they don’t have enough money. This is a serious problem. Too many traders open accounts with too small funds, and under such circumstances, good money management can’t be practiced.

Unfortunately, those who’ve big accounts either don’t understand concepts of excellent position sizing or fail to respect the concepts.

This leads us to the Gambler’s fallacy. When you’re in a losing streak, you think your chances of winning improve with next positions, since your previous ones are losses. You think the winners are around the corner. Doubling your stakes with each loss increases your negativity and depletes your account quickly.

Maybe after 4 losing trades, which cost you 2,000 USD, you double your stake to 4,000 USD. You could have the 5th straight loss because you’re still in a losing streak.

Even if you wait for 4 losses in a row before risking 20% of your account to recover the recent losses, you still face a gambler’s problem because your next trade could be a loss, and this has nothing to do with what happened to you in the past.


The Grass Is Always Greener on the Other Side of the Fence
Some hate transport business and some love it. The risks in transport business (accidents, failures, low patronage, losses, problems with authorities, etc.) don’t deter some people from doing it because of its rewards. Some who fail at agriculture think sports is better. Some who fail at politics now want to try publishing, whereas publishing has its own challenges. Some who’ve been disillusioned with salaried jobs now want to try music industry; whereas it isn’t easy to be a celebrity or a promoter. Some who started their business has also seen that remaining profitable isn’t easy. Certain people don’t want to do anything with trading until they’re financially down, having exhausted all other alternatives. Is that the right time to become a trader?

Those who don’t make money with CFD believe spread betting is better. Those who hate shares markets consider futures markets. Those who have problems with FX think BO is better.

What do you want to do with your life? What do you want to do for a living? What can you do to put food on your table (or to feed your kids, if you’re a parent)? Life’s short: only 70 – 90 years, and some don’t even reach that age bracket. A short life is meaningful if one’s financially free and is fulfilled.


Caveat
I didn’t mean to anger BO traders. BO is good and it offers nice potentials, but people are also blinded to its pitfalls and inherent disadvantages. A business that always makes profits that are bigger than expenses will sometimes go thru turbulent times, how much more a business that makes profits that are always smaller than expenses!

If I made a business proposal to you, telling you that your income/profits from the business would be primarily, permanently less than your expenses and other costs of running the business, would you agree to the business proposal? Does that kind of business sound rational to you? Sadly, this is the permanent reality of BO.

It doesn’t make sense to run a business in which the costs will always be bigger than income.
I’ll trade BO only when brokers start giving us the possibility of getting reward that is bigger than risk per trade. However, I sense that this may put them at a demerit.

Conclusion: The most exciting thing about market is its unpredictability. The unpredictability of our trading career isn’t always thrilling, however. We devise and strategize. We make trading plans, projections and proposals about what we’d like to see happen to our portfolios, but often they’re little more than our best guesses. We’ve no idea what a day, a week, a month or even a year might bring.

“Why don’t you just play around with the idea that you can be wrong and still be successful. Being right or wrong is a meaningless invention of your mind. Instead, what if you just developed a good system and practiced following it? A loss has nothing to do with being wrong. Instead, a loss has everything to do with following your system and not making a mistake…. So what if you just accepted losses when you got them, allowing them to be small losses and let your profits run when you have a good trade? Don’t you think that might be a good idea?” – Dr. Van K. Tharp (Source: Vantharp.com)

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Whether I Win Or Lose A Trade…

A HEART-TO-HEART TALK

Experience is the best teacher. Negativity in trading is compared to temporary setbacks in real life: it exists so that you can become a better trader. Losing streaks are equivalent of transient disappointments that celebrities face in their careers. They simply enable you to become an efficient risk manager. There are many life examples that can be compared to trading. Do you know that you need to be determined enough to surmount any challenges you might encounter in the markes?. Uncertainty will forever be our source of wealth! Do you know that you need to believe in yourself? You’re never doomed to failure in the markets. You just need to work hard enough until you reach the stage of trading effortlessly (after your past errors have turned you into a general of the financial markets). Can you do this? Do you agree with me? If you can, your dreams would be achieved ultimately.

“You can’t change what you can’t face and you can’t face what you don’t know.” — Dr. Woody Johnson

Whether I win or lose a trade, trading is my profession and it’s what I like to do. Great people have always faced challenges and failures – yet they become great. The past failures and challenges in the markets are never a deterrent to me. Markets wizards today were novices in the past. The road to success is bumpy indeed. Nevertheless, the resplendent reward of consistent success makes the pain of the past pale into insignificance. Whenever I visualize the joy of success, the glory of breakthrough, the pleasure of financial freedom, the luxury of attainment of goals – the benefits in trading are worth the sacrifices inherent in it. I’ll continue to move on.

Whether I win or I lose a trade, I’m still a trader and I’ll be a trader for as long as I live. A balanced trading life doesn’t preclude a normal person from having fun from other aspects of life. Trading is a holistic way of life: it’s a journey to self discovery. A successful trader is someone who’s won one of the life’s most crucial battles. Successful traders worldwide, I salute you! You’re heroes and heroines indeed! You’ve discovered your true self. You’ve conquered your negative personality.

Whether I win or I lose a trade, I’ll never quit. Losers and winners are normal part of the game. I was downtrodden and hopeless on the markets in the past, but I experienced a turnaround once I got to know the tips and tricks for survival on the markets, and I’m disciplined enough to follow them. Yes a trader may say he’s surviving the markets instead of saying that he’s successful. I was lucky to come across those with the right thoughts on the markets. For two real traders, there are ninety trading charlatans. There are too many crooks out there – too many wolves in sheep’s clothing. But I can’t be deceived anymore. I’m free from all their lies and marketing traps. I’m free!

“If you ever find yourself in the middle of a bumpy road in trading or in life, stay encouraged. You will make it to the peak if you realize that the valley is NOT your permanent address. Never forget, to become a butterfly, you must want to fly so badly that you are willing to give up being a caterpillar. Growth and change always go hand-in-hand with failure and fear. If you approach failure and challenges with a positive attitude, you will see how quickly you can use failure to achieve success.” — Sam Seiden

Whether I win or lose a trade, I’m on my journey to trading mastery. Why won’t a warrior constantly pray for opportunities to show her or his prowess? I’m glad to be an experienced soldier on the battlefield of the financial markets. A soldier I am, yet I’m still learning. I’ll be a learning soldier forever, for the market is a complex thing. Trading being the second most stress-related job in the world, second only to disarming live nuclear weapons, can be approached with stress-reducing tactics. There are normal reactions to stress and these I know. Stress, just like risk, can be managed successfully.

Whether I win or lose a trade, I won’t show any infantile reactions. I can be encouraged by a good trade, but I won’t be discouraged by a bad trade. Some others may abandon this way of life, but I won’t. People’ negative thoughts and comments on trading aren’t a headache to me. The outside world is very hard – harder than we may think. I’ll let go of the past and look forward to a brighter tomorrow. Trading is my niche; I’m comfortable with it. If you invest the time in becoming an expert then the financial reward can be huge. I’ll continue following the simple time-tested winning strategies. What benefits can you derive from an excellent speculation strategy if you fail to stick to it consistently irrespective of alternative winning and losing streaks?

Whether I win or I lose a trade, I’ll be a successful trader. I’m just desperate enough for success (badly desperate) or I can say that those who’ve quit trading weren’t desperate enough for success. I’m aware that nothing in the market is ever perfect; no Golden Goose method of making money. Nevertheless, I’d like to declare, without mincing words, that the probability of survival is strong if a positive expectancy speculation method is used regularly with self-control.

Whether I win or lose a trade, trading is an exciting world – a world of unlimited opportunities. Believe it or not, I’m moving up gradually higher and so you can. The me I see is the me I’ll be. Welcome to the world of financial freedom.

Conclusion
This article is concluded with a quote from Ken Long: “(When it comes to trading mastery) You already have the mastery within you, waiting to be called forth… Mastery is walking the path, not the destination. Should you choose to walk it each and every day, what will you find?”

The Beauty of Trading

“You do not need a PhD in math or physics to be successful in the stock market, just the right knowledge, a good work ethic, and discipline.” – Mark Minervini

Imagine. There’s someone who borrowed a total of $13 million to make a movie. She’s a credit officer at a big financial institution who’s helped many candidates secure loans to finance their ambitions. She herself was unable to get a loan to finance the production of her movie. In fact, it took her more than 6 years to get money to produce her movie. After going to the States to learn how to direct movies, she’d to sell all her property and borrow money from some friends and banks, before they could get the needed $13 million to finance the movie. The movie could’ve been a crashing failure, but fortunately, it was a roaring success. This courageous woman took a great risk.

Can you see the length people can go in order to achieve their dreams? The risk I take as a trader is even far less than this, with the assurance that my possibility of success is high because I’m a veteran trader.

Have you been touched by sadness in trading? You might feel that’s a problem without solution. But there’s a solution – namely, the necessary mindset and principles that are necessary for your happiness. A losing period is a terrible problem, but there are wonderful solutions to that.

If people discourage you, you could begin to think that the sacrifices you make in your trading career aren’t worthwhile or that you can’t attain permanent success. Since we’re surrounded by people that don’t understand the truth about trading, we must strive to keep our focus on the ultimate goals.

If You Can Draw a Straight Line, You Can Become a Successful Trader
This subheading was taken from one of the titles written by DbPhoenix of Trade2win.com. Contrary to what most people tend to think, you can become a permanently successful trader if you’ve a positive expectancy methodology and a winning attitude.

The road to profitability is to think positively and take steps. This doesn’t mean that your steps would often lead to what you want. There are times when you’ll feel that you can’t become a winning speculator. You can even contemplate quitting. I know this. It’s happened to me. There were times when I was discouraged by poor trading results and I thought of abandoning my trading career.

Nonetheless, I was aware of the potency of perseverance, and so, I didn’t quit. After many years of grappling with the markets, I’m eventually able to make money in the markets, surviving trendless and choppy periods and moving smoothly ahead when the markets trend strongly. I’m now able to keep my funds safe despite the vagaries of the markets. Sometimes, I make more than I even anticipate in a month.

The Providence used Forex to remove me from poverty and launch me onto my way to financial freedom.

Conclusion: Like the veterans of the markets, we don’t feel that the years we spend trying to bring our best trading self are a waste of time. Rather, we’re sure that the challenges are transitory and the rewards are permanent. I think of someone like Adam Jowett, who’s an entrepreneur and a developer who trades anywhere possible, like in the toilet, in the bus and in his garage. I know another trader who travels worldwide and trades on the go, raking in lots of money in the process.

This piece is ended by the quote below:

“Learning by trading may be the school of hard knocks, but in the end that is the best school you can attend. Just keep standing up over and over again, until you learn how to profit. Until that point, trade small and make sure to stay in the game. Make sure you will still be there once the profits arrive. And do not forget to enjoy the ride.” – Marko Graenitz

Sir John Templeton: The Greatest Global Stock Picker of 20th Century

INSIGHTS INTO THE MINDSET OF SUPER TRADERS – Part 17

“A main focus for us is showing traders how to reduce risk with three important tools. The first is the proper use of protective stop orders, the second is proper position size and the last, but maybe most important tool is to keep losses small.” – Sam Seiden

Name: Sir John Templeton
Date of birth: November 29, 1912
Nationality: British, Bahamian (and formerly American)
Occupation: Investor, businessman, researcher, philanthropist
Website: Templeton.org

Life and Career
Sir John Templeton was born in Winchester, Tennessee, USA. He went to Yale University (where he was an assistant business manager for campus humor magazine). He financed his own education by playing poker – with fine results. He graduated with outstanding performances. As a Rhodes Scholar, he was able to attend Oxford University, bagging an M.A. in law.

He became a billionaire by being the first person to take advantage of globally diversified mutual funds. H established Templeton Growth Fund, Ltd and was among the first persons to invest in Japan in the 1960s (some of the world's largest and most successful international investment funds).

His website reveals that he took the strategy of "buy low, sell high" to an extreme, picking nations, industries, and companies hitting rock-bottom, what he called "points of maximum pessimism." When war began in Europe in 1939, he borrowed money to buy 100 shares each in 104 companies selling at one dollar per share or less, including 34 companies that were in bankruptcy. Only four turned out to be worthless, and he turned large profits on the others.

Again, he’s noted for, during the Depression of the 1930s, buying 100 shares of each NYSE listed company which was then selling for less than $1 a share ($17 today) (104 companies, in 1939), later making many times the money back when USA industry picked up as a result of World War II (as mentioned in Wikipedia).

He’s been identified as one of the most generous philanthropists in the history of the world, donating more than $1,000,000,000 USD to charities. He relinquished his US citizenship in 1964, which enabled him to save $100 million in US income taxes when he sold his international investment fund. That money was used for philanthropy. He’d dual naturalized Bahamian and British citizenship and lived in the Bahamas.

He wrote many books, including:
A. Riches for the Mind and Spirit: John Marks Templeton's Treasury of Words to Help, Inspire, and Live By (2006)
B. Golden Nuggets (1997)
C. Buying at the Point of Maximum Pessimism: Six Value Investing Trends from China to Oil to Agriculture (2010)
D. Investing the Templeton Way: The Market Beating Strategies of Value Investing Legendary Bargain Hunter (2007)
E. Worldwide Laws of Life: 200 Eternal Spiritual Principles (1998)
And some other books

As a philanthropist, Sir John established the John Templeton Foundation, a library, a prize, and a college under the University of Oxford. He donated a sizable amount of his assets to the John Templeton Foundation, which he established in 1987. That same year, he was created a Knight Bachelor by Queen Elizabeth II for his many philanthropic accomplishments.

A Chartered Financial Analyst (CFA) charter-holder, Sir John received AIMR's first award for professional excellence in 1991. Money magazine called him "arguably the greatest global stock picker of the century." in 1999. In 1996, he was inducted into Junior Achievement US Business Hall of Fame, and in 2003, he was awarded the William E. Simon Prize for Philanthropic Leadership. He was named one of Time magazine's 100 Most Influential People in 2007.

Being a lifelong member of the Presbyterian Church, he served in various positions of high responsibilities in the church.

Sir John was married twice, blessed with children. He first got married to Judith Folk, who died of a motorbike accident in 1951. He then got married to Irene Reynolds Butler, who died in 1993.

Sir John Templeton passed on to rest on July 8, 2008, in Nassau, Bahamas, aged 95.

Insights
1. Humility is important to us as traders; and so are good mood, absence of anxiety and discipline.

2. Bull markets arise from pessimistic moods, they thrive on uncertainties and become mature on optimism and confidence, and then they die on euphoria. When the public go mad about a stock, it’s time to sell.

3. Avoid the herd mentality. What most people think, believe can’t help you. This will remain forever true in the world of trading and investing. Invest at the point of maximum pessimism. Stocks are excellent ‘buy’ candidates when people don’t want to buy them because they’re terrible. Please read Sir John’s career above again. Think about how he made his money. He invested in Japan when most people thought that idea was crazy. He sold his stocks when the public showed excessive confidence in them, when values and expectations were high. There are investment opportunities all over the world, not in the US alone. Sir John himself said: “The other boys at Yale came from wealthy families, and none of them were investing outside the United States, and I thought, 'That is very egotistical. Why be so shortsighted or near-sighted as to focus only on America? Shouldn't you be more open-minded?”’

4. If you want to have a better performance than the crowd, you must do things differently from the crowd. Since most traders lose, you need to do what most traders don’t do to be successful.

5. It’s possible to make money solely from fundamental analysis (just as it’s possible to make money solely form technical analysis). Sir John didn’t do technical systems; he based his investment decisions solely on fundamentals. Those using technical analyses only shouldn’t criticize those using fundamentals only: and vice versa. Any trading approach is good, no matter how weird, as long as it makes money.

6. Sir John - though a generous giver – never spent too much money on himself. Uninterested in consumerism, he drove his own car, never flew first class and lived year-round in the Bahamas. Being rich doesn’t necessarily mean we should live an extremely flamboyant, ostentatious, and expensive life. Warren Buffet is another good example.

7. Sir John, who was also interested in spiritual matters, said: “We are trying to persuade people that no human has yet grasped 1% of what can be known about spiritual realities. So we are encouraging people to start using the same methods of science that have been so productive in other areas, in order to discover spiritual realities.”

Conclusion: James Altucher quotes Marilyn Monroe as saying "Imperfection is beauty, madness is genius and it's better to be absolutely ridiculous than absolutely boring." He also says you should be embarrassed by what you do. Give yourself permission to be imperfect. Out of that messy soup of shame and imperfection will come art.’ No matter how many periods of discouragement you face, know that a good state of the mind, a sensible strategy and lack of expectations are what you’ll ultimately need to succeed. That’s the only method for survival in the world of uncertainties.

This article is concluded with a quote from Sir John:

“In my 45-year career as an investment counselor, humility did show me the need for worldwide diversification to reduce risk. That career did help me to become more and more humble because statistics showed that when I advised a client to buy one stock to replace another, about one-third of the time the client would have done better to ignore my advice. In other endeavors, humility about how little I know has encouraged me to listen more carefully and more wisely.”

An Old Veteran Trader Tells His Intriguing Story

Joe Ross is a trading legend, having made a living from the markets for – hold onto your hats – 58 years. He has been trading and investing since his first trade at the age of 14. Currently, he is a well-known and respected master trader and investor. He has survived all the ups and downs of the markets because of his adaptable trading style, using a low-risk approach that produces consistent profits. Joe is the creator of the famous Ross Hook setup, and has set new standards for low-risk trading. He has written twelve major books and countless articles and essays about trading. All his books have become classics, and have been translated into many different languages. In addition, he runs the website Tradingeducators, teaching his trading methods and providing resources for traders. Today, we have the great opportunity of speaking with Joe Ross about his approach to the markets, insights he has gained from trading, and his vast experience from trading for more years than almost anybody else on the planet.

TRADERS´: Joe, we can only guess at the wealth of experience you gained throughout the years. But first of all, let us begin with how it all started. When did you first hear about the markets and trading, and how did you get – in a positive sense – “addicted” to it?

Ross: When I was 14 years old, it was common for mothers to stay at home and fathers to go off to work at a job or business. However, my best friend’s father was usually at home during the working day. I assumed he had some sort of medical problem – that he was a person unable to work. My friend and his family lived quite well in an upper class neighbourhood, and they owned a new car.

I remember asking, “Is your father disabled? Why is he always home?”

The answer was, “No. He is fine. He does his work in that room, the one with the glass doors.”

“Well, what does he do in there?”

“I do not know. Why do you not ask him?”

So I tapped on the glass door, and asked “What is it that you do in here?”

The answer was, “Well, if you really want to know, come in and I will show you.”

My friend’s father walked over to a closet to pull out a roll of paper, which he then unrolled onto a drafting table.

He said, “I work with this chart, and others just like it.”

All I could see were a lot of things that looked like sticks, and so I asked, “Your job is drawing sticks?”

“No, those represent stocks, not sticks.”

“What is a stock? Does a stock look like a stick?”

He began to describe what stocks were, and to tell me that the sticks represented the prices of a company’s shares of stock. I was fascinated that he could make money from what turned out to be a simple bar chart.

At that time, both of my parents worked. My parents had to suffer through the daily rush-hour traffic, which was quite heavy. However, my friend’s father was leading a much more leisurely life, and I decided right then that I would learn how to trade stocks…

To read the complete interview, please visit:

Courtesy: TRADERS’ magazine, October/November 2015, pages 104 – 105

Michael Steinhardt: Wall Street’s Greatest Trader?

INSIGHTS INTO THE MINDSET OF SUPER TRADERS – Part 18[b]

“The trading game is not won in the strategy one selects. The trading game is won in the mind.”[/b] – DbPhoenix (Source: Trade2win.com)

Name: Michael Steinhardt
Date of birth: December 7, 1940
Nationality: American
Occupation: Funds Manager and philanthropy

Career
Michael was born to an American Jewish family. His dad was a notorious gambler who was his son’s first client. He provided the seed money for Michael to start his investment career.

Michael Steinhardt attended the University of Pennsylvania. After graduating in 1960, he worked for a brokerage firm. He started his own hedge fund in 1967, with some partners. One source reports that his fund averaged an annualized return for its clients of 24.5%, after a 1% management fee and a "performance fee" of 15% (early in his career, later 20%) of all annual gains, realized and unrealized, nearly triple the annualized performance of the S&P 500 Index over the same timeframe.

Because of his continuous success in the markets, Michael was investigated for allegedly trying to manipulate the short-term Treasury Note market, because his firm personally made $600 million from trading Treasury. The case was settled after a fine of $70 million was paid.

His fund sustained a loss in the year 1994 but enjoyed good returns in the year 1995. This shows that even great speculators can’t always win. But unlike short-sighted speculators, they don’t quit because they know things would soon turn out in their favor.

Michael closed his fund in the year 1995 and returned the capital to his clients. He came out extremely affluent and liquid.

In the year 2004, he came out of retirement and started working for WisdomTree Investments (formerly known as Index Development Partners). He’s chairman of that company; whose worth increases by about 10% per month, with $18.3 billion under management. The company suffered some losses in the years 2007 and 2008 as a result of the credit crunch that ravaged the financial world then. Nevertheless, the company has recovered and moved ahead.

Because of his Jewish ethnicity, Michael Steinhardt loves Jewish causes, donating generously to several Jewish causes, programs and events he believes in. He also donates generously to other political, academic and humanitarian causes.

Michael was married in 1967, He’s 3 children. In the year 2001, he released an autobiography titled: “No Bull: My Life in and out of Markets.”

Insights
1. Michael mastered several markets instead of just one market. He traded stocks, currencies, bonds, and options, using small and big timeframes. He’s a trend-follower. You can also master more than one investment vehicle.

2. According to him, make all your mistakes early in life. The more tough lessons early on, the fewer errors you make later. Always make your living doing something you enjoy.

3. You need to study the markets and gather lots of information so that you can sense major shifts in the trend. You can’t know everything, however. So you need to make your trading decisions with incomplete information. You will never have all the information you need. What matters is what you do with the information you have.

4. Trust your intuition always – though that doesn’t mean you can always be right. When you’re eventually right, the thought of having made a profit would be so satisfying.

5. Before your risk your money, make sure the reward is high enough to justify the time and effort you put into the investment decision.

6. Michael Steinhardt used fundamentals when trading, though his positions were short-term. He did an enormous amount of trading, not necessarily just for profit, but also because it opens up other opportunities. He got a chance to smell a lot of things. Trading is a catalyst.

Conclusion: “There’s no way to know in advance if a business idea is a good one. For instance, Google started around 1996 but didn’t make a dime of money until around 2001,” says James Altucher. He also says… don’t be afraid to test, fail, test, fail, try again, repeat, improve, test, fail again, and keep improving. The way to keep improving? Keep coming up with ideas for your business and for other new businesses. How true are these statements about when it comes to trading!

This piece is ended with a quote from Michael Steinhardt:

"One dollar invested with me in 1967 would have been worth $481 on the day I closed the firm in 1995, versus $19 if it had been invested in a Standard & Poor's index fund."

Planning Trades to Control Risk

The problem with many traders is that they have only half a plan, the easy half. They know how much profit they're willing to take, but they don't have the foggiest idea how much they're willing to lose. They're like a deer in the headlights, they just freeze and wait to get run over. Their plan for a position that goes south is, “Please God, let me out of this and I'll never do it again,” but that's wishful thinking, because if by chance the position turns around, they'll soon forget about their promises. They'll go back to thinking that they're geniuses, and they'll always do it again, which means that they're sure to get caught, and get caught bad.

I have a true story I’d like to share: It’s about a broker I knew and a Coffee trade he made. It goes like this:

I received a phone call from this guy moaning about a Coffee trade he was in. He was managing money and had all of his clients in this particular trade.

Coffee, at least at that time, was, and still can be, an illiquid and extremely volatile market, and is often best traded by people who have a genuine need to trade there. But he was in and in up to his neck in trouble. He said, “Joe! I don’t know what to do! If the Coffee goes down any more, I’m going to wipe out all of those accounts.” He told me he had been so sure the market would move up that he never even planned the amount of risk he was willing to take, and by the time he had determined where to put a protective stop, Coffee had shot past that point.

I told him I had no idea of how he could get out of his predicament, and that was an honest answer. I really did not know what he could do.

Apparently, he decided to pray! He called me back that evening and told me he had gone into the restroom, closed the door on the booth, and knelt down and implored God to get him out of the mess he was in. He promised that he would never again trade Coffee if God would just save his skin from disaster.

The following day, Coffee opened gap up, and moved to a point where he could get out at breakeven. He took the opportunity and got out. Later that day, Coffee moved even higher. Two weeks later, he was back trading it once again.

The broker had no plan for what he would do if the market moved against him. Whatever planning he did was done after, not before, entry into the market. His irresponsibility took unlimited risk with client accounts, having no idea of his exit point.

But perhaps worst of all, he was dishonest with both himself and his clients. He vowed to never trade that market again. Where were the discipline and self-control he needed to keep his promise?

How many of us do the same thing when we trade. We make mistakes, vow to never make them again, and then do the same dumb things all over again. We take risk without planning, or realizing just how much risk we are truly taking. Then the market teaches us a painful lesson. I think you would agree, markets are very good at doing that.



Author: Joe Ross

This article was reproduced with kind permission of Trading Educators.

Bill Miller: One of the Greatest Money Managers

INSIGHTS INTO THE MINDSET OF SUPER TRADERS – Part 19

“Just as picking up a five iron does not make you Tiger Woods, opening a brokerage account and sitting in front of a computer screen does not make you Peter Lynch or Warren Buffett. That is something you must work for, and it takes time and practice. What is important is that you learn how to practice correctly.” – Mark Minervini

Name: Bill Miller
Year of birth: 1950
Nationality: American
Occupation: Portfolios manager

Career
Bill Miller went to Washington and Lee University, graduating in 1972 (BSc Economics). Following that, he worked as a military intelligence officer, also pursuing graduate studies in the Ph.D. program at the Johns Hopkins University.

He was a treasurer of the J.E. Baker Company, a major manufacturer of products for the steel and cement industries. In 1981, he started working at Legg Mason. He was designated a CFA in 1986.

Bill’s fund increased from $750,000,000 in 1990 to more than $20,000,000,000 in 2006.
In 2002, Janet Lowe wrote a book about him, titled "The Man Who Beats The S&P: Investing With Bill Miller."

Bill performed so well that he and his team got numerous praises for their achievements and uniqueness of trading approaches. According to Wikipedia, he was ranked among the top 30 most influential people in investing when he was named a member of the "Power 30" by SmartMoney. He was also named by Money magazine as "the Greatest Money Manager of the 1990's" and named Morningstar's 1998 "Domestic Equity Manager of the Year." In 1999, he was selected as the "Fund Manager of the Decade" by Morningstar.com. Also in 1999, Barron's named him to its All-Century Investment Team and BusinessWeek called him one of the "Heroes of Value Investing."

Bill is currently the portfolio manager of the Legg Mason Opportunity Trust (Mutual fund: LMOPX) mutual funds, run by Miller through Legg Mason subsidiary LMM. Formerly he’s the chairman and chief investment officer at of Legg Mason Capital Management, now a part of ClearBridge.

Insights
1. It’s quite possible to outperform the markets for a long period of time. Bill Miller beat the S&P 500 index for 15 consecutive years (1991 - 2005). This is one of the longest winning streaks of a trading career. Constantly making market beating returns is considered to be very unlikely according to the efficient market hypothesis, but it’s possible. So in your career, you can defy the conventional theory and rise beyond obstacles.

2. Information simply shows what’s happened while value shows what may happen. It’ll be in your best interest to think about the Big Picture.

3. Bill says certainty belongs to mathematics, not to markets, and anyone who awaits clarity, visibility, or the diminution of uncertainty pays a high price for a chimera… It’s the nature of financial markets to be subject to sharp price fluctuations, to be buffeted by events, and often to be emotionally trying. Successful investing involves the disciplined and patient execution of a long-term strategy, especially when it’s emotionally difficult. That’s usually the time the opportunities are the greatest.

4. Most money managers take positions as they swing to their opposites. Those swings can have wide arcs, and unsustainable trends can sometimes persist beyond the ability of one to endure. This explains why speculators sell their positions in over-extended bear markets, for they can’t continue enduring the pain of losing. When bull markets become over-extended, speculators are glad to go in fully, thinking that the bullish trend would continue in spite of the fact that things look overbought.

5. Flying in the face of conventional trading wisdom, Bill explains what value investing really means to him: “We are value investors because we are persuaded of the logic of buying shares of businesses when others want to sell them, and we understand that lower prices today mean higher future rates of return, and high prices today mean lower future rates of return.”

6. The real secrets behind Bill’s super performance (which is very difficult to copy) is that he spent many years studying independent super achievers, and along the way he's become one of the super achievers.

Conclusion: Louise Bedford of Tradinggame.com.au once said that you’d better start seeking out people who are making a lot more money than you are. You will naturally rise to the occasion and start moving forward. Your thinking will change. Your habits will change. Traders who make a million plus per year think differently and act differently to those making 100K per year. The fact is, if your mates are telling you 100K per year is fantastic, but your goal is to get to 500K a year... then you’d better find another group. There are those who imagine the future; there are those who create the future. Permanent victory is easier when the mission is clear. Here, we’re dedicated to making our trading career a success story.

This piece is ended with quotes from Bill:

"The market does reflect the available information, as the professors tell us. But just as the funhouse mirrors don't always accurately reflect your weight, the markets don't always accurately reflect that information. Usually they are too pessimistic when it's bad, and too optimistic when it's good."

"What we try to do is take advantage of errors others make, usually because they are too short-term oriented, or they react to dramatic events, or they overestimate the impact of events, and so on."

What Super Traders Don’t Want you to Know – Review

CANDID BOOKREVIEW

Succeeding as a Trader after Learning the Necessary Facts and Skills
This book profiles 22 renowned super traders from around the world. Great traders who know what it takes to be successful in the markets. In this follow up to his previous book: “Learn From the Generals of the Markets,” the author gives an overview of their careers and explains what lessons can be drawn from their success.

The book emphasizes on the kind of friends you keep will have impact on your life, and of course, on your trading career. When you hang out with those who hate trading, those who have been floored by the markets and have sworn not to have anything to do with the markets
again, those who are afraid of the challenges the markets offer, those whose job is to discourage you from attaining your goals in life, you cannot become successful in the markets.

Trading is a wonderful experience that can transform lives. We need to surround ourselves with successful traders or at least, read about them, plus the principles that can be learned from them. The super traders featured in this book will inspire you and reveal the principles behind
their success. For you to eventually reach a position of a super trader (one who makes profits consistently and effortlessly), you definitely need more than strategies. There are certain timeless truths, principles, mindsets and beliefs that super traders cannot do without. Since using
the best strategy without the essential requirements would not improve any statistics; the catholicity of those seamless requirements cannot be overemphasized.

Super Traders with Enviable Achievements
Kenneth Fisher – a billionaire trader who is featured in the book – is an exceptional trader who was introduced to the trading world by a market legend, Philip Fisher, who was his dad. This shows that when we teach young people the art of trading, we prepare them for financial freedom
as early as possible. James Chanos, another highly profitable trader featured in the book, testifies to this fact by saying: “Life intrudes – as when you get older you end up with more responsibilities and your ability to take risk diminishes. If you are 25 and have a great idea and you fail, no one is going to hold it against you, and future you will be able to take more financial and career risk. If it does not work, you still have your whole life ahead of you.” You will also come across some celebrity traders like Dan Loeb (the Kanye West of Wall Street) and Ray
Dalio (the Steve Jobs of investing).

More interestingly, the book features some female super traders like a high earning hedge fund manager, Leda Braga; an influential female trader, Maria Boyazny; a world trading champion, Victoria Grimsley; and a happy market player, Toni Turner. The author advises that women should never underestimate their right to become a trader, including their limitless potential to become financially free. It is very sad that some people still underestimate women when it comes to online trading. It is unfair to underestimate women in the trading world because there is no level of achievement that cannot be attained by them. In fact, female traders have been a blessing to the trading world. In addition, they are a source of inspiration and encouragement to us.

The Inevitable Trading Experiences
According to the author, the gallivanting neophyte will pass through two phases of experiences. The first phase is when she/he loses money no matter what she/he does. This is a phase where the majority quit trading, and not many people go beyond that phase. The second phase is when one begins to make money easily. These are the people that the public call “market wizards,” “super traders,” “pros,” “expert speculators,” “gurus,” “witches,” “mad geniuses,” et cetera. The public think something is special about them, but these people know that there is nothing special about them. What makes the difference is that they decided to continue fighting for success at the stage that most others quit. This book will definitely be of interest to those who are determined to become super traders.

Adapted from TRADERS’ Book Review, June/July 2015 (pages 60 - 61)

“What Super Traders Don’t Want You to Know” is available right now for the Kindle at the flash sale price of just 99p. This essential guide could start you on the path to becoming a super trader.



NB: To get the almost free book, please visit:

What Super Traders Don’t Want You To Know: Advfnbooks.com/books/supertraders/index.html

nice tips

OP, thanks for the theory.
Grateful you give us at least one of your forex winning systems.

James Tisch: Moving Ahead of Warren Buffet

INSIGHTS INTO THE MINDSET OF SUPER TRADERS – Part 20

“Books are great mentors, but where else can you learn? By standing on the shoulders of giants. When it comes to making money, here is the million dollar secret...follow someone smarter than you...” – James Altucher

Name: James Tisch
Date of birth: January 2, 1953
Nationality: American
Occupation: Investor and businessman

Career
James, who’s of Jewish ethnicity, was born in Southampton, New York, USA.
His dad was co-chair of Loews Corporation, plus his brother Preston Tisch. He went to Cornell University and later got his MBA from the Wharton School of the University of Pennsylvania.

James has held prestigious positions, including having a seat in the directorate of the Federal Reserve Bank of New York. He’s been the CEO of Loews Corporation since 1999.

One thing special about him is that, in terms of percentage, his investments have outperformed Warren Buffet’s.

He’s married to Merryl and blessed with 3 children. James has a mansion which is about 8,000 square feet in Southampton, New York. James is an avid philanthropist, and a supporter of certain politicians. He and his wife donated $40 million to found a cancer research institute, named after them.

Insights:
1. Transparency matters in business success. If you claim you’re good at trading/investing, then you must make your audited track records known.

2. Transparency leads to credibility. Credibility leads to more and more success. Simply look for ways to make your career credible. Success would then be very easy.

3. James has been investing for many years. He’s really a veteran of the markets. Successful trading needs a commitment of a lifetime – just like a successful marriage. Commitment is what you need to realize your dreams, not mere interest.

4. If you’re good enough, you can outperform the bigwigs. This means you can gain better than they can, in terms of percentage, though their portfolios may be bigger than yours. You can make 40% per annum on a $100,000 portfolio: whereas someone who’s managing $10 million could only make 6% per annum. Can you see the difference? As mentioned earlier, one thing special about James is that, in terms of percentage, his investments have outperformed Warren Buffet’s. He may not be as rich as Warren, but he outperforms him in terms of percentage gains. Since the year 2000, James has grown by almost 400% while Warren has grown by only 100%.

Conclusion: Do you think you’re a god who can predict the markets, Can you predict football matches with utmost certainty, even before the matches start. If you could do that, would you do that for other types of sports? Can you predict exactly when you will die or when a healthy person will die? Why do you still think future can be predicted? Why do you still think you can predict the markets? People get frustrated only because they think they can predict the markets (but they can’t, in reality). When you agree that it’s unrealistic to think that you can predict the market with whatever tools you may have, then you’ll find a solution to your trading problems. You’ll develop a system that enables you to make money without predicting the markets. James Tisch was able to attain good performances because he’s formulas that make him victorious while not being able to know the future.

This article is ended by the quote below:

“Event-driven trading can be very lucrative.” – Dr. Adrian Manz


Copyright: Tallinex.com

Reactions from Traders (2015)

New Year is here! Year 2015 was the most difficult year I’ve experienced in my trading career. For example, years 2007 to 2014 were easy for those who cut their losses, ran their profits and employed sensible position sizing methods.

In the year 2015, the months of January, February, March, April and December were good, while the rest of the months were extremely difficult. Most market wizards posted losses for the year, though their investors know that it’s normal to have a losing year, for a winning year is in the offing. Certain market wizards announced profits – big or small. Many unknown private traders also made decent profits last year, and I personally witnessed some accounts histories. Needless to say, majority of traders didn’t’ make profits last year.

It’s difficult to keep one’s chin up when the going is tough, but that was what I did last year. The going was tough for several months, but I nearly met my annual target. I’m thankful for what the market gave me, though it was a bit below my annual target. I’m convinced that this year would be better than last year. So, be prepared to take advantage of great movements in the markets.


Reactions from Traders (2015)
As you know, I’ve been writing helpful trading articles to help traders in the areas of strategies development, trading insights and mindset, risk control, money management, traders’ bios, market analyses, etc. Some people found my articles very useful for their trading. Nevertheless, certain people were busy leaving negative comments, discouraging others and using put-downs while they’d little to do in helping traders who desperately needed help. I’d like to remind you that there’ll be people who’ll criticize you no matter what you do.

What someone finds useless can be indispensable to other people.

Below are some of the comments from those who read my articles last year. The comments were taken from those who sent me personal messages, not from those who simply replied to my posts.


Reactions from Traders (2015)

“Wow! Amazing articles. Thank you so much.” – V. R.

“Dear Analyst, I was very interested to read your excellent article on this forum… Thank you very much for sharing your very interesting article. Yours sincerely.” - I. M.


“Thank you so much for … the article.” – T. T.

“I read your post, really good job and I agree.” – H. Rob

“Hi Analyst. I enjoyed your article of June 2015.” – K. J.


“Over all I am sorry to say I was disappointed with some contents of the articles, as I was expecting to learn some useful concrete facts on trading strategies/methods. I found the content of the 'Lessons', is too generalized and found little to apply to my own day to day trading.
The theme of not giving up when things have not gone well provided so degree of solace but this alone is not a technique to improve one’s trading strategy and I would have liked to have had more information on how these super traders have achieved their success, i.e. what markets, instruments, stop loss use, market entry/exit points. Perhaps you could recommend further reading to such needs. Yours sincerely.” - P. B.


“Hi Analyst, I appreciate your prompt reply and thanks for the links you've included. Yes please give us articles on trading strategies. Such publications would be probably sought after by newbies trying to make headway as traders. Good luck” – L. C.


“Hi my name is Danny. I read your articles in some magazines recently and was very excited about your articles. I'm interested in learning more about your systems. I'm just in importance of a position size and I'm looking to do a swing trade using the daily charts. Are there any tips or advice you can give me? I too am a student of van Tharp institute! Thank you.” – D. C.


“Hi Analyst. This was very informative! I had been contemplating about opening up my own trading accounts because I am interested in speculation but I realized things are not the same ( I was trading in a friends' account and she had been losing a lot) . So she wanted me to trade for her and my winning has been 70% but I feel like I am gambling, luck eventually runs out. There is no finesse to it and even though you try your technical analysis no one can predict a price movement in the next 30 seconds. Thanks for the read! Warm regards.” – Z. A.


“Hi Mr. Analyst. I am a newbie in Forex and follow your analysis quite regularly and find it very educative. May I kindly request you to send me some analyses for the major currency pairs which shall enable me to perform better in my trades? I will be ever obliged if I can be in your group.” – H. D.

Conclusion
You can’t get an answer unless you ask a question. I really appreciate those who sent me messages, both positive and negative. Traders who are commended for their creativity and perseverance rather than simply for their talents come to realize a vital truth – that acquiring trading skills require patience and effort. They know they put in the work needed to achieve desired result… Even when they come up short, they don’t view themselves as failures, but as learners. You can’t win all the battles in the markets, but it’s great to know you’ve fought in good faith.

I assure you that I’m going to post superb trading articles this year, which would really help you achieve your aim to become a persistently winning trader. Just watch out for them.

May you have a fulfilled and prosperous trading year.

I’d like to conclude this article with the quote below:

“I don’t have any daily/weekly/monthly goals anymore. All I look at is what I achieved over a year. Why? Simply because I realized it’s almost impossible to reach a monthly goal on a persistent basis. The markets might give you a hard time for months, and then you make it all within a month or two. It’s better to not care for short-term results, which is difficult but possible, if you keep the long-term in perspective.” – Marco Mayer

Peter Thiel: A Foremost Investor

WHAT YOU NEED TO KNOW ABOUT MASTER TRADERS – PART 1[i]

“One of the secrets few know and fewer implement when it comes to trading success is that you have to really care about doing well. These days, I see a lot of traders not caring enough, not prioritizing learning about trading, and making pathetic weak-willed excuses.” [/i]– Chris Tate

Name: Peter Thiel
Date of birth: October 11, 1967
Nationality: German, American
Occupation: Businessman and investor

A RARE GENIUS
Peter was born in Germany, but his parents took him along to the United States, where they settled. He studied philosophy at Stanford University, earning a B.A. (1989). He also got his J.D. from Stanford Law School (1992). He was very good at playing chess, even to the point of being rated a Chess Master.

With Elon Musk and Max Levchin, he co-founded Paypal. He co-founded Palantir, serving as its chairman. He was the first outside investor in Facebook, acquiring a stake which was worth 10.2% in 2004 for $500,000. Therefore he’s a member of the board of directors.

He presides over a hedge fund named Clarium Capital. The fund was worth $700 million. He’s also a managing partner in Founders Fund, a firm which was worth $2 billion. He also co-founded, chairs Mithril Capital Management and Valar Ventures.

In the year 2011, his position on Forbes 400 was 293rd, being worth $1.5 billion. As of August 2015, he was worth $3.3 billion.

Peter is interested in other intriguing issues, causes and futuristic ideas, participating in some of them, funding some of them and advocating some of them. He’s won awards, honors, and an honorary degree from Universidad Francisco Marroquin.

What You Need to Know:
1. Peter really has a Midas touch. Are you successful in other areas of life? You might want to try trading and/or investing. Perhaps you success in other fields might be translated to success in trading as well. As you can see, Peter Thiel has been successful in most of the ventures he took, including investing. He correctly forecasted the weakness of USD in the year 2003, plus forecasting that the strength in USD and energy would be strong in the year 2005.

2. You can’t be right always. Peter wasn’t always right. His hedge fund, Clarium, dropped in value within years 2008 – 2011. This was largely due to incorrect bets. However, you should be successful overall, just as Peter is.

3. In trading, courage is more important than genius. Brilliant traders are rare. No wonder there are so many losers.

4. Peter says monopoly is the condition of every successful business. This can be applied to trading. You just got to develop your own unique trading approach and stick with it. That unique trading approach is your edge, which will give you breakthrough that many millions of traders can only dream of.

5. Nobody cares about you unless you become a successful trader with years of a nice track record. Consistent profitability is an elusive thing, and once you can achieve that, more and more people would be interested in you, because you’ll appear unique. Without this, you’ll just be like many other millions of people who’re failures.

6. Don’t be afraid to fly in the face of a conventional trading wisdom. You trading approach is good as long as it makes money, no matter how odd it seems.

7. Always make sure that in a quarter or on annual basis, you make average profits that are bigger than average losses. Your few winners ought to compensate for your numerous losers.

Conclusion: When problems and challenges arise in your trading career, do you feel overwhelmed? I no longer feel helpless and without hope. Today, I can truly say I’m happy as a trader, although previously I never imagined it possible, I now feel that I can help others.

This piece ends with a quote from Peter:

“The most contrarian thing of all is not to oppose the crowd but to think for yourself.”

Are You Disappointed in Trading?

“One of the keys to a trader’s success was not the results of a trade but rather how a trader reacted to the results of a trade.” – Dan Gamza

Why me? Why did this happen to me? Those are some of the questions that disturb losing traders. After a series of losses, some of them develop hatred for trading. Suffering that results from negative trades, drawdowns and margin calls can make people easily disappointed in trading.

Nonetheless, no matter how bad your trading is, it could’ve been worse. No matter how bad things are, there are still some reasons to be thankful, if you can think deep.

There are events that move the markets and which professionals focus on. These events often are filled with uncertainties, bringing profits and losses to people. Just some months ago, Greece was a hot topic, and speculators were mulling opening positions on the seemingly overextended markets, but some had serious misgivings. At times, the stakes may be higher than the rewards.

There Is Really Nothing Like Losses
There is really nothing like losses, for what brings losses to some people is what brings profits to others. The market moves up or down – not losing up or down. When you buy EURUSD and it goes up, you win (but a seller will lose). When you sell AUDJPY and it goes up, you lose (but a buyer will win). When you enter a direction in the market and it moves seriously in your favor, all those who go in that direction will make money, provided there are no wide differences in their entry prices.

What you call losses is what brings profits to some people. What you call profits is what brings losses to some people.

People Don’t Learn Their Lessons
Despite well-meaning efforts to solve the problem of loss, there are millions of traders around the world who’re still losing because of dangerous trading habits. People don’t learn their lessons.

During a funeral process, many attendees will be remorseful, thinking about the brevity of life and futility of wickedness, anxiety, love of money and so on. But once the funeral is done, you’ll see many of those attendees living their lives as if they’d not die again.

Too many traders lost in the past because they didn’t use stop loss on live and simulated accounts. When they come back to trading, you’ll see them using the same trading approaches that led to their downfall the last time, namely, high lot sizes and no stop loss. People don’t learn their lessons.

Traders who test new trading ideas on demos don’t use stops; and I wonder how that idea can survive on live accounts in the long haul, because they may apply it to a demo account once they’ve been lucky enough to gather some gains.

A Way Out?
After many years of grappling with the markets, traders who complained in the past may later show their gratitude; and for the fact that the markets cannot be blamed for what happen to them (though we may feel disappointed sometimes). There are days when they become sad, and they complain when they think of their seeming helplessness. Nonetheless, they’d have come to understand that the markets don’t set out to punish individuals.

Interacting with good traders as well as reading about super successful ones would’ve made them stronger psychologically and kept their spirits up.

Reflecting on a possibility of a risk-free trading approach reassures those who’re currently losing. Good trading coaches care about them, knowing full well that the end of their struggles is in sight. Focusing on such hope can give a trader the fortitude to endure certain negativity now.

Conclusion: Are you disappointed in trading? Well those who currently make loads of money from trading were once disappointed at some time in their careers. Those whose marriage is now successful were at one time, frustrated by their spouse. But these people, for example, profitable traders (as well as happily married persons), looked for solutions to their problems and apply those solutions faithfully. That doesn’t mean they’re luckier or better than others: that means they’re able to overcome the causes of frustrations and disappointment in their careers.

This article is ended with the quote below:

“Markets are people. So beating them asks for insight in what they are doing. And, perhaps more importantly, how they feel, because that will direct their future actions and, in the end, what markets will do.” – Dirk Vandycke

Bernard Baruch: One of History’s Greatest Market Participants

WHAT YOU NEED TO KNOW ABOUT MASTER TRADERS – PART 2

“The main purpose of the stock market is to make fools of as many men as possible.”

Name: Bernard Baruch
Date of birth: August 19, 1870
Nationality: American
Occupation: Investor, financier, philanthropist, and statesman

THE LONE WOLF OF WALL STREET
Bernard was born in South Carolina, to a Jewish family. His family later moved to New York and settled there. Bernard went to City College of New York, and then got married to Annie Griffin. They were blessed with 3 children.

He started his trading/investment career as a broker and partner at A.A. Housman & Company. He then bought a seat at NYSE, for $434,000 (inflation adjusted). His trades in the sugar market were successful and as a result of that, he became rich as young as 30 years of age.

He was an independent broker who did not affiliate himself with other financial houses – hence the alias “The Lone Wolf of Wall Street.” By 1910, he was already a force to reckon with in the markets.

After his success in the markets, Bernard got involved in philanthropy, politics and statesmanship, devoting his time toward advising U.S. Presidents Woodrow Wilson and Franklin D. Roosevelt on economic and other important matters of national interests. Because of his generosity, philanthropy, wisdom, love for his country and fellow citizens, Bernard left enduring legacy. He was awarded some honors.

Bernard Baruch went to eternal rest on June 20, 1965, at a ripe age of 94.

What You Need to Know:
1. Also known as the Lone Wolf of Wall Street, Bernard was able to amass huge wealth in the markets all by himself. He wasn’t helped by anyone. Nobody recommended anything to him. I’m not preaching against getting help (even that’s encouraged) or recommendations: I just want you to know that you can become successful also through your own personal effort. In an interview, Dr. Brett N. Steenbarger recently said that winning speculators are their own coaches. Never follow the crowd, especially in doing what you know to be irrational and illogical.

2. Don’t blame anybody for your mistakes and failures. This world is full of many people who goof, and yet look for things and others to blame. For example, failing traders blame other traders, coaches, brokers and the markets for their failure, which is not normal. You can’t make any progress until you see yourself as the source of your problem and the source of your solution. One American author says: “If it’s going to be, it’s up to me.” If it’s going to be, it’s up to you (not anyone else). You’re the architect of your success or failure in the market.

3. Bernard advised against buying at the bottom and selling at the top. He said that couldn’t be done except by liars. Please follow the trend, which may sometimes go further than you can imagine.

4. A speculator is a man who observes the future, and acts before it occurs. When you make money, definitely you’re not losing money. Winning traders thrive under pressure. They grow in uncertainties and become mature more and more in the constant challenges that market throws at them.

5. Bernard knew when to exit the market – he knew when to sell his shares. Once he got this signal, he sold as soon as possible. He said when good news about the market hits the front page of the New York Times, sell. When the public begins to feel encouraged by a price movement, then it’s time to sell.

6. Bernard said: “Take the obvious, add a cupful of brains, a generous pinch of imagination, a bucketful of courage and daring, stir well and bring to a boil.” How can traders interpret this relevant statement?

7. In certain cases, the fundamentals in the market are mere noises; published figures or what a CEO of a company says. A market is either moving sideways or upwards or downwards. It might be choppy, volatile or quiet. Just look at what the price is doing and respect it, not what news says or what a CEO or a chairman says.

Conclusion: I’ve found that listening to other traders and helping them understand good trading principles makes me genuinely happy. There is much beauty and reward in the markets, but you can only benefit from those good things when you become a profitable trader.

This article is ended by a quote from Bernard. The quote at the top of this article is also from him:

“If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he is wrong.”

Why Victorious Traders, Investors, and Funds Managers Are Paid Extremely Huge Amounts of Money

What you have to understand is that you're competing in an environment full of very talented, smart and highly motivated competitors. The guy on the other side of the trade, is as eager to make money as you are. This forces you to constantly improve your trading and adapt quickly. If and when you stop, your competition won’t, and they’ll quickly be ahead of you. - Marco Mayer (source: Tradingeducators.com)

Trading is one of the toughest and the most difficult professions in the world, as well as one of the most rewarding. The public hate trading because they feel it’s too tough for them.

“I am convinced that fewer than one percent of all beginners go on to be and remain successful in day trading,” says Dr. Brett N. Steenbarger. What about swing trading, position trading and investing? The statistics may improve considerably, but they’re still less than 10% of all market speculators.

Members of the public shy away from trading, even discouraging others who’re doing it, since they think it’s a gamble. Then why not abandon trading and look for a job that guarantees a paycheck every week or every month?

Recently, in one Asian country, 2.3 million candidates apply for just 368 low-level government jobs. The jobs pay 243 USD (before taxes) a month and will involve making tea and passing files between government offices. Requirements for the 368 jobs include having finished primary school and being able to ride a bike. The applicants included at least 255 people with doctorates and 150,000 graduates.

In certain lands, many a university graduates receive less than 50 USD per month (less than $600 per annum).

In a country where population is exploding, with more and more houses being built and new sites being cleared to make way for housing, but fewer and fewer industries are established, what would you expect? In a country where millions of people go to tertiary institutions, graduating en masse every year, but fewer and fewer gainful jobs are created, what would you expect?

The uncertainties in the world are now greater than the uncertainties in trading: Companies downsizing constantly, governments owing salaries, incomes getting slashed and slashed, the fear of a sudden dismissal, economic changes that have adverse effects on small and big businesses, etc. We’re living in hard times.

Many people are poor because they’re looking for easy, guaranteed ways, to earn income. They don’t want to take risks, and therefore, they choose trade, jobs, professions that make them confortable. Millions of people rush into such jobs, thereby driving the income lower and lower because the supply of personnel, workers, self-employed people, and so on, is higher than the demand.

In such situation, the only means of survival is to reduce what you’re paid more and more. Nonetheless, when you’ve a career that too many people think they can’t do because it’s difficult, you’ve the chance to demand a high pay. People won’t have a choice than to pay – for demand for experts is very high and supply is extremely low.

If people are doing easy jobs, thinking they must be well paid, employers/customers/clients will immediately get people who can do the jobs/services better for lower pay.

The easier a job is, the more people will rush into it, and the lower the pay will be. That’s the reasons why most people who work for themselves and others remain poor. Take petty trading, commercial tricycle riding, office assistants, etc., for examples. What other examples can you think of? I was poor when I was working as a private teacher.

The more difficult a job is, the fewer people will go into it, and the higher the pay will be. That’s the reason why those who can do those mentally challenging jobs are highly paid. Take programming, astronomy, surgery, oil rig engineering, etc., for examples. What other examples can you think of? I became financially free when I found a way to trade Forex victoriously.

I know how much suffering going on around me. People working hard, struggling every day, yet they’re poor. I know those who’ve worked for decades, but have nothing to show for their many years of labor, save for economic survival. I could’ve easily fallen into that lot if not for trading which the Providence used to rescue me. I could be telling the same story like many others who struggle, but remain poor.

In the year 2013, the 10th highest paid trader went home with $600 million. Which company in the world would ever pay you such amount of money per year ($50 million per month)? The 10th highest paid trader didn’t get that huge income in one year because he’s a collection of PhDs, but because he can do what billions of people can’t do – consistently successful trading.

Pareto’s Law and Trading
The Pareto principle (also known as the 80–20 rule, the law of the vital few, and the principle of factor sparsity) states that, for many events, roughly 80% of the effects come from 20% of the causes; says Wikipedia

Originally, the Pareto Principle referred to the observation that 80% of Italy’s wealth belonged to only 20% of the population.

More generally, the Pareto Principle is the observation (not law) that most things in life are not distributed evenly. It can mean all of the following things:

20% of the input creates 80% of the result
20% of the workers produce 80% of the result
20% of the customers create 80% of the revenue
20% of the bugs cause 80% of the crashes
20% of the features cause 80% of the usage
And on and on… - By Kalid Azad (Source: Betterexplained.com)

Can it be said that 20% of the traders make 80% of the profits?

One source says that there are over 50 million active Forex traders worldwide, and the number is rapidly increasing. But 1, 2, 3, and 5% or maximum of 10 % make money.

When talking about the number one source of profits for traders, Dima Vonko, mentions that, our fellow traders, specifically those who are less knowledgeable, less experienced or simply too slow on the draw, can be a source of profit for us. Of course, the traders are out to make money, but many of them will also lose money. Here we can profit by applying better trading skills and better quality trading systems.

Retail Traders Also Have Their Advantages
There are always interesting events that move the markets; which are major sources of concern to investors/traders. In May/June 2015, investors were most concerned about geopolitical crises. In June/July, they were worried mostly about the Eurozone breakdown. In August, they were most afraid of China recession. That was what was happening at the time of writing this article.

Traders like you and me also have certain advantages over institutional traders. We can go long and short at will, since we’re not bound as institutional traders are; although our freedom to do what we like also has a serious demerit. We can open our small positions without being noticed, unlike big players. We can move into or out of the markets faster than institutional traders

Seeing Beyond Loss
In TRADER’ magazine (August/September 2015 edition, pages 30 - 36) Mark Minervini, who’s now a legendary trader, shares his success story. When Mark began trading in the early 1980s, he endured a six-year period when he did not make any money in stocks. In fact, he had a net loss. It was not until 1989 that he began to achieve meaningful success. What kept him going? Unconditional persistence! An investment in knowledge, which takes time to acquire, is an investment in yourself, but it requires persistence.

Profits are only a by-product of a good trading plan. Try to become permanently successful. Try to be smarter than millions of traders in the world. You may ask: “How do I predict the markets accurately?” That question can’t help you. If you ask, “How can I make money without being above to predict the markets?” Then you’ll enjoy more success and popularity than you could’ve imagined, making huge amounts of money.

Trading is the best and the greatest tool for financial freedom. It’s better than any multi-level marketing systems. Please mention the highest paid multi-level marketer in the world, telling me her/his annual income. I’ll then tell you the annual income of the 20th highest paid trader in the world.

When you’re able to prove your expertise with a small account, you can be given a bigger account. If you show your expertise with the bigger account, you’ll be given another far bigger account. Your portfolios would keep on growing until you become extremely rich. You try yourself as much as possible to attain enduring success as a trader. Ultimately, you’ll find it difficult to believe how rich you’ll have become.

Conclusion: Andy Jordan, also at Tradingeducators.com, says it is difficult to recuperate from being "chewed up and spit out" by the markets. There are students of the markets who are determined enough, who will not accept defeat, and who started over again from the beginning of studying the basics, of sorting out and discarding wrong mindsets, in order to face the realities of the markets, and who learned self-control and how to run their trading in a businesslike manner. In the process, they developed stronger character as well as better skills, and emerged winners in the "game of life" and in the world of trading.

This piece is ended with the quote below:

"What is the one sentence summary of how you change the world? Always work hard on something uncomfortably exciting!" – Larry Page

Andreas Halvorsen: One of the Most Efficient Fund Managers

WHAT YOU NEED TO KNOW ABOUT MASTER TRADERS – PART 3

“Since 2003, I have traded the financial markets with my own capital using self-developed, quant-based strategies. The more I have learned and observed as a full time trader, educator and participant in the trading industry, the more motivated I have become to correct the gross and dangerous misinformation bombarding today’s active investors.” – Scott Andrews

Name: Andreas Halvorsen
Year of birth: About 1961
Nationality: Norwegian/American
Occupation: Hedge fund executive

ONE OF THE BEST PERFORMING TRADERS
Andreas was born in Norway. He graduated from the Norwegian Naval Academy and became a leader of a Norwegian SEAL team. He also earned a BA in 1986, from Williams College and later earned his MBA from Stanford University School of Business in 1990.

He served under Julian Robertson (the father of hedge funds), working at Tiger Fund Management and attaining a senior position. After leaving Tiger, he co-founded Viking Global Investors LP in 1999; a hugely successful funds management firm. Andreas is often referred to as one of the best fund managers in the world.

In the year 2012, the firm was managing about $16.7 billion. Later the firm was managing more than $30 billion – a testimony to strong performances and reliability of the firm. Andreas has been mentioned as one of the highest earning fund managers, placing 11th in Forbes' 2012 rankings and 9th in 2015, according to Institutional Investor's Alpha.

As of October 2015, Andreas was worth $2.8 billion. He’s married to Diane: They’ve three children and live in Darien, Connecticut, USA.

What You Need to Know:
1. Certain persons joined trading companies that once performed very well and later went kaput. As a result of that, they swore to never have anything to do with trading again. Andreas is different. He once worked at Tiger Fund Management, which performed very well in the first several years and later suffered heavy losses. Andreas left Tiger and co-founded another trading firm - Viking Global Investors – which is now hugely successful. If you were Andreas, you’d possibly never trade again after witnessing what happened to Tiger. However, you might now covet his $2.8 billion USD net worth. Any lesson? No matter what your trading experience is, NEVER give up!

2. The Viking Global Equities made roughly 23% returns in 2013. Like Andreas, there are super/master traders. In the year 2014, a smaller of the firm’s funds generated about 38.4%. There are talented traders. There are profitable traders. There are many of them in this world. They faced the same challenges you’re now facing. You can overcome your trading challenges; just as they did. You can become a super/master trader, talented and profitable trader. Trading mastery is already within you.

3. Since its start in 1999, Viking Global Investors has made a profit of about 22% per annum, but not without occasional losses. According to one source, the fund was making losses from September 2001 to March 2002, when the portfolio was down 12%. Was that another reason to quit trading? No! The fund has been hugely successful overall. You can have some losing weeks, months (even years), but you should be successful overall. Transitory losses should never discourage you.

Conclusion: When you risk about 3% – 8% of your account per trade, thus facing the consequences. Experience will later force you to reduce the risk per trade. Later, you’d even reduce the risk further. Experience is the best teacher.

The quote below ends this article:

“You can always make money back when you’ve lost it.” – James Altucher

3 Questions Traders Would Like to Ask Right Now

“The moral of the story is that you don’t know, I don’t know, nobody knows where price will go. Anybody who does claim to know either doesn’t understand how markets work, is selling something, or is delusional.” – Chris Tate

PEOPLE AREN’T WHAT THEY CLAIM TO BE
Why is there so much pretense among those who claim to have mastered trading?

Answer: Many experts tend to think they know what the markets will be doing next. While we’ve tools that can help us in doing this, we can never be sure, because we don’t really know the future. There are many people who’re overconfident when they get hold of a new trading system or an analytical tool. They think they’re wizards, but they’re not.

There are traders who talk with overconfidence, behaving as though they were in total control of the markets. But when they face the real battle, they flounder.

One woman was trained by a popular Forex trading institute in her country. After the training, she still experienced frustrating challenges. When she met me, she told me that the guys who trained her didn’t know anything about trading.

The woman was wrong (though I didn’t tell her so). The guys who trained her have lots of knowledge… only that they can’t predict the future. I also don’t know anything because I can’t predict the future.

That means official/senior/market analysts don’t know the future. What we do is best called educated guesses. Trading experts don’t know the future, yet they make profits. It’s better then to let our clients/trainees know that we don’t know what the price will do next, but we can survive without knowing that. That’s better than giving people a false impression that we can accurately predict the markets: this would make them hate us when they find out we can’t.

For instance, experts agree that it’s better to select trending instruments when considering a trade. An instrument that’s trending ought to continue doing so. Choosing a trendless instrument may be suicidal (unless one’s a scalper) because both buyers and sellers might lose. A trendless market may continue to be trendless. But one may enter a trending market and it would then start consolidating; whereas a consolidating market might start a serious trending movement. In reality we don’t know what may happen next.

3 QUESTIONS TRADERS WOULD LIKE TO ASK RIGHT NOW
Like trading skeptics, many who’ve suffered losses or tragedy are unable to find satisfying answers to the questions below. Some become apathetic towards trading. Others mayn’t entirely quit trading, but they become inactive.

It’s not that those who’re apathetic or inactive are completely unfamiliar with secrets of trading success. On the contrary, their experience with the so-called experts is often what pushes them towards apathy. Many liars who pose as successful traders, they feel, have failed to answer tough questions in trading. What kind of questions? Paradoxically, they’re always the same that people who claim to be experts struggle with.

Many members of the public believe that the fact that over 90% of traders lose proves that success in impossible. Others, though, who have come to understand why over 90% of traders lose, are confident that success is possible.

Why is trading so difficult?

Answer: As it’s being mentioned in the subheading, “PEOPLE AREN’T WHAT THEY CLAIM TO BE,” what makes trading appear very difficult is the fact that the market can never be predicted. When we predict, we’re sometimes wrong or right. However, having an impression that the market can be predicted is the single most important reason why most traders end of getting frustrated. No matter the analytical method you use (Monte Carlo, Neural Networks, Horology, robots, Gann, news, Ichimoku, etc), you can’t predict the future. Your frustration will continue as long as you think you can predict the market. Once you admit you can’t do this, your frustration ends, because you’ve aligned yourself with the reality in the market.

What benefit can I get from trading?

Answer: Freedom. Freedom is everything. You master your financial destiny, growing richer and richer gradually. Very soon, you’ll realize that trading is the best vehicle for financial freedom; plus the greatest game on earth. Sadly, many people don’t believe this fact.

How can I experience permanent success in the markets?

Answer: You’ll attain permanent success once you devise a way to make money in the market without being able to predict the market – without knowing what the market will do next. This kind of strategy isn’t hard to devise. You’ll then see each new trade as a potential loser until you’re proven otherwise. This mindset would enable you to activate stops and use a small position size. You’ll know trading is simply a game of probability and with a good RRR, the odds would eventually come in you favor. This is what’s called positive expectancy. With this simple approach, you’ll no longer see trading as difficult. More importantly, you’ll attain permanent success without the ability to know the future, which begins from your mind.

If you don’t know those who’re successful in trading, there are many of them and I know some of them.

This piece is ended by the quote below:

“Your trading system has a set of rules. When you don’t follow the rules, it’s a mistake. And if you don’t have rules, then everything you are doing is a mistake. Even with rules, most traders probably trade somewhere below 80% efficiency. When you make two mistakes in ten trades, you are at 80% efficiency and that may be a low enough level to destroy the positive expectancy of a system. Below 80% will turn a winning system into a losing system. Rather than acknowledge their mistakes, however, most people just blame the markets or decide their system is no good. But until you acknowledge your mistakes, you are not being responsible for them and you cannot fix them.” – Dr. Van K. Tharp (Source: Vantharp.com)

Copyright: Tallinex.com

Greg Coffey: One of the Most Impressive Traders in the World

WHAT YOU NEED TO KNOW ABOUT MASTER TRADERS – PART 4[i]

“When I encounter traders who lack enthusiasm for trading, I know their foray into the financial markets will be short lived. They seem puzzled that their mediocre efforts, and a tendency to be pessimistic, haven’t led to a bank account full of gold.”[/i] – Louise Bedford

Name: Greg Coffey
Date of birth: April 25, 1971
Nationality: Australian
Occupation: Trader and fund manager

THE WIZARD OF OZ
Greg Coffey is a London-based Australian trader. He obtained a Bachelor of Actuarial Science from Macquarie University. As a trader, he initially worked at Macquarie Bank, Bankers Trust, Deutsche Bank AG, Blueborder Partners (a fund related to George Soros), Bank Austria and GLG Partners.

He didn’t bother to continue working at GLG Partners (GLG), where he was enjoying a brilliant career, forfeiting about $250 million compensation plan. He then worked at Moore Europe Capital Management (a subsidiary of Moore Capital Management); as co-chief investment officer. He’s been so good at trading that he was dubbed “The Wizard of Oz.”

Recently, he earned £170 million in a single year. He bought a 12,000-acre sporting estate on the island of Jura in Scotland in 2008 when it was on the market for £3.5million. A source says that the hunting estate includes several houses and cottages, prolific red deer stalking, ten miles of coastline and seven private islands.

Greg is worth $743 million; and he’s happily married with children.

What You Need to Know:
1. I can’t emphasize this enough: The best thing is to start trading as early as possible, because one would reach financial freedom early. Think of Anton Kreil, John Arnold, Kenneth Fisher, etc. After 20 years of his trading career, Greg Coffey announced his retirement at the age of 41. He’s become so rich that he felt he’d need to retire and do what he likes, rather than working continuously to please investors. It’s interesting that someone retired himself at the age of 41 when many far older people are sweating over pensions. This is one kind of freedom trading offers.

2. While many people stick with one monotonous job for life, a great skill could make you to be one of the most highly sought-after experts, like Greg, who had short stints at several big institutions and firms. He turned down an extremely lucrative offer of $250 million from his then employer, hedge fund GLG Partners, because he didn’t want to continue working for them. He worked for another firm with a very good pay package. He eats what he likes, lives where he likes and wears what he likes. There are many people doing poorly paid jobs, and yet they beg their employers not to fire them. What a pity! By not looking for trading mastery, using it as a means of self-liberation; many people condemn themselves to a lifetime of slavery. To make the matter worse, they have nothing to show for their labor of a lifetime.

3. How much do you think Greg made per annum when he was still trading professionally on a full-time basis? He was making an average of 22% per annum. Unlike those who want to make 22% per week. Can you see the difference? Great trading geniuses don’t double their accounts every week or every month or every quarter: they simply make 20% profits or more or less per annum. Isn’t that good? That’s around what you need to make per year so as to become rich at last, honestly speaking. You can even make far less or far more than this in a year, but you’ll be fine as long as your account is safe.

4. Greg knows that there’s life outside trading and therefore, he keeps trading in its proper perspective. Whenever he went on holiday he would have his trading terminals deconstructed and flown to his hotel. More importantly, he retired himself from trading because he wanted to spend time with his wife and children. He also wanted to go back to his native land – Australia. Trading is great, but there are some other things in our life which are more important than trading, so we need a balanced view of everything. If you’re so rich and you decide to retire as a trader, that’s fine. If you think trading is a passion of a lifetime, that’s fine.

Conclusion: One prolific author says without being patient in a storm, he’d never learn how to protect himself and he’d never learn to recognize the signs of new storms approaching or leaving. Potential blessings often pass by while we fail to take advantage of them. Just because potential blessings, like trading, doesn’t present themselves in the most agreeable way to our mind, doesn’t mean they can’t help us achieve our dreams in life.

This piece is ended with the quote below:

“Why would we believe that if we lack discipline in our day-to-day lives that we would suddenly become disciplined in our trading? That’s just deluded thinking… But the reality is that without discipline all the market knowledge in the world will not help you become consistently profitable.” - Gabe Velazquez

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