Dear All,
Must Read for All Trader's
p14. “Consistently successful trading is founded on solid risk management.”
p14. “Successful trading is a process of doing certain things over and over again with discipline and patience.”
p31. “As many as 80% of my trades over shorter periods of time will be unprofitable. The probability of my very next trade being profitable is less than 30%.” (Looking for 90% accuracy see how one of the best trader of the world trade with only 40%--30% Accuracy )
p34. “More often than not, a market will defy what its chart structure implies” [but Peter remains a dedicated, profitable and long term chartist].
p38. “Boundary lines [i.e. trend lines] do not need to be redrawn to accommodate [intraday single-event] out of line movement.”
p41. “My experience is that there are far more false or premature breakouts of slanted chart lines than in the case of horizontal boundaries.” p129. “Normally I do not trade trend-line violations. Trend lines fall into a category of chart development I called diagonal patterns. Yet, the more a market tests a trend line, the more valid-and tradeable-an eventual violation becomes.”
p41. “[After a pattern break out] I generally abandon any position that has a significant return to the pattern.”
p43. “I believe that my net bottom line as a trader would have improved if I had exited every trade that closed at a daily loss.”
p142. “My net bottom line over the years would have improved if I had exited all trades that closed against me.”
p47. “As a general rule, the minimum move following the completion of a chart pattern should be equal to the height of the pattern itself, although the exceptions to this rule are numerous and complex.”
p53. “As a general rule, I will attempt one pattern recompletion per major pattern. After that, I will count my losses and go shopping elsewhere.”
p60. “Trades that are the emotionally toughest to execute are often the most financially rewarding.”
p128. “Trades that are emotionally easy to execute are often trades consistent with the conventional wisdom of the marketplace. Conventional wisdom is usually wrong.”
p74. “While chartists often attempt to jump the gun on a pattern, markets usually make it abundantly clear when it is time to climb aboard.”
p80. “It is important for a trader to use similar time frames to both enter and manage a trade.”
p88. “The more I follow the markets during the trading hours, the more apt I am to make an
emotionally driven decision to override my trading plan...emotional reactions to intraday trading will be detrimental to my net bottom line over any period of time.”
p102. “The biggest temptation after a premature stop-out is to get right back in before receiving another solid signal. Getting into this cycle throws discipline and patience right out of the window.”
p117. “I cannot allow myself to be stressed out whether a certain trade was profitable or not. Profit cannot be the direct focus of my attention because I have no control over the outcome of any given trade. Order entry is the only thing I can control. My challenge is to maintain the patience to wait for t my pitch and the discipline to swing when my pitch is offered. Swinging at pitches outside of my sweet spot is the single biggest source of trouble for me.”
January 2012
p117. “I am constantly studying and analyzing my trading performance for two major reasons: to determine if my trading plan is in sync with the markets and to determine if I am in sync with my trading plan. ...either can represent a real problem.” (Most trader's dont even have written trading plan ..........i ask you one question do you have written trading plan ??? I guess you dont have !!!!!)
p119. “Every successful trader I know has developed a criteria for appraising trading performance.”
p152. “Breakouts should be decisive in order to be valid. Drawing tight pattern boundary lines is an invitation to get sucked into a false or premature breakout.”
p154. “As a trader, I need to constantly remind myself that I cannot afford the luxury of being bullish or bearish. Bullishness and Bearishness represent an emotional commitment. I need to limit myself to positions. Opinions don't matter.”
p156. “Trade identification is the least important of all trading components. The trading process itself and risk management are much more crucial components to overall success in trading operations.”
p157. “The most profitable trades are those that breakout and never look back.” p165. “If at first you don’t succeed, be ready to lose and lose again.”
p160. “Trading dilemmas never end. A trader never solves all the issues standing in the way of greater success.”
p166. “The best and largest patterns are commonly comprised of many smaller patterns, mostly failures.”
p173. “The battle to profitability is with one’s self. Successful trading is learning what to do and how to do it and then overcoming one’s emotions to get “it” done (discovering the “it” is the challenge for traders, and the “it” is different for everyone).”
p189. “[Trading plan] flaws are never visible during the good months and good years. Good times provide cover for the deficiencies of a trading plan.”
p194. “Triangles are not valid when prices work too far [more than 2/3rds to 3/4ths] to the apex.”
p197. “The single most important price of the day is the closing price, posted mid-afternoon each day. This is the price at which position traders, as opposed to day traders, are willing to hold a position overnight. Even though I often enter and exit a position intraday, the closing price is the only one that really matters. Everything else is noise.
p229. “Make a chart prove itself. Do not lead a breakout.”
p230. “Do not chase a missed signal. There will be trading opportunities next week, next month, and next year. Chasing signals can lead to other serious breaches of trading practices.”
Thanks & Regards
Abhay Mehrotra
