Dump it Here

Trading this financial year is going great
If you are not making money trading the Australian markets this financial year, it is important to ask yourself why. To be profitable, traders need to have a well-defined trading strategy, with clear entry & exit points that are crucial for successful trading. As a trader, it's essential to approach every trade as an opportunity to learn & improve your performance.

While losses are a natural part of the trading process
It's important to have a precisely designed exit strategy to manage those positions effectively & not let them spiral out of control. In short, every trade offers you the opportunity to learn & grow as a trader, it's so crucial to manage your losses effectively & adjust your approach as needed to stay ahead of the curve. By doing so, you can become a more successful trader.



Skate.

Good evening,
Yep, Gold Coast got the job done last tonight. So ended Magic Round, 4 outta 4 to the Queensland Teams...

The secret to trading.

Before you even commence learning to trade, see below the Secret question of trading.
Yesssssssssss, there is a secret trick. However, rarely do traders believe that it is the real secret!!! They think important is the method but it is not the method it is the secret + method without the secret no method will be successful.

The Secret:
What should be the comfortable loss per trade and how it shapes the equity?

Loss per trade:
10% capped at 10 trades;
5% capped at 20 trades;
3% capped at 33 trades;
2% capped at 50 trades;
1% capped at 100 trades ...

If you have to choose your comfortable % from the above one!! Which one will you??

What is the % of loss of equity / capital we willing to lose from all our equity??
What % it will be from our equity lost is the secret.

Acknowledgement:
Not sure who wrote the aforementioned and their maybe some subtle differences, but rcw1 just luvs what it says and means.

Have great week and trade smart.

EDIT: fixed a couple thing up - hopeless, going too fast
Kind regards

rcw1

Skate said:

@rcw1, just to clarify
I sometimes use trading terminology without explaining what the acronym stands for. In the case of my VWMA Strategy, VWMA stands for volume-weighted moving average. I particularly like this indicator because it takes into account the trading volume, which can provide insights into the strength of a particular security.

The VWMA identifies trends with higher trading activity
In a nutshell, the VWMA (volume-weighted moving average) is an indicator that emphasises trading volume over price, making it useful for identifying trends with higher trading activity. As a trader, I prefer to use the VWMA to buy into strength & sell when the trend loses momentum. This means that I look for securities that are in an uptrend with high trading volume, before taking a position. I will then exit the position when the trend loses momentum or when the VWMA begins to flatten out.

Skate.

Click to expand...

Good afternoon Skate
Meant to reply sooner but have been distracted, anyways, yes 100% agreed, particularly your point,

buy into strength & sell when the trend loses momentum. ...

... in an uptrend with high trading volume, before taking a position. I will then exit the position when the trend loses momentum ...

Click to expand...

Click to expand...

Yep, true that.
Have a very nice week.

Kind regards
rcw1

rcw1 said:

The secret to trading

Click to expand...

Gringotts Bank said:

There are certain basic truths about markets, but not many.

Click to expand...

After reading @Gringotts Bank's previous posts about basic market truths & now @rcw1 post I should do a series of posts for those just starting out on their trading journey. A practical guide to profitable trading from my perspective.

Sharing information
There is a tremendous amount of information we all retain that can be beneficial to others. We are all in different stages of our trading journey but as this thread is a beginner thread, I'll start at the beginning.

Daily posts
I have a routine & enjoy reading something new about trading every day, whether it be @bigdog's daily post or @ducati916's daily post over a cup of coffee. I even like reading the musings of flippe-floppy-fly with his unique style of writing.

Yep, I'll make a post every day
I'll concentrate on the basics & name it "Trading for Beginners - Skate's Practical Guide to Profitable Trading". Posting a short article every day in a "new format" might just be the ticket. Experienced traders won't gain much other than a refresher of what they already know but it will keep this thread active.

Give me a few minutes
I'll write up my first post. I'll call it "Beginners have to start somewhere". Making only one post a day might be interesting for those looking to read something new every day.

Skate.

"Trading for Beginners - Skate's Practical Guide to Profitable Trading"
A daily series of posts aimed at those just starting out on their trading journey. I'll give it a spin for the next three months making around 90 in total.

1. Beginners need to start somewhere
I think it's necessary to be honest about the fact that money is a very important factor in life. It's important to remember that everyone has ideas, not all of them are positive or constructive or applicable to your own circumstance.

All of us have the capacity to think independently and I attempt to encourage individuals to think for themselves. Frequently we take thinking for granted since it is such a fundamental aspect of who we are. But if we stop and pay attention to our thoughts, we can learn more about the workings of our minds.

In short, I believe critical thought is crucial for personal development as well as trading. By doing this, we can all become more conscious of how we think and thus make better decisions. Trading is a decision-driven endeavour.

Also, making mistakes is a normal part of learning, and with trading, it's no different. I don't consider myself an expert, far from it, but I have learned a lot from my errors and have improved as a trader as a result. The value of patience and discipline in trading is one of the most important skills I've learned. I put an emphasis on making well-informed decisions based on my analysis and approach rather than letting my emotions control my choices.

However, I still understand that managing my emotions is a continuous process, and I'm constantly looking for ways to get better at it. In the end, I think that mistakes are opportunities for us to learn and develop. By accepting those mistakes and taking what we can from them, we may improve as traders.

My own experience has shown me that it is beneficial to hear what everyone has to say before deciding what is important or helpful. I am able to gain a variety of viewpoints and insights this way, and these can guide my choices and actions. But I also understand the value of using my own discretion to choose what information to keep and what to throw away. Not all suggestions or viewpoints will be applicable to your specific circumstance, therefore you must exercise judgment in selecting which to consider important.

In the end, I think that it is essential for one's own development to be receptive to listening to and learning from others. We limit our ability to evolve and lose out on important opportunities to learn and deepen our awareness of the world around us when we close ourselves off to new ideas or opinions.

I strongly urge you to continue on reading if trading even remotely interests you. You might be able to save yourself years of self-education and steer clear of some of the usual errors and risks related to trading by doing this.

Skate.

"Trading for Beginners - Skate's Practical Guide to Profitable Trading"
A daily series of posts aimed at those just starting out on their trading journey.

2. Trading is an ongoing process
It's crucial for those just starting out to keep in mind that successful trading takes time. Instead, it's a gradual, deliberate process that calls for self-control, concentration, and a readiness to absorb new information. The truth is that successful trading needs a combination of knowledge, ability, discipline, and a willingness to adjust to shifting market conditions.

Many traders spend a lot of time and energy looking for a straightforward, infallible way to trade but focusing on the process rather than the money is one of the secrets to effective trading. Focusing on gains and losses can cause irrational behaviour and emotional decision-making, which can ultimately lead to the failure of our ultimate goal.

Losses are an unavoidable aspect of trading, thus it's critical to create a realistic perception of our own capabilities and constraints. We can prevent overconfidence and maintain focus on our long-term financial objectives by accepting that we may turn out to be an "average trader" at best.

Successful trading depends heavily on experience because we need time to acquire the knowledge, and discipline to succeed in the markets. However, learning to control our emotions and persevere through difficult times is another aspect of trading.

Additionally, managing our emotions is a key component of successful trading. Even in the midst of market volatility, it's critical to maintain discipline and focus on the trading process. Fear, greed, and other emotions can cause us to make rash or irrational judgments so a mix of disciplines, and emotional intelligence are needed to be effective in this game. Over time, we can improve our trading results by learning from our mistakes and making adjustments along the way.

The emotional whirlwind that comes with trading is one of the important points I want to emphasise. It's critical to understand the psychological difficulties we all experience as traders, such as fear, greed, and impulsivity can ultimately drive our decisions making process.

Being conscious of your emotions and how they may affect your trading decisions may improve your chances of success in the market. You can learn to identify patterns and triggers that lead to impulsive or irrational behaviour by noticing when emotions like fear, greed, or excitement are rising up. Once you are aware of this, you can start to build techniques to control your emotions and keep a logical, objective mentality.

There is always something to learn about trading, regardless of your level of experience.

Skate.

"Trading for Beginners - Skate's Practical Guide to Profitable Trading"
A daily series of posts aimed at those just starting out on their trading journey.

3. How our brains are wired
Our brains' ability to comprehend information has a severe design flaw that can result in erroneous reasoning and poor decision-making. Confirmation bias is one instance of this, which happens when people look for and consider evidence that confirms their pre-existing opinions.

Our brains are programmed to feel good when we digest information that supports our views, including a dopamine rush. Because of this, it may be challenging for us to evaluate new information with objectivity or to reconsider our positions in the face of data that challenges our assumptions.

In areas like politics, science, and finance where unbiased investigation and judgment are essential, confirmation bias and other cognitive biases can have major repercussions.

It's critical for us to be conscious of these biases and how they affect the way we think and make decisions. We may actively attempt to overcome them and make more informed, reasonable decisions by actively searching out various viewpoints and sources of information.

Ultimately, by being mindful of our own biases and open to alternative viewpoints, we can become more effective thinkers and decision-makers, and better navigate the complex challenges we face in our personal and professional lives.

Skate.

This a sobering reminder
I remember reading one of @ducati916 articles posted back on the 21st of November 2016 where he explains how a hedge fund run by Katherine Burton fund suffered a startling billion-dollar loss in a matter of days. Many investors were surprised by this as Renaissance had been among the most successful hedge funds ever. This just goes to show that even the most seasoned traders are not immune from heavy losses.

Second-guessing your trading strategy
It's normal to be worried and begin second-guessing your trading strategy when the markets face abrupt and severe falls. It's normal to think that something is wrong and that something needs to be done right now. However, this reaction could be counterproductive because rash decisions might ultimately result in bigger losses and missed possibilities for rewards.

Skate.

Dr.Stock said:

"the harder I work, the luckier I am", and also "the smarter I work the luckier I become"

Click to expand...

Making illogical decisions can have lasting implications
Instead of giving in to fear and second-guessing your trading approach, stay focused on it, and have faith in its ability to recover. Remember that market turbulence is common and that temporary setbacks can often lead to gains in the future. It's crucial to follow your trading plan exactly and make modest alterations only when needed.

Panic selling
In order to keep trading over the longer term, it's crucial to make only a few minor tweaks for market changes. Market volatility "can't be avoided" and short-term dips do happen frequently. Crystallising losses as a result of panic selling makes them permanent where they otherwise could have been temporary and recoverable.

Skate.

Mechanical system trading
Emotions are somewhat removed from the decision-making process with mechanical system trading. Since emotions can cause impulsive choices that may not be consistent with a trader's long-term trading plan, this can be quite useful. Mechanical system trading helps traders stay focused and disciplined, lower their risk exposure, and increase their chances of success by depending on a set of established rules.

Rules-based trading
Mechanical trading systems still need to be monitored and adjusted, despite their advantages. Even the best mechanical systems may need to be modified to take these changes into account when trading tactics are affected by market circumstances or other unanticipated events. The rules that operate the mechanical system must also be reliable and thoroughly evaluated.

Skate.

Many trading systems require ongoing development
I for one, question if well-known trading strategies from the past would still be successful in today's markets. While previous performance is not always a reliable predictor of future success, some trading methods have stood the test of time while others have been rendered obsolete. With an increase in market participants and technological improvements, there will be some historical strategies that will fail to fire.

Market data is publicly available nowadays
I know of numerous traders using historical trading strategies who find it challenging to trade them at the moment as the gains are less frequent than in the past. I maintain all trading systems at one time or another will require ongoing development just to keep them relevant with changes in the markets. In saying this, determining the viability of a certain trading technique requires extensive research and analysis before coming to a definitive answer.

Skate.

"Trading for Beginners - Skate's Practical Guide to Profitable Trading"
A daily series of posts aimed at those just starting out on their trading journey.

4. Trading doesn’t have to be time-consuming
Regardless of your age, financial situation, or level of knowledge about trading, there are compelling reasons to consider getting involved in the markets.

At its core, trading is about achieving financial independence and having the freedom to support yourself without relying on a traditional income source. This goal is achievable for anyone, regardless of their current financial situation.

Trading allows you to build a foundation for your financial future by taking control of your financial destiny. Even if you're not familiar with the markets or feel uncertain about the future, there has never been a better time to take an interest in your financial freedom.

Ultimately, trading is not about getting rich quickly, but about making smart, informed decisions that will benefit you over the long term. With the right mindset and approach, anyone can achieve financial independence and enjoy the freedom that comes with it.

The fear of losing money is one of the main reasons why people put off starting to trade. Putting your hard-earned money on the line can be frightening, especially if you lack confidence in your skills or market expertise. But it's crucial to keep in mind that failures and setbacks are a necessary component of learning. Even the most seasoned traders occasionally make mistakes and incur losses since nobody is perfect all the time.

To succeed in the markets, one must approach trading with an attitude of constant learning and growth. You may minimise your losses and maximise your earnings over the long run by investing time in your education, creating a sound trading strategy, and managing your risk well.

It's important to realise when trading, mistakes can occasionally be unavoidable. You must embrace the learning and development process that comes with trading rather than allowing your fear of failure to hold you back if you want to reach your financial goals and all of its benefits.

Remember that a growth attitude and a willingness to "learn and adapt" are necessary for effective trading. Accept the difficulties that come with trading and seize the chance to broaden your knowledge and abilities. Take calculated risks without fear, but always do so with a well-thought-out plan and an awareness of the benefits and hazards involved.

Skate.

"Trading for Beginners - Skate's Practical Guide to Profitable Trading"
A daily series of posts aimed at those just starting out on their trading journey.

5. Financial Independence
Making money is undoubtedly a key component of trading, but it's not the only one. Trading is really about taking charge of your financial future and gaining the flexibility to live your life as you choose.

You can achieve financial independence and realise your full potential for growth and wealth by actively participating in the markets and taking well-informed decisions based on your own analysis and plan. Trading can be a potent instrument for accomplishing your financial goals, whether you're trying to increase your income, create a nest egg for retirement, or have other aspirations.

Of course, having the appropriate attitude and strategy will help you succeed in the markets. Long-term losses and earnings can be minimised and increased by investing in your education, creating a sound plan, and managing your risk well. Anyone can succeed in the markets and take advantage of the numerous advantages that come with it by managing your money well and making wise decisions.

Skate.

"Trading for Beginners - Skate's Practical Guide to Profitable Trading"
A daily series of posts aimed at those just starting out on their trading journey.

6. Getting Started
It's more crucial to get started trading than to aim for perfection right away. If trading is new to you, don't let self-doubt or fear stop you from following your financial objectives.

Although you need to have a fundamental understanding of trading ideas, you don't need to know everything before you begin. A good idea is to learn as you go by buying small positions and gradually building up your knowledge and expertise over time. By doing so, you can reduce potential losses and errors without endangering your ability to maintain focus.

Keep in mind that learning is a natural process that involves experiencing losses and making mistakes but it's crucial to see them as chances to improve and draw lessons from them.

Setting precise, measurable goals and adhering to them is essential for trading success. This will assist you in maintaining concentration and preventing rash decisions that could cost you a lot of money. You can improve your chances of success and gradually reach your financial goals by combining a sound trading strategy with risk management techniques.

Periodically assessing your trading progress allows you to modify your approach as needed in addition to setting goals and adhering to your trading plan. By being open to learning new things and being flexible is another way to raise your chances of success.

If you have a growth mentality, you will be able to see errors and mistakes as chances for development rather than as sources of irritation or discouragement. You can pinpoint areas for development and create solutions to problems by thinking back on your experiences and getting feedback from others.

Skate.

"Trading for Beginners - Skate's Practical Guide to Profitable Trading"
A daily series of posts aimed at those just starting out on their trading journey.

7. Trading doesn’t have to be time-consuming
Contrary to popular assumption, trading doesn't have to be extremely difficult or time-consuming, and you don't have to be rich or an expert to start. Even if you have little money or experience, there are several easy and accessible ways to start trading. For instance, you could begin by buying and selling shares in a licensed investment company (LICs). This is an excellent option for those just starting out since (LICs) give exposure to a diverse array of assets.

A different strategy is, to begin with, paper trading, in which case you practice trading with fake money before using real money. Without putting your hard-earned cash in jeopardy, this can help you improve your abilities and confidence.

It makes sense for a new trader to be concerned with determining when to initiate a trade. But it's crucial to keep in mind that finding profitable entry locations is just one aspect of trading success. Another is risk management and exit strategy planning.

Significant losses may result from poor risk management and exit strategies. Without an effective risk management plan in place, it's simple to get emotionally invested in a trade and let losses get out of hand. Similar to the previous point, it can be challenging to decide when to cut losses or grab profits without a defined exit strategy, which can result in missed chances or needless losses.

Therefore, risk management and exit strategy must be given top priority along with entrance strategy for new traders. Determining position sizes in accordance with risk tolerance and having a clear strategy for when to exit a trade are all part of this. Traders can increase their chances of long-term success by doing this while minimising their losses and maximising their earnings.

In the end, the secret to trading success is to start small and concentrate on increasing your knowledge and experience over time. By utilising the numerous tools and resources currently available to traders, you can start down the path to financial independence and all of its many advantages.

Skate.

"Trading for Beginners - Skate's Practical Guide to Profitable Trading"
A daily series of posts aimed at those just starting out on their trading journey.

8. Trading errors
A common trading error made by inexperienced traders is holding onto losing trades in the hopes of recovering their losses or even averaging down on a losing position. This is a dangerous strategy that could cause significant losses and obstruct their development as a trader. Due to their emotional attachment to their trades, traders who stick to losing positions frequently fail to recognise the warning indicators that the trade is not moving in their favour.

Having a defined strategy that takes risk management and exit planning into consideration is one of the most important components of successful trading. As a result, traders must have a clear strategy for when to exit a trade, including a trailing stop and a take-profit exit. Traders can minimise their losses and increase their returns over the long term by precisely defining the loss and profit targets.

Nevertheless, despite being informed of this knowledge, inexperienced traders frequently fail to alter their strategy until it is too late. This is due to the fact that trading may be an emotionally charged activity, and traders may find it difficult to sell. It's critical to keep in mind that profitable trading necessitates a methodical approach founded on a precise plan.

The ability to change course as market conditions change is just as important for traders as having a clear strategy. This entails having the flexibility to modify their trading approach as necessary. Traders who can maintain their pliability and adjust to shifting market conditions will succeed.

Finally, new traders should be aware of the dangers of hanging onto failed trades and utilising riskier strategies like averaging down. Instead, they ought to approach trading with a well-defined strategy that takes risk management and exit strategy into consideration. Traders can minimise their losses and maximise their earnings over the long term by defining an accurate exit plan and profit targets and sticking to them. Additionally, it's essential for traders to maintain their adaptability and modify their strategy when market conditions alter.

Skate.

TIP: Don't just keep your plan in your head, write it down 'in detail', don't just write it in point form. The detail of your money management, exit and entry will keep you from making mistakes. It will also let you identify those small changes you may need to make. "The money is in the details".

"Trading for Beginners - Skate's Practical Guide to Profitable Trading"
A daily series of posts aimed at those just starting out on their trading journey.

9. Confirmation bias – a human defect
One of the most fundamental flaws among all known cognitive biases, confirmation bias is a serious shortcoming in human reasoning. Of all the cognitive biases that have been identified, confirmation bias seriously impedes reason's ultimate goal, which is to reach trustworthy conclusions.

Confirmation bias can be harmful in a variety of situations, including trading. It refers to people's propensity to seek and accept information that supports their own beliefs while ignoring information that contradicts them. It is a pervasive and damaging form of faulty thinking.

Confirmation bias can lead traders to disregard data that contradicts their beliefs and fail to alter their approach, leading to poor trading decisions. It takes a willingness to question our own opinions and consider competing ideas in order to overcome this prejudice.

Traders can improve the clarity and objectivity of their analysis and decision-making, which can eventually raise their chances of becoming financially successful, by fostering a growth mindset.

A growth mentality entails accepting difficulties, battling through obstacles, and viewing failures as chances for improvement. With this outlook, traders can view trading as a learning process and continually look for fresh ideas and insights that might aid in decision-making.

In conclusion, being conscious of confirmation bias and actively looking for alternative viewpoints and facts are necessary for trading to be financially successful. Traders can avoid this prejudice and improve their decision-making skills by keeping an open mind and being lifelong learners.

Skate.

Skate said:

"Trading for Beginners - Skate's Practical Guide to Profitable Trading"
A daily series of posts aimed at those just starting out on their trading journey.

9. Confirmation bias – a human defect
One of the most fundamental flaws among all known cognitive biases, confirmation bias is a serious shortcoming in human reasoning. Of all the cognitive biases that have been identified, confirmation bias seriously impedes reason's ultimate goal, which is to reach trustworthy conclusions.

Confirmation bias can be harmful in a variety of situations, including trading. It refers to people's propensity to seek and accept information that supports their own beliefs while ignoring information that contradicts them. It is a pervasive and damaging form of faulty thinking.

Confirmation bias can lead traders to disregard data that contradicts their beliefs and fail to alter their approach, leading to poor trading decisions. It takes a willingness to question our own opinions and consider competing ideas in order to overcome this prejudice.

Traders can improve the clarity and objectivity of their analysis and decision-making, which can eventually raise their chances of becoming financially successful, by fostering a growth mindset.

A growth mentality entails accepting difficulties, battling through obstacles, and viewing failures as chances for improvement. With this outlook, traders can view trading as a learning process and continually look for fresh ideas and insights that might aid in decision-making.

In conclusion, being conscious of confirmation bias and actively looking for alternative viewpoints and facts are necessary for trading to be financially successful. Traders can avoid this prejudice and improve their decision-making skills by keeping an open mind and being lifelong learners.

Skate.

Click to expand...

Very well worded Skate, your skill level of expressing yourself in the written form is impressive. Your doing a great job here, I know it will help a lot of people.

DaveTrade said:

TIP: Don't just keep your plan in your head, write it down 'in detail', don't just write it in point form. The detail of your money management, exit and entry will keep you from making mistakes. It will also let you identify those small changes you may need to make. "The money is in the details".

Click to expand...

@DaveTrade, for those just starting out, the simplest things are frequently the most helpful. As you say, writing down your well-thought-out plan is one of the most crucial things you can do when it comes to trading. This not only helps you think more clearly, but it also enables you to evaluate your performance and pinpoint areas for improvement, ultimately sharpening your decision-making processes.

Skate.