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20 Tips From Real Traders: 10-Year Anniversary Edition
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It’s November of 2012.
Barack Obama has just been elected to his second term.
The cultural phenomenon that was ‘The Big Bang Theory’ is in the middle of it’s fifth, and some would say apotheotic season.
And a ragtag bunch of British scamps billed as ‘One Direction’ dominate the American pop charts.
It was in the midst of this political and cultural wasteland that a not so young trader, scarcely five years into his blogging career, wrote the following crowdsourced piece, proving that though social, political, and cultural morays may wax and wane, good trading advice is timeless.
Traders are told not to trade on tips, and that’s good advice. But tips on how to be a more successful trader, well, that’s a different case altogether.
There is a temptation to discount tips as not providing real value because by their nature they are short and simple.
That type of thinking is a mistake.
A good tip is not an end, it is the means to an end.
It’s the spark that makes you think in more depth about a certain aspect of your trading game.
Here are 20 tips from real traders and investors who put their money on the line every day.
If you have to think for more than five seconds about how your trade is going to work, then it’s too complicated. Simple is sexy.
-Sean McLaughlin (@chicagosean)
Many traders plan their entries, but to manage your risk you must also plan your exit - and do so before you enter a trade.
-Greg Harmon (@harmongreg)
When it comes to markets, check your ego at the door. It’s not about being right. It’s about making money.
-JC Parets (@allstarcharts)
I constantly tell traders to turn off the financial media. There is zero upside to this incessant noise, and you will be amazed at the newfound clarity you will get. There are way too many opinions and the “experts” most likely aren’t trading your timeframes anyway.
- Joe Donohue (@upsidetrader)
Be contrarian in your thinking when it comes to entries and exits. If you run with the herd you are more likely to get run over by chasing the obvious.
-Steve Gomez (@TISteveg)
Be aware of your risk limits before your trade and play within them. Most trading mistakes come from extreme emotions and extreme emotions arise when a trader takes more risk than he or she is prepared to handle.
-Phil Pearlman (@ppearlman)
Prices change when expectations change, and expectations change when prices change. In other words, sometimes price action can be its own catalyst.
-Ivaylo Ivanov (@Ivanhoff2)
If you are trend-trading then the base is your friend – stay close to the base and trade around it. selling into extended moves away from the base (chasing after extended moves is probably the fastest way to blow-out for new traders).
The base is your friend when buying a breakout through resistance or shorting a break-down through support. However, when doing the inverse, you want to buy a reversal that’s extended from the base, or sell on a spike into resistance away from the base.
-High Chart Pattern Group (@HCPG)
There are a lot of good stock pickers out there. That is 1% of trading. Trade management/position management; that’s the next level stuff that takes you from doing this as a hobby to doing it for a living.
-Kunal Desai (@Kunal00)
Don’t be penny wise and dollar foolish in choppy markets.
-Frank Zorrilla (@ZorTrades)
The market does not value your opinion of the news and it often does the opposite of what common sense would indicate. Focus on price action and risk management. Only price pays!
-Brian Shannon (@alphatrends)
Know what you don’t know: when you think you’ve found free money in the market, think again.
-Kid Dynamite (@KidDynamiteBlog)
Get good at getting out quick for a small loss. This practice of losing small, and often, is what will give you confidence when trades do not go your way. Taking small losses properly is where you as a trader score. Internalize: Every small loss gets me closer to a big win.
-David Aferiat (@TradeIdeas)
If I could give a gift to my trading friends, it would be the gift of patience and discipline as they are the ultimate enhancer to one’s trading edge.
-Sunrise Trader (@SunriseTrader)
80% of trading is psychology. The best way to protect your confidence is to have a strong plan that produces consistent results and cut your losses quickly when you’re wrong.
-Joe Fahmy (@jfahmy)
Every stock chart is telling you a story. If you don’t understand the story, don’t trade the stock.
-Anne-Marie Baiynd (@AnneMarieTrades)
It’s the trader responsibility to adapt to the ever-changing market conditions. No strategy will work well in every market. You must constantly adapt.
-Trader Stewie (@TraderStewie)
Do not listen to the stories, gossip, and rumors flying around on network television, blogs, Twitter, stock forums or the major financial outlets. It’s a surefire route to bad information and clueless advice. Do your own research; you’ll come out much further ahead.
-Chris Perruna (@cperruna)
Pay extremely close attention to where you are in the cycle of your own emotions as it relates to your exposure and the direction the market is moving in; trading without emotion is a myth, even quants pull the plug sometimes.
-Leigh Drogen (@ldrogen)
Always use hard stops, never mental stops. I once had a mental stop in and didn’t obey it. That’s how I ended up with my first kid.
-Brian Lund (@bclund)
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It should go without saying - but I’ll say it anyway - all opinions expressed in The Lund Loop are my own personal opinions and don’t reflect the views of my employer, any associated entities, or other organizations I’m associated with.
Nothing written, expressed, or implied here should be looked at as investment advice or an admonition to buy, sell, or trade any security or financial instrument. As always, do your own diligence.