The market gap up as shown from this chart in the Globex market due to positive news coming from China and the looming decisions from the Greek parliament regarding their debt dilemma.

I have this convincing sentiment that it will continue its upward momentum come regular open tomorrow.

Trading and Psychology, What Traits Equate to Success?

Guest Post by Tom Cleveland of Forex Traders

Investors and traders alike are instructed early on in their training that success depends on three fey factors – knowledge, experience, and emotional control. While the first two items can be approached in a straightforward manner, the latter factor, the psychology of dealing with risk and reward when real money is on the line, is one of those “muddy snowballs” that no one quite knows how to handle or master in a step-wise fashion.

As a result, we listen to what is necessary to cope with the issue, but do we really “hear”? When we trade from our emotions and then ride a “loser” for all it is worth, we know that we have violated the cardinal rule of trading. Yes, we abandoned out trusted system, we cancelled our stop-loss order, and we were sure the fundamentals favored our position. The market, however, did not agree, yet we continued to hold onto our position, refusing to accept a loss until it was so large that we had to gulp and exit.

Sound familiar? Psychologists would tell us that investing has nothing to do with feeling like a loser, but everything to do with how we manage decisions related to risk and how we decouple that experience from the concept of loss. If we must view risk in a different way, then what characteristics support that type of thinking? Here is a brief list of psychological traits that successful traders possess:

1) How do you handle mistakes? If you were shamed early in life, then mistakes may threaten your personal sense of self. Successful traders understand that mistakes are part of the game. Mistakes do not reflect on your inner core. The errors are due to actions in the market. Your role is to accept them and adjust quickly, not take them personally. Learn from them, and move on;

2) How do you approach decisions? If you enjoy the intellectual challenge of interpreting the nuances of your trading system and how it applies to current market conditions, then you are a step ahead in the game. Focus on the components of the decision at hand, and try not to be overly concerned with the potential for loss;

3) How do you deal with denial? Some denial is actually good, if it allows you to concentrate on the decision in front of you, rather than become overly consumed by the fluctuations in the market. Your faith in your trading system and routine must trump any undue feelings of anxiety about what you may lose. Confidence will accrue if you follow your process;

4) Do you trade in isolation? Trading can be a highly individualized activity, leaving little room for diffusing emotional tensions. Studies have revealed that many investors handle the concept of loss better if they share strong emotional ties with another person. Having a reliable relationship bond with someone else can actually improve your creative activities by providing emotional support for you sense of self;

5) Lastly, do you feel like an outside observer? Many successful traders actually regard themselves as somewhat different than the general population, following the beat of a different drummer, so to speak. They have developed confidence in their own abilities, and, although they are not loners, they are not followers either. They have learned to trust their own judgment and display a modicum of skepticism.

“Know thy self” is the mantra to follow before embarking on any active trading regimen. If the traits above ring true, then stop questioning your ability and focus on your trading system and logical decision-making process.

Be Selective In Putting Trades

The market (YM) made a dramatic move upwards today only to lose its momentum and stay idle (choppy) halfway through the trading day.

It tightly consolidates from thereon without any clear indication where it is heading because the two other core index (Nasdaq, NQ and the S&P, ES) made a dramatic drop after they surge in the open.

For most three hours or so into the trading, you can't get any idea where or what trades you are going to initiate, either a long or a short.

That is where patience and sitting tight is the virtue in trading.

If you are patient enough, you can trade YM at around 1:00 pm. ET. for a long trade.

You can spot the consolidation between 12:00 noon to 1:00 pm. as you can see from the chart and the obvious small body bars that consolidates tightly.

Placing too many trades without any clear picture is one cause that depletes account because of commission costs, thus it is necessary to put trades that are highly probable and be selective.

Trade What You See And Not What You Think

The market went up clearly Thursday and by just looking at it (the chart below), buying at the open and selling at the close is the crystal clear to trade.

But when you are in the market tick by tick, you cannot spot the outcome the way you can conclude as shown from the chart.

That's where you as a trader, it is important to read the market's mind, and not imposed how your (as a trader) mind/will imposed to the market.

That's exactly what happened with my trades, kept imposing how "my mind" will work where the market goes - not the other way around (let the market do its thing, and ride with it).

Trading is simple but its not easy!

That is, if you let your "own" mind play by yourself imposing your will where the market goes is an exercise of bad trading practice.

So next time around, trade what you see and not what you think!

In Trading, It is Also Important To Watch Yourself

The market drops today even though there are some positive news about the Greek problem, Chinese pledge and some economic calendar events.

But for some other reason, the market went south and the unfavorable minutes of meetings that came out from the Fed.

Today's market was a bit tricky to trade.

The market leap vertically in the overnight session and drops like a falling debris from the outer space.

Unless you have a crystal ball or a psychic that can predict where the market goes, it's all about riding it and anticipating where to find a good location to trade.

In this market environment, it's not enough just to analyze the market itself.

It's also about watching yourself how you will react and exercise good psychological judgment when and how you get involve in the market.

Unless you can psych yourself mentally, getting involve in the market without any plans and purpose is like torturing yourself to hell.

That's why in trading, it is important that you are mentally prepared, be alert, and most of all - be disciplined!

Following your plans without discipline is not enough to trade well.

Though trading cannot be perfected, it's all about how you manage yourself mentally too.

Trading is not just about putting trades, watching yourself how you react with the market movement cannot be overlooked.

An Ugly Valentine Trading Day (No Love For The Market)!

An ugly market trading range today.

Other than choppiness, the market went down from positive open and did not recover.

It still getting buried from the mud (as of this posting) and there's no clear indication it will rise up.

Same story from yesterday's trading range.

It's another "scalping" type of trade for the market.

This is the type/kind of market that is supposed to be studied carefully before putting trades, unless you are seasoned enough, you will get burned totally without recognition.

Trading 'recklessly' today is an exercise in futility, and if you don't practice discipline, you will be the loser.

Just wait for another day, anyway the market will always be there.

The important thing is you can still trade the next day.

Wait for the market to settle down (if it will settle?), or when the conditions suits your personality in trading.

Practice like a doctor to trade well

By Jeff White

Struggling traders are always asking about various indicators or whether they should be watching 15-minute candles vs. the VWAP. They'll give their left leg just to gain some kind of an edge, but they're missing the boat when it comes to lasting improvement. If only trading could be easy!

Trading itself is not a complicated subject. You can certainly make it complicated by piling studies onto your chart or reading the endless opinions of analysts, but none of that translates directly into profits. In order to get those, there's one thing you have to do. At the risk of stating the obvious, let me remind you of the incredibly simple goal for any trader: to sell at a higher price than you buy.

For whatever reason, that just isn't fancy enough for some folks. Complicated, to them, is better. Never mind the notion that the difficult part of trading boils down to doing just two things very well - closing out bad trades quickly and staying in good trades as long as possible.

It's no surprise that the great traders are continually fixating on how to do those two things better. They care not about making their charts look prettier or how they can add another screen to their desktop or relying upon some software enhancements to help them turn the corner. All that matters to the best traders is to focus on the things which add to their bottom line. Naturally, they spend their time honing the two skills of exiting losers and staying in winners.

Remember to Practice

I know a few doctors, and each of them refer to their business as "a practice." They're highly qualified, they've been through years of formal education, they've passed intense exams and they've for years been called "Dr."

So why do they say they practice medicine ? Because they're constantly learning. They're still being educated - not in a classroom, but through real-life patients who are counting on them for help in healing. Yes, they embrace the challenge, and yes, they have seen many of the same cases before. But it doesn't stop there, because for them for them to succeed they must rely partially on what they've already been taught, while keeping an open mind for what may work better with reduced risk to the patient.
Traders would do well to adopt a similar mentality.

Maybe you've attended the market's School of Hard Knocks, or maybe you had a mentor show you the ropes. Your background as a trader is somewhat important, but it's not everything. It might make you some money this month, but in a few months or a couple of years, if you haven't figured out how to make adjustments in a changing market, you're done.

Instead, consider the following mindset. Each day, what if you prepared as fully as possible and then executed your plan with complete discipline? Those are important tasks which every trader should be doing. But it cannot stop there.

In addition to those basics, what if you continually asked yourself how you could have detected signs of trouble in your losing trades sooner in order to trim those costs of doing business? And perhaps most importantly, what if you constantly looked for ways to stick with your best trades longer? Don't you think you'd see some consistent growth not only in your account, but also in the intrinsic rewards of better trading?

I'm confident you would.

With that in mind, approach your trading carefully. Use indicators as confirmation of what the price action is already telling you. Alignment of the indicator stars may never happen, and even if it does, that will only provide you with an entry for your next trade. Think big picture, and always keep in mind what's most important in your trading - both in the near term and for the long haul.

I can tell you it's not a magic bullet, it's not a faster PC and it isn't some fancy software that gives you red and green arrow signals. You just have to reduce the damage of losing trades as much as possible, and maximize the winners. Plain and simple, but it takes practice.