Have you ever seen two people in the same situation act differently? With trading futures this is really evident. Only one side gets to make money.

How a person handles sinking (losing money) will help shape what they become as a trader. The second thing that my mentor every told me was learn how to lose. Winning is easy. Here are some key things about losing:

Losing is a result. A loss is a culmination of an action or inaction, own it.

You can’t control when you lose only how much. It is ok to lose, it is not ok to lose big.

In the beginning, it is easier to learn through losing than winning. Understand why you are losing and winning. Losing is what makes you put in the work. Winning is what makes you continue to put in the work. Allow yourself the second opportunity.

Don’t run on a broken leg. The worst day is always the second day. You will get better at healing until then recognize it.

Stick to your limits. If you cannot stick to your loss limits than you should not be trading. It creates a path you do not want to go down and hole that is hard to get out of.

Run it like a business. If you are losing more than you are making, risk less. If you can’t make $200 you should not be risking $800 a day.

You can’t prevent yourself from losing but you can control everything before and after. That is the best that the market has to offer. It has to be enough. Lose with a purpose or it will always be greater than your wins. Don’t epitomize the definition of insanity. Clear your head and come back, however long that takes. Learn how to lose so that your winners count. Exit every trade the same, with confidence.

No trader likes to lose but the best traders know how to swim.

From Trader Habits blog...

The market is on the upward move as shown from this chart, Russell 2000 (the small caps).

Switching my concentration to monitor the small caps which comprises all the small companies as compared with the S&P's and the Dow.

Though they all move almost in the same direction, this time I am preferring to concentrate with the Russell 2000 which is the equivalent of the IWM etf.

Dont Follow Your Passion, Follow Your Effort

Mar 18th 2012 2:47PM

I hear it all the time from people. “I’m passionate about it.” “I’m not going to quit, It’s my passion”. Or I hear it as advice to students and others “Follow your passion”.

What a bunch of BS. ”Follow Your Passion” is easily the worst advice you could ever give or get.
Why ? Because everyone is passionate about something. Usually more than 1 thing. We are born with it. There are always going to be things we love to do. That we dream about doing. That we really really want to do with our lives. Those passions aren’t worth a nickel.

Think about all the things you have been passionate about in your life. Think about all those passions that you considered making a career out of or building a company around. How many were/are there ? Why did you bounce from one to another ? Why were you not able to make a career or business out of any of those passions ? Or if you have been able to have some success, what was the key to the success.? Was it the passion or the effort you put in to your job or company ?

If you really want to know where you destiny lies, look at where you apply your time.

Time is the most valuable asset you don’t own. You may or may not realize it yet, but how you use or don’t use your time is going to be the best indication of where your future is going to take you .
Let me make this as clear as possible

1. When you work hard at something you become good at it.

2. When you become good at doing something, you will enjoy it more.

3. When you enjoy doing something, there is a very good chance you will become passionate or more passionate about it

4. When you are good at something, passionate and work even harder to excel and be the best at it, good things happen.

Don’t follow your passions, follow your effort. It will lead you to your passions and to success, however you define it.

From blog maverick/mark cuban

The market made a nice pretty move last Friday's session.

A surprising move considering a Friday trading is usually a profit taking day.

But that's not quite a surprise since the market is on the downward trend since Monday's trading open.

The Dow made a nice classic pattern to trade, a cup with a handle setup.

It drops further after the open to make a small cup formation opening for the setup at the consolidation when it reach red line.

Every Adversity Contains The Seed Of …

by: Bill Zimmer

Friday, March 23rd, 2012 at 9:58 am

The path to success consists of knowing your outcome; taking action; knowing the results you are getting; and having the flexibility to change until you are successful. You have to find the beliefs that support your outcome, the beliefs that get you where you want to go. If your beliefs don’t do that, you have to throw them out and try something new.

The accumulation of all of our experiences creates the impression that “we know“. When in fact, we “don’t know“, we merely believe “we know“. Confused? Take for example the old cliché “Everything happens for a reason “. As a normal human being we usually invoke this cliché in our minds when something goes wrong, when something bad happens. There must be a reason this happened to me, perhaps someday I will understand. I knew I should have… I knew it, I knew it, I knew it. How will I ever recover? Sound familiar? It’s happened to everyone! Now comes a choice.

There are numerous ways people react to this situation. If we use trading as an example and assume for the moment we’re not doing well, we may; refuse to even open our statements (out of sight out of mind). We can feel hurt and frustrated. We might sit home and mope, or go out and get drunk. We will be mad. Seek blame; the broker, the advisor, a friend who recommended it, the company insiders whose shares we invested in. It doesn’t really matter, it just must be someone else’s fault, it can’t be me!

All of this might allow us to let off some steam, but it doesn’t help. It does not bring us any closer to our desired outcome. It takes a lot of discipline to be able to retrace our steps, learn painful lessons, mend fences, and take a really good look at new possibilities. That is, however, the only way to get a positive outcome from a seemingly negative result.

All successful people have the uncanny ability to focus on what is possible even in a negative situation, what positive results could come from it. They think “everything happens for a reason, and a purpose, and it serves them”. They truly believe that every adversity contains the seed of an equivalent or greater benefit.

The bible says, “you reap what you sow” it does not say you reap what you desire. Could the mistakes you have made, the losses you incurred, sow the seeds of learning? Does it make you think, perhaps all I need is a further education? And then get one? Or does it make you think, you need to be a professional, an insider, a floor trader, to make money in the markets?

You probably paid for your professional education. The market is your new education. Your losses, if any, are the cost of your new education. If you take the positive approach, say this is just the school of hard knocks. I will read, study and learn. Next time I’ll make money. From now on I’ll make money. Now you can say, this happened for a reason and it serves me!

Trade Like A Turtle

Been learning and observing the market for a quite a while and participates daily with its movements even in an "on and off" activities.

The thing that I noticed from all (or most) participants (especially the individual retail traders, the home traders) were all looking for the "kill" in the market.

And also looking for the "short cut" in trading the markets to make easy profit.

But that's not how the market works.

Unless you are working for the sophisticated prop firms, but if not, you need to trade in a slow pace with minimal but consistent expectations.

Making a low profit in the market that is equivalent to a minimum day's work might be enough considering how the markets is tough to trade.

Especially if you are still at the initial stage of your trading endeavor, expecting high returns should first ignore.

Trade like a turtle might be the suitable words to describe in trading the markets.

Trade the market in a slow calculated edge with minimal profit enough for a day's work is the right way to get involved in the market.

In other words, treat trading as a day job, not for the get rich quick scheme.

Otherwise, you will quickly lose your capital and if you are not ready also your sanity.

Trade the market carefully!

JAMES ALTUCHER: These Are The People Who Really Make Money On Wall Street

James Altucher, The Altucher Confidential

I came up with an ultra-perfect top-secret method for beating the stock market. I saw it right there on the screen after thirty straight hours of computer programming. My heart was beating fast. I was sweating when I went to sleep. I could only sleep for about two or three hours and I had to get up and check my work. I added up all the money I was going to make. I would never work again!
It didn’t work.

Every day I get a message that sounds something like this. “Can you introduce me to Steve Cohen. I have something that will make him a lot of money.”

I don’t mean to sound arrogant and I certainly don’t want to piss off people who take the time to send me emails (usually they flatter me first and say, “I love your blog and can you give me [insert rich guy]’s personal cell phone number.”)

Playing along I write back, “Why?” Like why would I give anyone’s email to someone I don’t know, for one thing.

Answer: “I have a method that beats the stock market.”
Usually it involves some moving average bullshit or there’s some new theory about commodities or whatever.

It’s all BS. NOTHING works. Let me repeat it a different way:
YOU ARE NO GOOD.

You’re not even a good person. You’re arrogant and rude. You smell.
I know from personal experience. You’re smart, talented and yet you want to use those talents to do some hocus-pocus that you think will put you ahead of the other 5 million people who are trying to win in the markets: people a lot smarter than you are, a lot hungrier, have a lot more computers, have a lot more inside information, have teams of analysts, etc. I cannot believe how stupid you are.
Let me describe to you the ONLY people who make money on Wall Street (and note: I am very bullish on stocks in general). By the way, all of the below people will slit your throat in a dark alley. They don’t like you, they want you to die a painful and disgusting death and they want all of your money. So beat it, punk.

People who hold forever. Warren Buffett, Bill Gates, etc. These are usually the founders of companies, who build their companies up, take them public and never sell their shares. Some people who try this have companies that fall apart and they make nothing. Some people who try it turn out to be multi-billionaires. If Bill Gates had sold his company in the early days instead of going public he would’ve made about $100 million or so. A good amount. But not the 50 or 60 billion he has today. Ditto for Buffett who was worth about $20 million in 1970 but didn’t sell a single share of Berkshire Hathaway stock during its climb from $6 to $100,000. (See, 8 Unusual Things I Learned From Warren Buffett).

So this presents an obvious way to make money on Wall Street. START A GOOD COMPANY that actually helps people. Then take it public and ride it forever. You’ll make money.
People who hold for one trillionth of a second. i.e. high frequency traders. Let’s say you want to buy some shares of IBM. These guys have computers with cables hooked right into the exchange who slip in the middle, buy some someone else, sell to you 1/10 of a penny higher and makes a sliver of money. These guys make money every single day and it’s a race to the bottom: who can get their faster, quicker, and more deflty to screw you out of 1/10 of a penny every time you make a trade. And by the way, probably more than 50% of trades on the stock market are done by these guys and a single mistake (think: flash crash) can cause the market reeling within seconds.

People with inside information: If you know Hilton is about to buy Marriott then you can make an awful lot of money. The Feds arrested a handful of people engaged in insider trading a few years ago but my guess is they only got about 1/10,000 of the people who have inside information. Every hedge fund manager trades on inside information all day long. There’s no other way for them to get any edge on their peers.

They use every means at their disposal. Not the old-fashioned bribery stuff of the 1980s. They hack into networks, they vacation where your CFO is vacationing, they use so-called “expert networks”. There’s no stopping the culprits.

By the way, this does mean that micro-cap companies that have public information but seems like it’s inside because nobody pays attention to them, could provide a small edge in the markets. But whoever is trading the large-cap companies are just losers. The kind of people you want to play cards with.

Congressmen. It’s legal for congressmen to trade on inside information. So, let’s say your congressman knows that a vote on some energy tariff is going to go a certain way he can go to his local casino table (stockbroker) and place his bets accordingly.
Guess whats happened the past few years since 2007 when all of America lost money in the stock market. As a group, congressmen are up 30% per year. If this continues I might consider running for Congress sometime soon instead of just running for the Vice-Presidency.

This is one of the reasons I think we should just abolish Congress.
People who take fees. I’ve been invited twice in the past few weeks to become a partner at different $100 million funds. In one case I said no and in the other case I kind of just blew them off. I’ve become a bit of a shut-in lately and the thought of meeting people and negotiating and selling..blah. I can’t handle it right now. I think I need medication.

But here’s how it works. You raise $100 million and you make about $2 million straight off the top in fees which you split with your partners and the people who raise you money. Then you split any money that comes in off the profits on the $100 million. In the long run you lose money for all of your investors but you make a TON of money on fees.

My favorite example is super hedge fund manager John Paulson. He turned one billion dollars into six billion during the housing crisis in 2007-8. He probably took a billion in fees off the table. Then he raised his fund from six billion to 30 billion as more investors poured in. Then, or so people tell me, he lost 50% and his fund went from 30 billion to 15 billion (these are rough numbers. Its give or take a few billion). So net-net he lost about $10 billion to the markets. And yet, he’s pocketed about $3 to $4 billion in fees, making him one of the richest people in the world without providing any useful service in the world. He made that money simply by losing even more money. That’s a pretty good job if you can get it.

Ugh, in general, try not to be an arrogant loser. And, by the way DO NOT spell “loser” as “looser” like everyone on the yahoo message boards. Also, shower more frequently. And don’t think you have a system for beating the markets. And, in the worst case, if you can’t get over your bad habits then either start a company or run for Congress. At least there you can legally steal from us and pretend like you are “representing” the people. Good luck and God Speed.

This post originally appeared at The Altucher Confidential.