Quotes from 'Tools and Tactics for the Master Day Trader' - Oliver Velez
Proper trading is a by-product of proper thinking.
A trader has to identify chart patterns that :
1. Are reliable and represent a short term shift in market psychology.
2. Show when there is a change in balance of power between buyer and seller.
Mastering two or three trading techniques is all that is required to become a highly successful trader.
A trader has to spend little time analyzing what has happened, as it is only of academic value. The majority effort has to be directed as to what is about to happen in the near future.
Stocks experiencing a great degree of momentum tend to correct (or rest) for 3-4 days before they resume their move. This 3-5 days of decline typically sets up a unique opportunity for the educated swing trader.
Trading tactics and techniques will have little or no value if the mind behind those techniques is not been prepared.
The greatest riches of a successful trader lies within his thinking, not with the method used.
Requirement of a successful trader : Deep understanding of the market, clarity and mental awareness and emotional mastery.
It takes many months and years of relentless effort to obtain market proficiency. However excellence seems to emerge only after one has learnt and experienced every conceivable way to loose.
The ultimate reward that goes to those willing to pay the price is immeasurable. Successful traders enjoy an independence that cant even be enjoyed by most.
A trader has to make achieving a successful life a magnificent obsession, a burning desire to attain a state of trading mastery. Make your sole mission in life to overcome all obstacles to your success without any thought of ever giving up.
As traders our entire life is spent looking at the markets in the next 2-10 days.
Every stock is driven by these three emotions : Greed, Fear and Uncertainty.
Short term trading is based entirely on technical factors. i.e price patterns, volume, momentum etc.
A disciplined trader acts out as per well thought out trading plan.
The best traders make money by observing and focusing on the movement of the stock.
Astute traders refrain from allowing news, stories and rumors alter their plans. They stick to their technical and pre-determined stop loss at all cost.
Mastery of self and market comes first. When these are secured, abundant profits will follow.
If aspiring traders can truly love the art of trading and combine it with a passion to succeed, no obstacle can stop them in their way.
Good traders focus on 1. Proper entry. 2. Position management and 3. Proper exit.
It is important for a trader to separate losses due to a faulty strategy from those that arise due to faulty implementation of a strategy.
What a stock is doing is far more important than why it is doing it.
While dealing with trading strategy, the first ten traders should not bring judgment. Only after 10 trades should a strategy be analyzed.
Knowing how to enter a stock accounts for about 85% of a traders success.
Knowing when to do what (buy/sell/hold) will make you a great trader.
Every trader eventually realizes that the very best trades are those that become profitable immediately.
In reality most market players fail to understand the trading reality. What they experience is largely determined by their interpretation of the market. i.e It is not the market that determines our results but our interpretation and response to that reality that determines it.
Trading is about perception. The successful trader perceives the market as a friend, whose purpose is to serve and reward him, a place where dreams come true, a place where his life is made better each day.
Stocks rise and fall based on beliefs, not facts.
Comfort is the arch enemy of a trader. If something is psychologically pleasing, in most case, it is wrong. On the other hand if a strategy or approach is psychologically and emotionally difficult to pull off, the odds of it being right are greater.
Opportunity lies where the majority are afraid to go.
Most difficult trades to make are often the ones that go on to advance dramatically. Opportunity often lies where most individual dare not tread.
The biggest impediment for a trader is the yearning to be certain before we act, the need to be safe.
As traders, we are conditioned to want to know if this will be winning trade before we take a leap. But the hard, cold reality is that successful trading will always be difficult to accomplish because it requires that we act before we know.
The need for certainty is one trait that every aspiring trader must have to overcome.
The active trader will find the greatest opportunity where no one else is willing to go.
A trader can never be certain that a trade undertaken will work. He can only access the odds and devise a strategy to exploit the odds.
Those who master the art of trading will have learnt how to proceed during time when everything seemed to go wrong.