Sep 25, 2016

Practical Lessons For Successful Stock Trading

How to Find Your Trading Tendency

* How you trade after you’ve made money versus after you’ve lost money:  Do you trade more?  Larger?  Do you trade differently based on recent P/L?  Do you become risk averse after recent losses?  Does that affect your future P/L?
*  How do you trade when you’re taking more risk versus less risk?  Does different size/risk exposure cause you to trade differently?  Are you actually making more money when you’re taking more risk? 

*  What kinds of markets and market patterns provide you with your greatest profits?  Losses?  Do you trade selectively to maximize your best opportunities?  Do you overtrade markets that are not ones providing you with opportunities?

*  What is your ratio of winning to losing trades?  What is the ratio of the size of average winners to the size of average losers?  How successful have you been in finding large winners?  In preventing large losers?

Many times, our greatest biases and psychological mistakes come through when we thoroughly review performance.  The decision to not review performance is perhaps traders’ greatest bias blind spot.

All above points are too much important for success in trading.
One must contemplate and get answers to all the questions above and find reasons as well and take necessary steps to improve.
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5 Types of Mindset And Importance For Traders - Successful Mindset For Traders

5 Types of Mindset And Importance For Traders - Successful Mindset For Traders 
Create a better mindset for success in trading

1) An open mindset – Traders succeed when they see things that others don’t. Sometimes those are overarching themes and trends; sometimes they are short-term patterns in market behavior. To see things differently, we need a mind that is open to new and different information and open to shifts in market behavior.
2) A quiet mindset – Minds filled with noise can’t process new information. When we’re focused on ourselves and our profits/losses, we’re no longer focused on markets. We can’t exercise self-control in our actions if we are not able to sustain control over our thought processes.
3) A constructive mindset – Losses happen. We miss opportunities. The great trader learns from mistakes and embraces the lessons from drawdowns. If every day brings wins from trading or wins from learning, there is always something of value to be taken from each day.
4) A positive mindset – It’s because we cannot count upon our profits and losses to make us happy that we need to lead a fulfilling life outside of trading. A life that is filled with meaningful activities, fun activities, activities that bring us close to others, and activities that give us energy is most likely to provide us with the emotional fuel needed to power through challenging market times.
5) An action mindset – All the best ideas and intentions will get us nowhere if we aren’t prepared to act upon them. The action mindset is one focused on plans, translating excellent ideas into excellent risk/reward opportunities. Preparation is idea-focused, but also execution-focused. It is as important to work on our implementation of ideas as our generation of them.

 Lessons for traders, psychological aspects of trading, successful trader psychology  

China Faces Banking Crisis After $2 Trillion Mountain of Toxic Debt Exposed

According to the agency’s Tuesday report, up to 21 percent of China’s loan pool is “non-performing loans,” (NPLs) which means debtors are struggling to make the repayments. At the same time, only 1.8 percent of loans were classified as bad ones by state authorities last June.
Moreover, Beijing’s reliance on credit growth for providing near-term GDP increase could exacerbate existing problems, Fitch stressed, as it “will increase the size of asset-quality problems in the financial system.” “There seems a high likelihood that banks’ NPL ratios will continue rising over the medium term, in light of this discrepancy,” the report stated. “There are already signs of stress, most obviously in the increased frequency with which banks are writing off or offloading loans, such as those to asset-management companies.” As of the late 2015, Chinese debt made up 243 percent of the national GDP with a prospect of reaching 269 percent on a condition of debt continuing to grow. The latest statistical data also revealed that loans will be increasing by 13 percent annually, surpassing the pace of the GDP growth that stands at 6.5 percent as of now.
Liquidation of bad loans would cost China some $2.1 trillion, if the country’s financial sector moved to address the problem immediately, the report assessed. In longer perspective, however, dealing with the growing economic pressure would require the government taking some drastic measures such as writing off debts or expanding repayment terms.
Still, some experts are skeptical about the Fitch’s assessments. Senior economist at Commerzbank’s Singapore Hao Zhou said that the problems of Chinese financial system are caused by the shadow banking sector and aren’t big enough to plunge the economy. “The size [of shadow banking] is about 12 to 15 per cent of the overall banking [industry] and most of the shadow banking assets are related to bonds and cash products, which is seen as a low-risk product,” he said in an interview with City A.M.


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