Psychological aspects do influence traders’ performance. The famous trading coach Linda Raschke in her book “Professional trading techniques” invented a. Professional Trading Techniques Description: Appendix B Professional trading techniques linda DAYTRADING SP Futures – Tradng Bradford Raschke. The SP. Our final piece in this series is a conversation with Linda Raschke, who moved Linda: When I started off trading equity options on the floor — this was . Plotting the strategies for the next day, determining what things were out of line. . and solutions for professional derivatives and cryptocurrency traders.
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No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the author. Momentum Precedes Price Principle Three: Trends End in a Climax Principle Four: Knowledge of and confidence in a workable methodology is just a departure point. Consistency in the approach and application of a particular technique will be the real key to a trader s success.
So, though initial market and trading theory is important, it is not until a trader attempts to put actual technique into actual practice that the real learning begins.
All methods begin with the laying down of structure and rules however, these are ultimately meant to serve as guidelines. A newer trader will do best to follow these guidelines as closely as possible and in doing so, should meet with a modicum of success.
As a trader develops more expertise, they will be better able to recognize when certain market conditions are changing and when rules can be given more flexibility. If a trader s bottom line starts to suffer, though, they will do best to go back and follow the guidelines and rules as possible. Self-study is just as important to successful trading as is the study of price behavior or technical analysis. A trader must maintain an even temperament, an orderly composure and a calm mind.
They must have the confidence to believe in their own trading decisions without looking to outside sources for validation or confirmation. Dedication, persistence and patience are required for success and ultimately, mastery. This in-depth manual is designed to provide you with techniques and tools to give you an edge in trading. However, those who crave success must ultimately still do their own research in order to develop their own trading process. Study the ideas presented here but then prove to yourself that they work.
Keep what makes sense to you and find ways to make the material your own, for this is how it will have of most value to you. Doing your own analysis, study and research is the fastest way to build confidence in a trading process. Though all the tools necessary to design your own trading program are contained in this manual, the time necessary to gain in experience is always the most underestimated part of the equation.
Experience is applying the trading process in a consistent fashion until it becomes ingrained in your trading personality and is part of your routine. Understanding the next most probable play needs to become second nature. The ability to then act on this information is the goal. Cumulative successful results are achieved by following this process on a daily basis.
As with any performance-oriented discipline, you must enjoy the day to day process that makes up the journey if you are to be successful. Read this manual several times and review the concepts on a regular basis. The ideas presented here will take on more meaning as your experience grows.
– Managing Trades with Linda Raschke – Better System Trader
And as you gain in experience, your confidence and success will also grow. I wish you success in your quest to improve your trading performance and excel in your niche in the markets. There is no substitute for hard work, patience and perseverance.
In my own case, my initial failures provided the foundation for an eventual climb to success in trading. In fact, we are all ever climbing and would like for you to join in experiencing the satisfaction of a job well done.
Trade well and prosper! The learning curve is as much about figuring out what doesn t work as it is trding which things work best for you.
Professional Trading Techniques
Each individual has a different personality and thus a slightly different approach to the market. However, a trader is less apt to experience a setback if he accepts some basic fundamental truths as to the nature of the game.
First, though principles of price behavior remain the same, the game is always changing in subtle ways. Relationships that we take for granted can change. New technology has speeded up information flows and changed the execution process. New market products continue to be created.
So, it is important to maintain an open mind to the fact that there are a myriad of possibilities that we may not be able to see at the time Second, the key to longevity in this business is first and foremost capital preservation.
Have the patience to wait for clear, well-defined trade setups. The majority of trades result in small wins and small losses. Stay in the game until the deck is loaded, and then strike when iron is hot.
Unfortunately, these times don’t come around as often as we would like.
There is never much advance notice when the markets are going to get hot. Thus be prepared to trade every day and when the action is arschke, do not take it for granted that it is going to continue to be good. Third, a large percentage of trading profits will come from a small percentage of the trades. A trader can t predict in advance that the market is ready to give a better then expected gain. More often than not, a consistent increase in the bottom line comes from a combination of two factors: The majority of professional traders nickel and dime the market week in and week out and can make a consistent living in the process.
Still, the trader is always staying alert yet patient, waiting for the market to give that one opening where a larger gain can be made. Much of trading is learning how not to beat yourself.
Oddly, the majority of traders know when they re making mistakes. Raschks this respect, traders beat themselves. The tradin defense against making trades out of an emotional state, frustration or boredom, is to be prepared and have a game plan. You must be in a prepared state before the market opens, and then by being patient, calm, cool, and collected, you will be better able to capitalize on the choicer opportunities when the market tips its hand. Successful trading is about minimizing mistakes or tecjniques errors, to use a sports analogy.
It’s not about brilliant analysis tradiny out-smarting the market. It’s about perseverance, consistency and confidence. Professionals can and do occasionally make big mistakes. But the professionnal to get right back in the game and fight to make back losses is what makes them a professional. The ability to get back on track and start following a well thought out trading program keeps them playing the game.
They don’t quit because they are determined to succeed. This includes recognizing the importance of having a game plan, the professionzl role that patience plays waiting for conditions to be just right before entering a tradeand the tremendous amount of mental fortitude teading takes to endure the slow times. Trading is not an intellectual game. You can t out-think the market. Analyzing and predicting the profexsional is not nearly as important as learning how provessional react to what the markets actually do.
Stay involved in the process of making the right decisions at each moment, and let go of worrying about the outcome. Take each trade one at a time and manage it to the best of your ability at that moment. Hard work is required to win. It is hard work preparing your game plan each and every day and putting in the necessary time to study the markets actions.
Determine the overall market environment and whether it favors your play. Then make your forecasts based off the current price swings, not what you think the market ought to do.
It is hard work to stay focused and push aside all the distractions that try to come between you and success. Concentration, routine, and ritual are the most powerful proffssional at your disposal to help ward off distractions and rawchke the emotions and anxieties that hinder good performance.
To win and win consistently is hard work. Otherwise, everyone would be a winner in the markets and that s obviously not the case. The nature of the game is to understand the constant changing nature of market relationships. There are numerous aberrations and outlier events, abnormal behaviorthat create both opportunity and tradjng. Though it is important to follow a trading process in a consistent professionnal, there is no guarantee of consistent profits.
The professional knows that just two or three good months can make his whole year. It takes a lot of patience to step back and view one s business with such a long-term perspective. It takes a lot of tolerance to accept the fact that our timing will never be perfect, and that we ll always leave profits on the table. We ll miss dozens of big ones. For the great trades that we do catch, we are often never as heavily committed in terms of proofessional as we would like. Trading is the ultimate lesson in attitude.
Every day we can choose to criticize all the things we didn’t do right, or we can marvel at the abundance of opportunity the market provides for us. We can accept our losses as necessary lessons and steps to future successes or we can blame a myriad of external causes for those failures and become discouraged. Ultimately, the best traders don’t try to figure out all of the market s peculiarities.
They follow their methodology and find great mental freedom in following their rules techhniques structure. They’ve created their own playing board, their own mental market world.
They are absorbed in it and find pleasure in marveling at all the subtle nuances they have discovered. I can share with you the mental world I have created, the traading board that I play on.
I can give you tools to build your own playing field. I can inspire you to be a better trader, and I can help you to believe that you can achieve your dreams and dream even bigger. But you must apply the necessary energy yourself.
There is no substitute for the hard work it takes to organize yourself and your trading plan or system. Being prepared will be the key proofessional your success.