What do I trade ? Part Two
Hi there ,
Lets dive right in. Like I said last time in the article found here , there are lots of possible instruments one can trade and this leads most beginners to be confused as to where to start and what to trade . In this post , I am going to give you a few pointers to consider when looking to learn how to trade an instrument.
There are a few questions you have to consider first and you can use this post as a simple checklist.
- Do you understand the product?
- Do you understand the Risks associated with that product?
- Are you financially able to trade the product?
- Are you set up to trade the product ?
These questions above are the general questions. Firstly, understanding the product has to do with; Knowing in detail what it is ( s they say the Devil is in the details) , Its parameters, its payment structure , eg With Shares , you generally make money in one of two ways, Capital Gains, or Dividend payments. Whilst some investors would be looking for capital gains through a host a methods such as buy and hold , value investing or scalping , others may require the dividends only , and the considerations one would think of would differ , based on what you are looking to gain from trading these shares. Eg . The Dividend Cover Ratio , which tells the investor how many times a Company would still be able to meet their dividend payment obligation , would be critically important to an investor seeking to make gains from dividends. On the other hand , those who want to trade options , may be more interested in exploiting recent Volatility in a Company , rather than looking for Dividends or Capital Gains. All of these go towards the question “Do you understand the Product you are trying to trade? ”
The second question, which deals with the risks you are faced with when trying to trade a product , is one that most investors love to shy away from. Regardless of all the risk disclosures which are put in place , investors and traders are frequently blinded by Greed and do not truly focus on risks. Eg . A dividend paying company may go go bankrupt, An option could decay drastically causing a loss to your Capital , A penny Stock may go to zero , A Government or Company may default on paying it Bond obligation as we saw with with the Russian Default Crisis, A Short CFD position , may EXPLODE significantly upward, causing a MASSIVE LOSS to your account. Something as simple as the wrong wording on an order type may leave you trapped in a position you mean to be out of.
Traders and investors are constantly faced with risks, you cannot avoid it. So we seek to understand it and tame it. That is what the focus of any good Course in Trading or investing should be about ….Risk Mitigation ! Sure Strategies are great but controlled risk is even better.
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The TwoScrolls Equity Trading Course found here , teaches a disciplined approach to trading and mitigating risks
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The third question is in line with the risk concern above . Are you able to trade this product ? Is it too volatile for your account . i.e Are the swings it often encompasses so large that whatever trade you do , you are bound to get your position fluctuate so hard against you , that you close the position. Alternatively is the contract is so large, you cannot even afford the margin ? ( A Good faith deposit required on some derivative products to prove you are able to meet any future obligations arising from being involved in that position)
Finally , are you set up to trade that product. Some products cannot be traded on certain accounts. For example , you cannot trade an Equity option on an account setup to trade Forex. Or you cannot trade margin-able products on a Cash only account . These are questions which all need to first be answered before one delves into the more technical questions on strategies , finding opportunities , data mining , correlations , etc
Hopefully , you can begin to understand why the question What should I trade is not something which on can answer right away , because the answer requires a lot of solid inputs before it can be of any use to somebody asking the question.
If you are interested in learning more about how to trade , in a strcutured manner , then you may want to visit this link
to begin a structured approach to trading . This course allows you to get these questions answered methodically , and provides the means by which you can build your confidence to begin your investing career
Stay empowered,
Ty Canning
What should I trade ?
The question above is one I often get from people who have never traded before, and they are often overwhelmed at the amount of information out there when they first start looking to trade. Before they realize it they are lost in the maze of Sites , product offerings , newsletters, adverts, seminars etc. The financial world is constantly spitting out more and more information making it really difficult for a beginner to gain the relevant amount of information, in the right dose, in order to begin a profitable climb of the financial ladder.
In this post , and over the course of the next few post , I will help you answer the question for yourself. However , the answer to the question “What should I trade” turns out not to be so easy after all. When you consider that there are all sorts of products which one can possibly trade. The small list below would serve as an example. There are Stocks , Bonds, Options, Futures , Commodities , Forex , ETF , just to name a few Then you also have the slightly more client friendly products like Turbos , Speeders , Sprinters, etc , all of which try to remove the complexity involved in trading options by eliminating a few of the Greeks (These are the aspects of Options trading which require a little bit more mathematical sophistication , and which causes several investors to lose their money trading in options.
In order that you might successfully , answer the question “what should I trade?” , it all boils down to a simple word , FOCUS.
In the Next post , I will discuss FOCUS and how it applies to this question, the answer might surprise you. But when you start applying it , your progress would be in leaps and bounds
Until then
Stay Empowered,
Ty.
Discipline: The Association Switch
If you have followed the series on Trading discipline so far , you would know by now that discipline cannot be discussed in isolation to other aspects of your life. See part one here and part two here
In this final post , I will discuss a powerful method used in for inducing disciplinary change at a structural level. Before going into this technique though, I need to first elaborate on a set of foundational Ideas
As mentioned in Part Two of this series, the PAIN/PLEASURE principle lies at the heart of the Matter of the issue of Discipline. All our actions go through some sort of mental filter, which goes something like this below.
Would this give me pleasure, or would this cause me pain?
1) 50%/50% Pain vs Pleasure ( Pain always wins implying AVOID)
2) 20%-50% Immediately receivable Pleasure vs 80%- 90% perceived severely delayed pain ( PLEASURE wins)
3) 20% Immediately receivable Pain vs 80% slightly delayed pleasure (PAIN WINS-Implying avoid )This is the area where discipline becomes an issue
4) 100% Pain ( Immediate or Delayed ) – ( Avoid and repeat avoidance without any further significant processing in the Future)
5) 100% Pleasure ( Immediate or Delayed ) – ( Participate and repeat as often as possible) Threshold ….Entrance of Pain i.e When utility or derived benefit begins decline..
These numbers above are not hard and fast , but are simply put here to give you an idea of magnitude.
With respect to beginning to trade or invest , most people are stuck in point 3 above. The knowledge of needing to put in EFFORT to succeed (PAIN). The idea of having to learn first (Pain). The possibility of taking losses in trading (Pain). The potential of not succeeding (Pain). And regardless of all that they might know of the benefits of success coming through hard-work , and how that success would lead to a significantly improved lifestyle in the Future, or how they would be able to contribute to others when successful, the immediacy of the Pain barrier is too large to move towards their investing goals.So they stay stuck, in the same actions and excuses.
To correct this faulty behavior ( i.e To Foster Discipline) one can use the association switch . “The Association Switch” works in the following steps
- A major attention shift to the 80% delayed pleasure discussed in point 3 above. In which you fully immerse yourself in the thought of having that 80% today. What it would feel like , why you would feel like that , really soak it all up in your mind. See yourself enjoying everything defined in the context of that 80%. Completely activate all your senses when doing this. Enjoy the process. Nothing comes between you and your goal except the limit of your own imagination, so give it the very best of everything you can Imagine.
- Whilst in this state of mind, FORCEFULLY bring yourself BACK into the Present. Such that every single pleasure is not only taken from you , but WRENCHED FORCEFULLY from you. The essential idea is for you to feel the PAIN of LOSING what you have created in one above. This loss must be palpable.
The end objective of the “Assoc Switch” is that you place yourself from a starting point of Pt 3 above , and end up somewhere in the vicinity of Pt 4, the feeling of 100% Pain. This is where you are truly able to feel the PAIN of NOT DOING WHAT YOU NEED TO DO. By bringing the opportunity-cost of your current actions into the Present , you are able to utilize the PAIN/PLEASURE principle , which lies at the heart of all human endevour to your benefit.
Stay Empowered,
Ty.
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Discipline : The Art of Its Cultivation
In my last post , I discussed the importance of Discipline to Trading. You can find that post here.
http://www.twoscrolls.com/blog/discipline-over-rated/
In this post , I intend to delve a little bit further into the idea of Discipline and how to begin the Art of its cultivation.
When Discipline is discussed on a Trading Education website , the focus is usually on whether or not the Trader follows his system , had a system , cut his losses quickly, etc. However, this method of looking at the discipline problem is not likely to solve it at all , for traders who recognize this as an issue within themselves. The reason for this is, because it does not go to the heart of the actual matter , which is that of, the TRAIT OF DISCIPLINE ITSELF and its essence.
If you are asked if you are disciplined or not , chances are, that there are areas in your life where you might be/feel you are extremely disciplined. However, you may find yourself lacking discipline when it comes to other things. So this leads me to mention the seemingly obvious statement that “Discipline needs to be discussed with respect to a specific Objective”.
The problem with this statement however, is that True Discipline does not exist in isolation to an objective, but rather should be cultivated as a character trait , that spans all your actions , attitudes , beliefs , Words and mindsets.
As an example, it is virtually impossible to constantly fail to keep your promises to friends, family or colleagues, but yet keep the promises you make to yourself in the process of achieving any goal you set for yourself. The human mind simply does not work that way, but rather, it uses a series of historically enacted reference points in forming any new decisions it has to make.
From the point of view of these pre-established reference points , the mind proceeds to evaluate and decide.
Consider a set of data points in any field, which tend to cluster around an average, the human mind also tends to extrapolate an “Average Behaviour” , in order to trigger a response similar or as closely fit to the average it extrapolated, when it is confronted with an aspect of your life requiring the exercise of Discipline.
This is the base reason why smokers continue to smoke , coffee drinkers continue to drink coffee, successful traders continue to remain so, whilst failed traders tend to repeat the same actions over and over again.
This is also likely to be the same reason why you may not have realized the Trading and Investing Goals and Objectives you may have set for yourself. If you have been sitting on the sidelines, intending to invest someday , this has become your referential data points and the chances of you ever actually taking action are closer to nil than you think , while the end result of this is that you lose out on the opportunities present in the Markets daily.
There is usually a “MEAN CONFIGURATION OF BEHAVIORAL PATTERNS ” associated with different situations you are faced with. All of which are driven by the underlying Fight or Flight response prevalent in living things, all underpinned by the PAIN or PLEASURE principle. [ The Pain or Pleasure principle in essence, states that we gravitate towards actions which cause us pleasure , and away from those which cause us pain ]
Now understanding, that behaviors are driven at an underlying level by this PAIN/PLEASURE principle, cultivating Discipline within any area of your life must first have to do with identifying the predominant Behavior driver in that scenario. chance are that it would require discipline , if the underlying driver is Painful, and you will need to do a deepened association switch to cultivate discipline in that area.
In attempting to cultivate a blanket of discipline across all areas of your life, one of the essential pre-requisites must be a BRUTAL HONESTY with yourself.
You must adopt the mindset of getting RESULT and not tolerating EXCUSES. Be gentle with others , but extremely TOUGH ON YOURSELF.This is critical.
Keep your word or Do not give it at all even for the simplest things. And if you ABSOLUTELY have to break it after giving it, for whatever reason, ensure that you absolutely Hold yourself accountable to making it up and striving to ensure it does not happen again.
In the final post on Discipline, I am going to be delving further into implementation of the association switch mentioned above, and discussing specific actions you can take next, to reconfigure and reset “Mean Behavioral Patterns ” which do NOT serve you or move you powerfully towards your goals and objectives. So be on the lookout for this.
Stay empowered,
Ty.
NB : I highly value your comments.
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TwoScrolls Live Seminar 24th of April 2010
Hi there ,
Clear your schedule. On Sat the 24th of April, TwoScrolls is going to be holding a power packed Beginners Trading Session. The Session begins at 9:00am and will continue until 6:30pm.
Warning: Come well rested and be prepared to learn, because this is an Intensive Coaching session which will leave no stones unturned in laying a strong foundation for you for years to come
Below is sample of what you will learn.
The Basics of Trading.
Understanding what to Buy or Sell, When to Buy or Sell and How much to Buy or Sell.
Techniques for profiting from rising or falling markets.
Understanding the Secret to successful Trading.
Analysis Techniques of the Professionals.
Forget about Guessing …. You will learn the SPECIFICS OF TRADING and doing so successfully
In addition to the above, you will also be given directions as to where to find important data and how to find it for FREE.
Oh , I also mustn’t fail to mention that, you would be given several methods and ideas which you can go on to implement… and lots more…
Send an Email to Admin@TwoScrolls.com to find out how you can be part of this day.
Fair Disclosure; Due to our planning we have restricted the total number of spots to twenty so I urge you to act fast to reserve your place now. Reservation costs you nothing ! You have nothing to lose and everything to gain.
See you there …
Ty Canning
NB: I am required by LAW to state that, Trading and Investing may not be suitable for all people, and you may lose more than you invest.
Discipline … Over rated ?
Everyone talks about the benefits and importance of discipline in all professions. And I am not going to deny that discipline plays a part in trading. After-all one needs discipline to follow a system. Discipline to even make a system, Discipline to directionally study markets. Discipline to pull the trigger and not fear losses , Discipline to exit with rules , Discipline to use stops, To Stay Out ; To Stay in, To Study Market Forces, lose, win or scratch … Regardless of what you do or say, you are not going to avoid this critical soft trading requirement.
So I guess I have to throw my voice into the fray and agree ; DISCIPLINE is one of the most important things to have as a Trader.
This leads us to a critical question… Is Discipline innate to some ? Are you born with it ? Or can it be developed ? Are there factors which lead to greater discipline which we can apply to ourselves, or are there environments in which we can immerse ourselves such that discipline seems to come naturally ?
In my opinion, there are a very small handful of people who are BORN Disciplined. The natural human tendency is to move towards pleasure and away from pain. And Discipline seems to require us to move towards “PAIN” in other words , forming discipline actually requires us moving in a direction contrary to what we may desire to actually do.
Several techniques exist for increasing discipline in individuals. Techniques such as repetition, force drills, reprogramming, etc. , but each of this methods really do not go in to the heart o the matter Which is the innate human FIGHT or FLIGHT response.
One other method is an association switch ( A technique employed in NLP ) which cause one to actually WANT TO DO what is required. This technique leads to powerful progress in any field to which it is directed. And Trading is no different.
In the next post , I will discuss the association switch and how you can begin to employ it to make change.
Stay Empowered,
Ty.
Why is the Mona Lisa so Expensive?
Why is the Mona Lisa so expensive?
Have you ever wondered why the Mona Lisa is as expensive as it is?
Some think it is simple hype, others think it is because it harbored a secret about the person who posed for the picture, regardless of what the reason was/is , the truth is that some pictures hide a thousand secrets.
See the picture on the traders Secret document
http://www.twoscrolls.com/ext/equity-trading-module/ Click on the TRADER’s SECRET to see the picture. Actually click on each DVD to see what is contained.
This picture above contains ALL the secrets for becoming a super successful trader.
Can you figure out why ?
You might think such a thing does not exist, but do you know that NOT ONE SINGLE PROFESSIONAL has been able to challenge the claims of the Secret which I have made. This is simply because the secret is rooted in pure mathematical facts. Not fiction or the whims of one trading system over the other.
Trading is a demanding business and you are not adviced to go into it without having a sound basis upon which to operate.
Lets here your thoughts on what the secret may contain.
Stay Empowered,
Ty Canning.
What’s happening to the Economy?
A Quote from the IMF World Economic and Financial Survey
“Also, poverty could increase significantly in a number of developing
economies where real GDP per capita is contracting
in 2009 for the first time in a decade.
Activity may pick up quickly in the short term.
Yet the forces that are driving the current
rebound are partly temporary in nature, including
major fiscal stimulus, central banks’ support
for credit markets, and restocking following
exceptionally large cutbacks in production and
drawdowns of inventories. These forces will
diminish during the course of 2010.” Act now to protect yourself and your wealth . Start by learning how to invest by obtaining a copy of the Equity Trading module from
HERE.
End of Year TwoScrolls Update
First I would like to say thanks for following TwoScrolls and the work we do over the Company. 2009 has been a very seemingly uneventful year, with what has seemed like very slow progress, however, we had to take time to restructure the manner in which the offering of the Company was brought to you . Consequently, I decided that no events would be held , no course of private mentoring take place and all.
Going into 2010, we intend to deliver extreme value to our clients , through a series of events, courses, webinars and private offerings, visit back on the 25th of Jan to see the Calendar of events lined up for 2010.
Stay Empowered,
Ty
Changes Going On at TwoScrolls
There has been a lot of work going on at TwoScrolls and we are always trying to offer the very best to our customers. A system, Big Bertha, is being built in line with customers expectations to enable them profit from the markets.
Trading is a tough game, and TwoScrolls is here to help you succeed.
Stay Empowered,
Ty Canning