1000 TIPS & TRICKS FOR TRADERS

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1 1000 TIPS & TRICKS FOR TRADERS

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3 1000 TIPS & TRICKS FOR TRADERS Anirudh Sethi

4 Notion Press 5 Muthu Kalathy Street, Triplicane, Chennai First Published by Notion Press 2014 Copyright Anirudh Sethi 2014 All Rights Reserved. ISBN: This book has been published in good faith that the work of the author is original. All efforts have been taken to make the material error-free. However, the author and the publisher disclaim the responsibility. No part of this book may be used, reproduced in any manner whatsoever without written permission from the author, except in the case of brief quotations embodied in critical articles and reviews.

5 Dedicated to my wife Vandana Sethi

6 A-B-C-D of Trading A wise man chooses to do in the beginning what the fool is forced to do at the end. Better to be wrong and rich than right and broke. Create an atmosphere of confidence and you will never choke on the bone of contention. Develop an edge and stick to it. If you are not living on the edge, you are falling off one. Enter the market prepared or you will exit impaired. Forget the last trade, or the market will steal your next one. Giving in to emotional bias is akin to giving up. He who chases three rabbits catches none. If it sounds too easy to be true, it is neither easy nor true. Just say no when the market has said yes one too many times. Keep what you have by not having what you never intended to keep. Losers justify and winners rectify. Money, Mind, Method what you need to be a successful trader. Noise is the mother of doubt. Obvious trades can lead to blind faith. Poor execution can result in a broken disposition. vi

7 Quitting is not a fork in the road, but a street with a dead-end. Reason looks for support in the past while judgment considers the weight of the future. Stocks move first and ask questions later. Timing the market is like winding a clock that has no hands. Understand yourself first and the market last. Voice your opinion in mute mode. Wishers become has beens when what has been becomes a wish. extra time in the market could spell disaster in the home. Your ability to win is based on your willingness to lose. Zoos welcome bulls and bears but pigs are slaughtered. vii

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9 1. Don t try to read into other people s trading decisions. 2. By all means, appreciate a stock but don t try hold on to it forever. Instead, spend time nurturing positions that are kind to you. 3. Be aware of the Beginner s Cycle. The need to be right will cause you to collect courses and books but that will prove to be a costly, frustrating exercise. The secret lies elsewhere. 4. Actually, there is no secret. It s all in the maths. 5. Losses are inevitable, but they should be limited. 6. Prepare a trading plan so that you don t rush into bad decisions. Time spent planning will help you avoid catastrophic losses, riding the emotional roller coaster, and other headaches. 7. Get off your high horse. Your ego will cost you dearly. 8. Validate your strategy before you risk your capital. 9. Don t waste time thinking about other traders successes. The only person you re competing against is yourself. 10. Ignore any broker who tells you to buy when there is blood in the markets. Anirudh Sethi 1

10 11. When someone is better at something, outsource that job to him/her. Spend the available time doing things you are better at. 12. Make haste slowly. Ensure you have a validated strategy that has an edge and that you have a full understanding of the journey ahead. The markets will always be there but the capital in your account won t last if you re in too much of a hurry. 13. Understand positive expectancy. When you see it, you ll get it. 14. If you are unsure, ask someone you trust for advice. 15. Risk a small amount of capital on each trade. 16. Sentiment will drive the market or a stock a lot further than logic ever will. 17. Only fools claim to know the future. 18. You can t control the market. Don t waste your time watching every trade tick along. 19. Find a strategy that makes sense to you. 20. Keep a trading diary. Be curious. Don t be afraid of learning something new Tips & Tricks for Traders

11 21. Explore new ideas and opportunities. 22. Let go of things you can t change, concentrate on things you can. 23. There is no point in questioning the market. 24. The market will pay you when it s ready. You just need to be there when that happens. 25. Find a strategy you actually enjoy following. 26. Understand that the harder you work, the luckier you will get. 27. Risk not thy whole wad. There is a reason why compounding is the Eighth Wonder of the World. 28. However good or bad a situation is now, it will change. Accept that positive expectancy sometimes takes time to show its hand. 29. Understand that being right does not equate to profits % of trades will be profitable; 45% will be losses; 10% will break even. Your job is to make the winners count. Anirudh Sethi 3

12 31. Make mistakes, learn from them, laugh about them, and move on. 32. Successful trading is not a sprint. Warren Buffet didn t earn his reputation in a single year or decade. 33. The only thing you can control is the amount of money you re willing to lose on each trade. 34. Don t over-think things. Simple principles work best. 35. Understand why your strategy makes money. 36. If you can t pull the trigger, it s usually because you don t trust the strategy you re using. Stop and re-evaluate. 37. Trends will always exist. 38. The biggest hurdle lies between your ears. 39. Don t fear the market it can t actually hurt you. However, you can hurt yourself. 40. The objective of a trading education is not to gain knowledge it is to enable action Tips & Tricks for Traders

13 41. Never move backwards. If you are doing so, your mind is screwing with you. 42. Rules you can t or won t follow are of no use to you. 43. Your initial reaction to any adverse situation is usually wrong. 44. Risk and volatility are not the same. Volatility can increase returns, risk can increase losses. 45. Think long-term with regard to strategy application. Performance and trade outcomes in the short term are random. 46. The keys to success are consistency, discipline and patience. They cannot be bought. 47. Every stock that goes bankrupt first exhibits a sustained downtrend. 48. Any strategy is only as good as the person using it. 49. Take responsibility for every decision you make. 50. Always listen to what the market is telling you. Anirudh Sethi 5

14 1000 TIPS & TRICKS FOR TRADERS