Trading Psychology & Trader Frustration [tradingsadvantage]

Trading Psychology & Trader Frustration [tradingsadvantage]

Whether they are trading corn or soybeans, traders can look at the U.S. Drought Monitor and see big areas of dryness south of Minnesota. ... Minnesota Farm Guide: Markets - Soybean market again trades higher based on weather news · Advanced Search ... Soybean market again trades higher based on weather news

www.informedtrades.com A lesson on how to trade the Parabolic Stop and Reversal (SAR) indicator for traders of the forex, futures, and stock markets. In our last lesson we learned about the Average Directional Index (ADX) an indicator which helps traders determine the strength of trends in the market. In today's lesson we are going to look at another indicator called the Parabolic Stop and Reversal (Parabolic SAR), which helps traders enter and manage positions when trading those trends. The Parabolic SAR is an indicator that, like Bollinger bands is plotted on price, the general idea of which is to buy into up trends when the indicator is below price, and sell into downtrends when the indicator is above price. Once traders are in positions the indicator also assists in managing the position by providing guidance as to how one should trail their stop. Example of the Parabolic SAR While this is an indicator that works very well in trending markets, as you can see from the below chart simply following the basic be long when the indicator is below price and be short when the indicator is above price will lead to many whipsaws in range bound markets. Example of Whipsaws in Range Bound Markets To combat this problem the developer of the indicator J. Welles Wilder (who also developed the RSI and ADX) recommended establishing the strength and direction of the trend first through the use of things such as the ADX, and then using the Parabolic SAR to trade that trend. As mentioned ...

tradingsadvantage.blogspot.com 27. How to Trade the Parabolic SAR - Stocks, Futures, Forex

What does trading psychology say about being frustrated?  Here's the scenario: you've been sitting on the sidelines while watching the market rally 50% off the March lows. Are you itching to jump in and buy?  Are you frustrated because you are missing profits?

Many traders I've been talking to feel this way at the moment.  They have watched the market rally and they are not on board.  And, it's not just the swing trader who feels this way.  Many times, day traders are confronted with a narrow, flat market or even a trending market that offers little entry opportunity.

That happened to me this morning as I was coaching a group of traders in the S&Ps.  The market was moving, but there were just no entries. Sitting on your hands can be one of the most difficult things a trader needs to learn.  We often feel unproductive.  After all, we are traders; we are supposed to trade!

Redefining Ourselves as Traders

Well, not really.  We are traders and we are looking for edges to trade. When an edge shows up, then we trade -- and that's a big difference.  The trader who has adopted this mentality is much less likely to force trades out of boredom or because he/she feels an internal pressure to be productive.  The trader who defines his/her job function as finding edges to trade is in a better position to avoid frustration trades.  It is an important part of what makes successful traders successful.

OK, so now we have clarity on our function, but it still can be frustrating. It still can feel quite unproductive to sit on our hands all day. True enough.

How to Be Productive   So, what can you do when you can't find an edge? How can you be productive? There are many things you can do when the markets aren't offering opportunities. Here are five practical ideas you can do to avoid the frustration and be productive:  

1. Learn a new aspect of trading. Maybe you have wanted to learn more about trading options ratio spreads, or perhaps that book on Market Profile is sitting on your shelf unread and gathering dust.  Dust off that book and read a chapter. Search the internet for information on ratio spreads and put a file together to study.

 

2. Do some market research. Maybe you have an idea about market behavior that you want to assess. A down time in the market can be a good time to do research.  

3. Do some simulated trading. Focus on a particular setup and paper trade it on a simulator. Study it carefully in simulation and you will "own it" as a setup in real time.

4. Review your trading plan. Trading plans can always be improved. Take a section of your plan and think carefully about how you can improve it, and then do.  

5. Annotate charts. Pick out model examples of trades and mark your charts carefully, highlighting all the reasons this was a sound trade. This has you think carefully about the trade and you will no doubt come away with greater insights.

Keeping yourself from becoming frustrated and taking poorly defined trades can be a simple matter of how you define yourself as a trader and shifting your attention to productive activities when needed.  You can keep a chart open to the side of your screen and keep an eye on the market  If an edge sets up, you can trade it.  Otherwise, you can engage in another productive activity as you 'sit on your hands.'

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