The Traders Mindset and Risk Psychology

By Ahmad Hassam

Even great traders struggle with their inner demons from time to time. Those demons generally are fear, greed or regret. Your personal trading psychology affects every trade entry and every trade exit that you make. Every great trader has a deep understanding of his/her psychology.

The more you develop the traders mindset, the quicker you will confront your demons and the more success you will have in slaying them. In your journey from a novice trader to a master trader, you will have to keep an eye on your trading psychology.

There are certain traits that help traders and investors make consistent profit in the markets. Some of these traits will come naturally to you as a trader. However, others you will need to cultivate and acquire. Now this is what you feel when you acquire the traders mindset:

a. You will stop worrying about the money and start believing in your trading system. b. Trading and investing are inherently risky. You will accept risk in trading and investing. c. Even great trader cannot avoid a losing streak. You will accept winning and losing trades equally as a part of trading. d. In the end you will start enjoying trading. e. Every time you lose, you wont feel being victimized by the markets. f. Learning is a continuous process. You will be always looking to improve your skills. g. The trading profits will start accumulating and start flowing into your bank account as your skills improve. h. With experience you will be more open minded in your reading about the markets. You will want to keep your opinions to the minimum. i. You will want to learn from every trade or position. j. You will try to align trades in the direction of the market and try to flow with the market.

These are the lists of some destructive emotions that you will have to face when trading:

1. Most of us fear failure! So fear of taking a loss and the fear of being stopped out is going to haunt you. 2. Anxiety will make you get out of the trades too quickly. 3. When you are not in control you wish and hope that you will make a winning trade. 4. You will feel as if being victimized by the market and will feel anger after a losing trade. 5. Never ever trade with borrowed money. It can ruin you. Trading with borrowed money or trading with money that you cannot afford to lose is a destructive emotion. 6. When you think adding on to a losing position can help you avoid a loss. 7. Just like addiction to gambling, compulsive trading 8. Excessive joy after winning a trade. You are tying your worth to the market. 9. Poor trading accounts profits. This results in poor self esteem. 10. Not following your trading system. You dont believe in your system or you havent tested it well. 11. Second guessing your strategy. Fear of loss can paralyze you. 12. Not trading the correct trade size. The trader might be refusing to take responsibility for managing the risk or be too lazy to calculate the proper trade size. 13. Trading too much. You feel like conquering the market which you cannot do. 14. Afraid to trade. This happens when there is no trading system in place. 15. Irritable after the trading day. Trading is like an emotional roller coaster due to anger, fear or greed. This happens when there are unrealistic trading expectations.

When you find one of these emotions in yourself try to isolate and defuse it. Try to take a look into the mirror and see if you are experiencing any of these destructive issues. This exercise will help you identify your strengths and weaknesses.

Once you have identified a certain destructive emotion present in you, try to write it down and find a solution. Just the action of writing it down will help you bring one step closer to nirvana. In essence, getting the Traders mindset is getting to a place of profitability, peace and bliss. - 23200

About the Author:

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Develop your own Forex Trading System. Get Netpicks Forex Signals Free!

How to Easily Pay Off Your Debts, No Matter How Many Times You've Failed

By Sean Payne

A large number of people who are currently in debt have tried at least once to pay off their debts. Many of them have tried several times. Unfortunately, most of them have failed, ending up even deeper in debt than before.

What causes this? Why do they end up accumulating more and more debt? The answer can be found in the methods that they use to try to get out of debt. Those people who use additional loans to get out of debt are only temporarily fixing the problem. Debt reduction loans might work for a while, but eventually the habits that caused the problem with debt in the first place will sabotage them.

The best answer to the problem is to correct the underlying habitual behaviors that create the problem of debt. The easiest way to accomplish this is to use a debt payoff plan that won't let you continue in your overspending ways.

What are the steps of the best plan for getting out of debt and avoiding bad habits?

The first step is to create a buffer between you and going into additional debt. When you're stretched really thin financially, even a small financial emergency can make you go back to using debt. What do I mean by a buffer? I mean a small amount of savings, somewhere between $500 and $1000, depending on your situation. It should be enough to fix your car if it breaks, pay the plumber if a pipe bursts, or pay the bills if your paycheck is late or too small.

The second step is to incur no new debt. That means no debt consolidation loans, no second mortgages, or any other kind of loan. People who take out second mortgages in an effort to pay off credit card debt are substituting a secured loan for an unsecured debt. The problem with that it is that if you can't pay off your debt, you lose your house.

The third step is to make a plan to pay off all your debts. Realize that the order in which you pay off your debts can make a huge difference. If you do it wrong, you're at risk of losing your motivation to get out of debt. Do it right, and you'll pay off your debts quickly while becoming more and more enthusiastic about getting out of debt.

The next step is to work your plan. The best way to accomplish this is to make your debt repayment plan automatic. One way to do this is to use your bank's automatic bill payment service (most banks offer this service). One you set up this service, it will keep you from having to pay late fees, since your bills will be paid on time, every time. Most banks don't charge for their bill payment service, so this is a must-do item if you really want to pay off your debts.

The final step is to stick to your plan. After a while, you will have developed a little bit of momentum, and this will become easier. Once again, choosing the correct debt repayment plan can make a huge difference.

That's it: Now you know how to pay off your debts even if you have failed a dozen times. All you need is the correct approach. - 23200

About the Author:

Sean Payne has taught people about personal finance and how to get out of debt for over a decade. To get more information about how to pay off debt, check out Sean's informative free course on debt reduction management.

Money Management Can Make Or Break You

By Maclin Vestor

Many people have been through it all, they've lost money and made money in stocks, they've lost and made money in poker, and they've lost and made money in options, and they've even lost money and made money in gold. What separates the winners from the losers and the haves from the have-nots? What do people that go through those experiences ultimately learn from?

The fact is that it almost doesn't matter at all how good the method is, if you cannot manage your money well. In stocks although people who can read financial statements and charts, and understand if a stock is likely to go up, or do back testing on certain method and estimate a probability that stocks using that method went up in the past, it is difficult to pin point the exact odds. That makes managing your money more difficult. However, just because you can't know the exact probability, doesn't mean you can't use past results to estimate a probability range, and manage your money well. Lets just assume for a while that you could know the exact probabilities. If you know that you will win 3 times as much as you lose when you win, and you know that the win will take place half the time, do you know for sure that you will make money in the long run?

This is a trick question, you can never know with certainty that you will make money, but is it probable? Again, that still depends. How can this be? It's easy to say that if you invest $100, you will turn it into $200 (gaining $100) half the time, and you will lose $33 the other half, that in 100 one hundred dollar investments you can expect to make $5000, lose $1667 and net $3333. However, this fails to take into account how likely you are to be able to afford the $1667 in losses and maintain that $100 investment every time out of 100 times.

In other words, the $3333 net gain is theoretical, and takes absolute no consideration on how likely you are to be able to afford those 100 investments. What if you only had $100 and you bet it all, you have a 50% chance that you lose $33 of that 1000... what then? You can't simply make another $100 investment, So instead you have to make a $66 investment, now your win will be significantly less. If you lose yet again it will become even more difficult to get back to even. Although on paper this is a good investment, it is not a good investment without proper money management. You may have built a very safe car that drives straight, but if you are a bad driver you still could crash.

Unfortunately many people don't learn how to drive their financial investment vehicles, and instead rely on money managers, financial advisors, mutual fund owners, and company CEOs to do everything for them. This isn't a bad thing for those unable or unwilling to learn. However, the risk is not only that these people won't manage your money well, and not only that if they do, you still may pay them so much in fees and expenses that it's not profitable, but also that by handing the keys to your investment vehicle over to someone else, you lose control and you fail to learn anything. Although you may accomplish your goals with the help of these people, you also could do this yourself with a good trading system that uses good money management. - 23200

About the Author:

Maclin Vestor teaches about varioustrading systems and has a course coming soon on finding futures trading systems that may work for you.

Investing In Foreign Stocks For Better Returns

By Riz Goodman

Emerging companies are coming from the foreign markets like India and China so it is better to invest in these markets. There are number of ways to invest in the emerging foreign markets and these stocks will give you the better returns in the stock market as compared to the US stock market.

That said it used to be tough to buy stocks of a foreign company but now that has become very easy. The first option that you have is to check with your brokerage firm if they have the operations in other countries and if they can allow you to trade in the foreign stocks via your US account. Most brokerages have this facility. Another option is to make sure that you invest in the foreign stocks listed in the NYSE or the NASDAQ. These stocks reflect the underlying shares as they were listed in the home country of the company.

Foreign stocks denominated mutual funds and the country specific mutual funds is another way to invest in the stocks of emerging market countries. The best part of the whole deal is that then you can avoid any foreign stocks analysis and any other regulatory challenges and hurdles.

Currency devaluations and exchange rate fluctuations are the main risks which can impact your foreign investments. You will need to closely monitor them. Do proper research before investing in the emerging market stocks. The foreign markets can be challenging and risky but the fact is that they also provide better returns

Proper research and due diligence is the key here and that will mean digging more information about foreign companies. There are specific brokerage houses that provide research on foreign companies. You can do your own research by looking up for the foreign companies on the internet. Foreign markets are bound to provide better returns in the longer run. - 23200

About the Author:

The author gives information on how to buy foreign stocks and also writes about top 10 stocks to buy

A Bank Short Sale - My Only Option?

By Anthony Mauwer

A bank short sale is not the only choice we have to avoid foreclosure - but it is definitely better than some of the other possibilities. If a homeowner is already in this position, they are already dealing with intense financial anxiety from every angle. If approved for a bank short sale, much of this stress will be alleviated because they'll be in a great position to purchase another home.

It is extremely difficult for us as homeowners to accept the fact that our home may be lost, but if it's going to happen, avoiding foreclosure is the highest priority. It's important for us to understand clearly that a short sale is not the"only" way out, but it may be the "best" way out. If we foreclose, the lender can sue us, garnish our wages, put a lien on other property, and hound us for years. All this in addition to the destruction of our credit rating. With a bank short sale - if handled correctly, we're making an agreement with our lenders beforehand to settle most of these issues now.

Either way, for the layman, a bank short sale or foreclosure can be quite stressful due to all of the complexities involved. There are attorneys, lenders, accountants, complex forms, legal jargon, and the internal revenue service to deal with. On top of that the money is tight on every side. We've got to remember in this situation that all parties involved are trying to get as much of their money as they can - so we've got to be prepared for anything. Banks are well-known for dropping surprise requests at the last second. Don't allow yourself to be pushed around!

By having expert legal advice from the outset, we can avoid many of these last minute surprises. Don't be fooled into thinking you can complete this process without expert advice. A bank short sale involves many aspects of law relating to taxes, lending practices, and real estate. Be sure that you have access to professionals in "each" of these areas. There are services offered by teams of attorneys, accountants, and real estate professionals that will help you complete the entire process - and then get their fees paid by the lenders. As with any service, there are good ones and bad ones - so be careful - but there are some excellent services out available.

A bank is losing money with a short sale and are not necessarily enthusiastic about doing them. They avoid a foreclosure - yes, but their attitude is not to be considered enthusiastic. They can be difficult to deal with at times because they're trying to get back as much money as they can. For this reason they might not always move as fast as we want - although we know they can. Patience is a valued virtue here - so practice it and keep cool. If you've ever had to work with the government you know exactly what dealing with these banks will be like.

The bank short sale is stressful on all involved, but if we complete it successfully, we'll definitely be the winners in the end. Hopefully, we'll come out the other side with no unpaid taxes, no bankruptcy and no foreclosure. This is why a short sale is so much better than foreclosure. It's a tough process - yes, but in the end we'll still be in a great position to purchase another home. Completing the process prepares us for our new future. A bank short sale is not the only way out - but I'll take it over a foreclosure any day of the week. - 23200

About the Author:

Anthony Mauwer's free advice has helped many borrowers successfully complete a bank short sale. Be sure to check out his short sale blog for tips, advice, and information on how the bank short sale can best work for you.