1. Failure to have a trading plan in place before a trade is executed.
2. Inadequate trading assets or improper money management.
3. Expectations that are too high, too soon.
4. Failure to use protective stops.
5. Lack of “patience” and “discipline.”
6. Trading against the trend–or trying to pick tops and bottoms in markets.
7. Letting losing positions ride too long.
8. “Over-trading.”
9. Failure to accept complete responsibility for your own actions.
10. Not getting a bigger-picture perspective on a market.

I think this is a very good list. I dedicated a considerable amount of my book (and by extension my course) to developing a good trading plan, and many aspects of Jim’s list tie in with the things I talked about there. I have written previously on the subject of “protective stops“, so I won’t go into that again here. You can also see my recent post about traders letting losers run too long.

For me, #9 may be the biggest one of them all – at least for some people. Too many traders want to blame poor performance on someone else.

I will contend with Jim on the trading with/against the trend in #6 as there are systems that do quite well operating in a counter-trend (often called mean reversion) fashion. That, though, is different from trying to pick tops and bottoms, which usually ends in disaster.

• Broker rankings for the equity traders out there (HT to @mymoneyblog)
• Just started reading Schwager’s new Market Wizards book. Look for a write-up in the future.
• For those who use price distribution (Market Profile) charting, take a look at the monthly for EUR/USD vis-a-vis the January POC. #
• Gold now back to about where it was at the end of QE2. Make sense since Twist is not a money supply growing operation, and neither is LTRO. #
• Learn a Lesson from JP Morgan
• Basic Things You Need To Know About The CFA But Were Afraid To Ask
• I don’t always agree with Brusca on things, but this is one case where I think he and I are on the same page.
• A while back I did a review of a book which focuses on George Lindsey’s methods, the primary one of which Carl Futia talks about here.
• Recessions Are Voluntary (Not Controlled by Politicians)
• Is the Market a Battlefield for You?

• So You Wanna Be A Trader
• The story of a former Wall Streeter now part of the Occupy movement: Leaving Wall Street
• On Covestor, Copycat Traders Auto-Buy as Mirror Trading Takes Off
• How You See Affects How You Trade
• Blasphemy from @PeterLBrandt? Why high/low/close bar charts have become worthless
• For those interested in the supposed high failure rate in trading (suggested at 95% or more), give this article a read… The Bell Curve Is A Myth — Most People Are Actually Underperformers
• I’m a member of this “award-winning IFR Markets Forex desk”. Reuters creates a Buzz with new intraday FX News
• Intelligence Is Overrated: What You Really Need to Succeed
• When is the best time of day to trade forex?
• How The Power Of The Masses Drives The Market

• Emotions, Decisions and Discipline
• Sell in May?
• Four Quick Ways To Get Better At Trading
• The truth about stop hunting
• Trading and the Null Hypothesis
• This isn’t strictly about trading, but since education is a focus here, it’s worth sharing … What I’ve Learned About Learning
• It’s as if this author has been reading my stuff. Will the Dollar Be Replaced As a Reserve Currency?

• Do you involve others in your trading? … Trading Alone
• Learning To Let Go Of Past Trades
• 15 Of The Most Spurious Correlations In The Stock Market
• From the data: One reason traders struggle
• Do you not know, or do you not do what you know? … Trading Mistakes
• Don’t forget about the month-end iPad3 giveaway open to Essentials of Trading newsletter subscribers.
• Prospects for USD/JPY looking forward
• Currensee is Hiring!
• ‘Real’ investors eclipsed by fast trading
• 4 Easy Tips to Prevent Recency Bias
• Seems real estate investors need to learn lessons from those in the financial markets. (HT to Michael Covel) Falling home prices drag new buyers under water

First Prize: A new 16GB iPad 3 ($579 value)
Second Prize: 4 hours of 1-on-1 coaching with me ($400 value)
Third Prize: 2 hours of 1-on-1 coaching ($200 value)
(I’m open to substitutions if the winner wishes to pick something else of comparable value)

The only requirement for eligibility is that you be a subscriber to the newsletter on April 30th. Signing up is quick and easy. Just go to www.theessentialsoftrading.com/nl

As an added incentive to sign up, there is also a referral feature subscribers can take part in to increase their chances to win a prize. Details will be sent once you’ve signed-up.

Let me know if you have any questions.

PS: An archive of my past weekly newsletters can be found at here.

I’ve pull the following set of numbers on trades which include USD pairs (no crosses), of which my data contains over 2 million records.

Winners: 1,280,459
Average Profit: $60.03
Average Pip Profit: 28.20

Losers: 752,614
Average Loss: $105.14
Average Pip Profit: 63.88

Notice there are many more winners than losers. They represent 63% of all trades. These are retail traders, so it just goes to show that you don’t want to get too crazy about looking to trade against the collective.

Notice also that the average loss is about 75% higher than the average profit. That completely offsets the 63% win rate and results in a negative overall expectancy for the group.

It must be noted, however, that that average loss appears to be due to holding on to losers too long rather than risking too much money. Notice how the average loss in pip terms is more than double the average gain. Traders actually had lower pip values on their losing trades than on the winning ones (on average). They just held on too long.

Here is the problem is for most traders. They are quick to take profits and slow to take losses. This is referred to as the Disposition Effect in Behavioral Finance research.

Much more analysis of the data needs to be done, but these results are very interesting nevertheless.

• My first ever market participation was a Dow Chemical DRIP using my paper route money. Do kids even still deliver newpapers?… Investing in Dividend Reinvestment Plans (DRIPS)
• The Goal is Not the Driving Force
• Looking at yield spreads to understand EUR/USD
• If you haven’t already, sign up for my weekly email newsletter for a chance to win an iPad3.
• Apparently the meek shall inherit the trading profits. Q&A with Susan Cain on the Power of Introverts
• Essentials of Trading 6th Anniversary
• How correlations change

It’s kind of a humbling thing, now that I think about it.

I like to do something special to mark important dates. This anniversary is no different. So here’s what I’m going to do.

Between now and Monday (April 23), anyone who owns the book can enroll in the supporting course for only $37, which is a MASSIVE discount. The course is an excellent complement to the book, and includes a fair amount of additional bonus and supporting material.

If you already own a copy, all you need to do is send me a photo of you holding the hard copy version of the book, or if you have the Kindle edition, a picture of you holding your device with the cover page of the book showing to author @ theessentialsoftrading.com. When I get it I will send you a special discount code to sign up for the course.

Now, if you don’t already own The Essentials of Trading, have no fear. If you purchase a copy online between now and Monday and send me a copy of the receipt, I will send along the discount code, so you can get in on this as well.

Nice and simple. Right?

I look forward to seeing your photos!

• Never Buy Stock Again!
• Here’s a shocker. Earnings expectations are often way off. 12-Month Forward Earnings, What Do They Predict?
• Getting ready to start answering some trading questions
• Tips to keep the trading fires burning
• Looks like the forex volume train is still chugging along. Uncertainty pushes FX volumes above $5 trillion
• I once did a panel discussion with the subject of this interview. Emotional Trading: Why Traders Need to Avoid Hope
• RT @alphatrends: RT @ivanhoff Mean-reversion works better during corrections… Ummm, aren’t corrections mean reversions? #
• Technical analysis in manipulated markets