Importance of Backtesting - What Is Backtesting?
The importance of Backtesting your trades could not be more paramount in your trading career. Apart from having a solid mindset, you need a solid strategy. Your strategy is only valid if it has been time-tested, meaning it can work across all market conditions over the years.
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What is backtesting?
Backtesting is the process of testing a trading strategy or system using historical data to see how it would have performed in the past.Ā
It is an important step in developing and evaluating a trading strategy, as it allows traders to see how their strategy would have performed under different market conditions and to identify any potential issues or areas for improvement.
There are several benefits to backtesting a trading strategy.
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Firstly, backtesting allows traders to evaluate the robustness of their strategy, by determining its performance over a large sample of historical data. This can help traders to identify patterns or trends that may...
Think Like The 5% - Market & Mindset Consistency
In the realm of trading, a stark statistic often captures the attention of newcomers and veterans alike: 90 to 95% of traders fail. This figure, while daunting, shifts the focus onto a critical question that most in the trading community overlook. Instead of dwelling on why the vast majority fail, a more productive inquiry is to explore what the successful 5% do differently. Their secret? Consistency. But not just any form of consistencyā€”there are two distinct types that set them apart: the consistency in action, particularly in journaling and documenting trades, and the consistency in mindset towards trading itself.
Defining Success and Consistency in Trading
Success in trading doesn't necessarily equate to winning every month. Instead, it means sustaining the energy to improve daily, becoming an elite performer through an unwavering willingness to learn. This perspective requires us not to belittle another's success or to underscore the challenges of achieving consistency in th...
Resiliency Over Luck: The Trader's Advantage
Luck can smile on anyone, but it's resilience that truly separates those who thrive from those who merely survive. Consider two scenarios: one, where an individual wins the lottery, and another, where someone builds their success as an entrepreneur. The former relies on chance, while the latter embraces resilienceā€”a trait that can withstand and recover quickly from difficulties.
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Entrepreneurship Resilience: A Skill to be Developed
In the world of 9-to-5 jobs, winning the lottery might seem like the ultimate stroke of luck. However, entrepreneurs understand that creating their opportunities is far more empowering than relying on chance. They make their "lottery" and print success at will. The study of Powerball winners sheds light on the divergent paths these two individuals take: a 9-to-5 worker might spend a $1,500 windfall, but an entrepreneur will use it to make that sum grow.
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The Curse of the Lottery vs. Long-Term Wealth of Entrepreneurs:
The stories of lotter...
Getting in Sync with the Markets: The Key to Successful Trading
In the fast-paced world of trading, staying in sync with the markets is not just a luxury ā€“ it's a necessity. An out-of-sync mind is a non-profitable trader, and in this blog post, we'll explore why it's crucial to be in harmony with the markets and how to identify and rectify when you're not.
Why is it Important to be in Sync with the Market?
An Out of Sync Mind is a Non-Profitable Trader
Trading success is not just about strategies and analysis; it's equally about mental alignment with the market dynamics. When you're out of sync, you're more likely to make impulsive decisions, miss trades, and incur excessive losses.
Signs of Being Out of Sync
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Missed Trades, Increased Losses: If you find yourself consistently missing opportunities or experiencing more losses than usual, it's a clear sign of being out of sync.
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Breaking Soft Rules: Deviating from your trading plan's soft rules indicates a lack of discipline and focus.
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Overleveraging: Risking more than nece...
Does Trading Get Easier?
A pondering thought: Does Trading Get Easier?
Short answer is yes. The deeper answer is no.
Why?
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It's easier to get into trading, and harder to stay trading.
For more info on this check out our latest podcast!
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Show Notes:
Related Episodes:
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Aloha! We are Glenn & Reid, founders of Hawai'i Trading Academy.
Our mission: Cultivate & sustain profitable traders.
Our ethos: Be honest and transparent as we build our content off of what we consider three pillars of successful trading: Risk Management, Edge, and Psychology.
For more information about Trading Education in Hawaii, visit our links below:
Bootcamp & Trainings: https://training.hawaiitradingacademy.com/store
Website: https://bit.ly/HawaiiTrading
Podcast: https://spoti.fi/3wfbqF7
Youtube: https://bit.ly/HTAtube
Instagr...
Trade60 - Building Good Trading Habits
Trade60: The Ultimate 2024 Challenge for Trading Success
Are you ready to take your trading game to the next level in 2024? Trade60 is the challenge you've been waiting for! Over the course of 60 days, you'll develop the essential habits of successful traders and build a strong foundation for long-term success.
The Four Pillars of Trade60:
1. Hydration - Fueling Your Success:
Trade60 Rule: Drink a minimum of half a gallon of water daily (64 ounces).
Importance to Trading: Staying hydrated is not only crucial for overall health but also impacts cognitive function. As a trader, mental sharpness is key, and dehydration can impair decision-making abilities. By prioritizing hydration, you ensure that your mind is in its optimal state for analyzing markets and making strategic trades.
2. Movement - Energize Your Body:
Trade60 Rule: Engage in at least 45 minutes of movement daily (a workout or a walk).
Importance to Trading: Physical activity has been linked to...
Setting 2024 Goals
Crafting a Resilient Path: Insights from Episodes 58 and 59
As we usher in the end of the year, our recent podcast episodes have delved deep into the art of setting and achieving goals, providing a roadmap for those seeking purpose and intention as they navigate the journey ahead. In this blog post, we'll explore the highlights from Episodes 58 and 59, which focus on trading through the holidays and culminate in a powerful discussion on ending the year with goals and intentions.
Episode 58: Trading Through the Holidays - Missing Out on 1.28%
In Episode 58, we examined the impact of trading through the holiday season, specifically addressing the consequences of missing out on a 1.28% gain. The discussion set the stage for a profound exploration of tackling goals logically, prompting Reid to pose a crucial question to Glenn: How does one go about it?
Framework of Setting Goals: Episode 59 - Ending the Year with Goals and Intentions (Part 2)
1. Set Goals with ...
Trading Through The Holidays
Trading EnvironmentĀ During the Holidays: Sacrifice, Discipline, and Seasonal Strategies
As the holiday season approaches, the financial markets often witness a shift in dynamics. While many people tend to slow down and relax, successful traders know that the markets never take a break. In this blog post, we'll explore the importance of discipline, sacrifice, and strategic planning during the holidays, shedding light on the seasonal trends in the stock market.
Setting Goals and Making Sacrifices: Setting trading goals is the first step towards success. However, the crucial question to ask yourself is, "What are you willing to give up to achieve these goals?" The holiday season, with its distractions and festivities, can be a challenging time for traders. It's essential to maintain focus and avoid the common tendency to slack off.
High Tolerance for Success: Drawing a parallel with athletes, traders must adopt a mindset of high performance and low tolerance for lazines...
Gambling Trader Or Trading With Risk Management?
In the thrilling world of trading, two distinct personas often emerge: The Gambler and The Risk Manager. These two characters couldn't be more different in their approach to financial markets. While The Gambler chases the next big win with wild abandon, The Risk Manager takes a methodical and calculated path to success. In this blog post, we'll explore the stark differences between these two trading personas and why, in the end, it's the Risk Manager who usually comes out on top.
The Gambler: YOLO and What If?
The Gambler is all about the excitement of trading. They embrace the "You Only Live Once" (YOLO) mentality, constantly looking for the next big play that could turn their fortunes overnight. They're often blinded by the allure of big profits and only see the positive side of the equation ā€“ the "What If." While optimism is essential in trading, The Gambler tends to disregard risk and throw caution to the wind.
The Risk Manager: Calculated and Neutral
On the...
Proactive VS Reactive Trading Decisions
Proactive vs. Reactive Trading Decisions: Striking the Balance for Success
Trading in the financial markets is a dynamic and challenging endeavor that demands a delicate balance between proactive and reactive decision-making. Proactive decisions involve creating or controlling a situation by causing something to happen, while reactive decisions involve responding to a situation as it unfolds. In the world of trading, the choice between these two approaches can have a significant impact on a trader's success and longevity in the market.
Proactive Trading: The Path to Preparedness
Proactive trading is akin to being prepared for battle. It involves a series of deliberate actions and practices that traders undertake before they even think about entering the market. Here's what proactive trading looks like:
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Maintaining a Calm State of Mind: Successful traders start by clearing their minds of distractions and emotional turbulence. They understand that emotional deci...
