Infinite Wealth - Gain Financial Freedom, Learn How to Become Infinitely Wealthy

This is the article written by Dr. Van Tharp. He also conducts an workshop on this topic.

In the mid-1990s, I decided to start modeling wealth processes. What was true wealth?  What did it take to really become wealthy?  I started asking traders if they were wealthy and ironically, just about every one of them said "No, I’m not wealthy"— no matter how much money they had.  When I asked each of them to define what it would take for them to become wealthy, can you guess how they answered that question?  Almost always, wealth meant having about 10 times more money than they already had—regardless of their net worth at the time. If they were worth $10,000, then $100,000 would make them feel wealthy but if someone was worth a million, then they’d need $10 million to feel wealthy.

Strangely enough, if you put ten times your current net worth to work at a reasonable rate of return, you could earn your current net worth every year.  Wouldn’t that make you feel wealthy?  Well, people don’t tend to realize that or think that way so that really got me thinking about the concept of wealth.  Maybe wealth had nothing to do with how much money you have. Perhaps it really has to do with freedom and the ability to live without having to work.  After all, what good is living in a $10 million dollar house if you need to make $2 million before taxes just to pay the mortgage bill on it – that’s a real problem, not real freedom.

Also around this same time period, I played Robert Kiyosaki’s Cashflow 101 game for the first time. I was stunned! Although I had already modeled multimillionaires, suddenly I was learning many new things that I had never even thought of or heard about before playing that game. What I learned changed my life. Following the plan I developed from those ideas, I became "infinitely" wealthy very quickly– all while I maintained my standard of living. And you can do it too.

The strategy is easy to teach and to follow so I decided I must teach it at a workshop.  For the first three times we held the workshops in 1997, Robert Kiyosaki co-taught the Infinite Wealth Workshop with me.  That arrangement ended, however, when he became famous after his book Rich Dad, Poor Dad came out.  I continued to teach the workshop for several years with a number of different guest speakers over the years. After a while, however, I realized that we were spending a lot of time and energy focusing on infinite wealth and not enough time supporting the needs of our core customers - traders.   Over time also, some of the techniques that our guest speakers had taught were no longer viable as the economy, markets, and regulations changed.  We stopped teaching the Infinite Wealth Workshop in the early 2000s and refocused our company on traders

Since we stopped teaching that workshop, we have continued to touch upon some of the wealth principles here and there at our trading workshops. Many of the core infinite wealth principles from the original workshop, however, remain highly relevant (yes, relevant for traders) and those principles have also remained very valuable.  In addition, I have gained more insights into the concepts of wealth and now believe that building real wealth is an inner process – not primarily an external one as I had thought before.  I have been studying a lot about this in the last year or two and what we have developed is exactly what most traders need.

As a result, I am bringing back Infinite Wealth in 2016 in which I will emphasize the psychological principles of wealth rather than any technical strategies. Specific strategies can change over time and most people to fail follow them anyway. But if you have inner wealth, then outer wealth becomes easy.  The psychological principles of wealth or inner wealth, however, remain constant and actually, they will lead you to the “right” technical strategies.  We will call this course the “New Infinite Wealth Workshop” and it will be one of our core workshop offerings.   

Think about the following for a moment:  If you stopped working today, how many months would you survive maintaining your current standard of living?  Three months?  Maybe five months? 18 months? Perhaps 10 years?   Or, could you last indefinitely – for the rest of your life?  Once you can maintain your level of living for the rest of your life, then you are infinitely wealthy.  Very few people say they could stop working for the rest of their lives. 

Where are you at the moment?  Do you feel like you are on a treadmill going nowhere? Imagine what it would be like to never have to work again.  What would you do?  How would you spend your days?  Anyone can achieve infinite wealth - no matter what your income is or how old you are. In fact, we know of minimum wage workers who became infinitely rich while never earning more than the minimum wage.   To achieve this status, those people needed to learn to make new choices about how they were going to lead their lives and they needed the discipline to carry out their choices.  You can learn about those choices and what it takes to follow them through.

Does this seem hard to believe?  It did for me too initially.  I had been working for a long time and trying to build my net worth. When I learned about the infinite wealth strategy for the first time in the mid-1990's, I still had lots of debt. I had a positive net worth, but from a financial standpoint, I still had to work at my company to earn the paycheck.  After grasping the power of infinite wealth principles, however, I completely rearranged my financial situation over the next six months and reached a position where I didn’t have to work anymore.  Now I love what I do, so I have continued my work even though I’m past the normal retirement age.  My point is that I am financially free and I don’t have to work – I choose to work.  I want to show you how to do this in the new workshop --- and help you achieve it easily by focusing on your psychology around wealth. 

This is your personal invitation to join a group of elite people who want to build infinite wealth. The infinite wealth strategy is actually contained on this page. You’ll want to read every word because it will change your life.

Derivative trading Basics

1. What are Derivative Instruments? A derivative is an instrument whose value is derived from the value of one or more underlying, which can be commodities, precious metals, currency, bonds, stocks, stocks indices, etc. Four most common examples of derivative instruments are Forwards, Futures, Options and Swaps.


2. What are Forward Contracts? A forward contract is a customized contract between two parties, where settlement takes place on a specific date in future at a price agreed today. The main features of forward contracts are They are bilateral contracts and hence exposed to counter-party risk. Each contract is custom designed, and hence is unique in terms of contract size, expiration date and the asset type and quality. The contract price is generally not available in public domain. The contract has to be settled by delivery of the asset on expiration date. In case the party wishes to reverse the contract, it has to compulsorily go to the same counter party, which being in a monopoly situation can command the price it wants.

3. What are Futures? Futures are exchange-traded contracts to sell or buy financial instruments or physical commodities for a future delivery at an agreed price. There is an agreement to buy or sell a specified quantity of financial instrument commodity in a designated future month at a price agreed upon by the buyer and seller.To make trading possible, BSE specifies certain standardized features of the contract.

Importance of Trading Plan (Business Plan for Trader)

I’ve had the question of whether I have a trading plan template or anything like that I can provide or recommend a couple of times in recent weeks. In short, the answer is no, but that’s because I’m hesitant to recommend one.

You see trading plans necessarily must be very personalized things. That makes the idea of a specific template something difficult to contemplate. A template is rigid, and as such isn’t going to work for everyone or even necessarily for any given trader all the time.


What’s a Trading Plan?

The starting point of effective trading is the Trading Plan. One can think of it like a Business Plan for the trader. Just like the Business Plan, the Trading Plan is a specific outline of current status, objectives for the future, and the expected path to reach those goals.

In plain language, the Trading Plan is a set of rules governing the traders efforts in the markets. It brings together all of the what’s, when’s, where’s, why’s, and how’s of trading in an all encompassing definition of what the trader is seeking to accomplish and how he/she will go about trying to make it happen. The Trading Plan is the starting point for every trader looking to succeed in the markets.

Please note that while we may be speaking here in terms of the trader as an individual, everything presented is equally applicable to a fund or company environment. The Trading Plan still must be constructed, albeit from a different perspective.

Why does one need a Trading Plan?

The very simple answer is that it allows the trader to measure their performance in a very clear, straightforward manner, on a running basis. Just as one uses a map to both establish the path to be taken and to judge the progress which has been made, the Trading Plan defines the trading system and gives the trader benchmarks for use in judging their execution of it.

Be aware that a Trading Plan and a Trading System are two different things. The latter is, in brief, the way one determines entry and exit points—the timing of trades, if you like. The former is more over-reaching in that it includes the Trading System, plus other important things like money management.

What is the purpose of the Trading Plan?

There are several reasons to have a Trading Plan, but probably the biggest is the way it simplifies things. A good, well thought out Trading Plan takes a great deal of excess thinking out of the trading process. Decision-making is very clear-cut. The Plan defines what is supposed to be done, when, and how. Trading can be a very emotionally charged venture. That can lead to all kinds of less-than-optimal behavior. The Trading Plan takes that out of the equation. Just follow the plan.

The Trading Plan is also very, very handy in helping one to understand the reasons for performance problems. If one is suffering from losses beyond what would be expected (as defined by the Plan), there are only two possible reasons. Either the Plan is not being followed, or the there is a problem with the trading system. That’s it. Without the Trading Plan, resolving performance issues is a much more complicated process.

While a Trading Plan is intended to help the trader succeed in the markets, having a Trading Plan is not a guarantee of generating profits. A Plan is only as good as the components in it.

Rules of risk management - By D. Mohini

Rules of risk management
Some principles to keep your trading risk at the minimum level


The stockmarket is a place where more investors lose rather than make money. However, losses can be reduced or
even eliminated by following some simple principles of risk management. We will discuss a few of these below.
These principles apply equally to anyone who is already trading in the market, or is thinking of doing so.
The first one goes against the mindset of most traders, as they get into a trade thinking only of the profit they
would make on it. The rule is to not think of the profits you can get out of your trades, but only of the losses. It is
much better to plan your reactions to a loss before entering into the trade. Decide on what you would do if the
stock goes against you, losing 5%, or 10%, or even 20%. It is better to assume that the market is going to go against
you when entering into a trade, as you are then prepared to face the eventuality.
The second principle is to use a stop loss. Most professional traders employ stop losses between 3 and 7% of their
entry price. A stop loss restricts your loss to an acceptable amount. Placing stop losses can now be done through
the stock exchanges’ ordering system. Stop losses are a vital part of trading. Even the world’s most successful
traders expect more than half their trades to wind up with a loss. It is therefore critical to keep losses at a
minimum on the unsuccessful trades. Here’s an example of a stop loss – you buy a stock at Rs. 200 and decide to
use a 5% stop loss. This means that you wish to restrict your loss on the trade (if it goes against you) to 5% of your
entry price, i.e. Rs. 10. You would then place a stop loss below Rs. 190. This means that your stock will get sold if
the price of the stock falls under Rs. 190.
Next, don’t enter the market without a clear plan. Following a tip does not constitute a plan. The plan must
include your reason for picking a stock, your stop loss and your exit strategy. Picking an exit is not easy, but should
nevertheless be planned in advance. One simple strategy is to use a trailing stop on profitable trades. This means
that you keep raising your stop as the price of your share goes up.
Another element of risk reduction is diversification. Portfolio risk can be reduced substantially through
diversification, especially in stocks which behave differently from each other. Never bet everything one trade.
One sin that most traders are guilty of is overtrading. Many speculators take to day-trading as they can play with a
larger block of shares since they do not have to pay for them. Their thinking is that the more the stock you own,
the bigger the profit. While this is true for profitable trades, the losses will also be larger on the losing trades. Day
traders are invariably hurt very badly whenever an unexpected development causes a much larger movement
against them than they had originally anticipated.
These rules of risk management may make the market seem a little less exciting by limiting your position size and
forcing you take an early loss on stocks you like. However, bear in mind that the most successful traders always
use these rules, and if they need such rules, so do you.

Rules

Rules of risk management
Some principles to keep your trading risk at the minimum level
The stockmarket is a place where more investors lose rather than make money. However, losses can be reduced or
even eliminated by following some simple principles of risk management. We will discuss a few of these below.
These principles apply equally to anyone who is already trading in the market, or is thinking of doing so.
The first one goes against the mindset of most traders, as they get into a trade thinking only of the profit they
would make on it. The rule is to not think of the profits you can get out of your trades, but only of the losses. It is
much better to plan your reactions to a loss before entering into the trade. Decide on what you would do if the
stock goes against you, losing 5%, or 10%, or even 20%. It is better to assume that the market is going to go against
you when entering into a trade, as you are then prepared to face the eventuality.
The second principle is to use a stop loss. Most professional traders employ stop losses between 3 and 7% of their
entry price. A stop loss restricts your loss to an acceptable amount. Placing stop losses can now be done through
the stock exchanges’ ordering system. Stop losses are a vital part of trading. Even the world’s most successful
traders expect more than half their trades to wind up with a loss. It is therefore critical to keep losses at a
minimum on the unsuccessful trades. Here’s an example of a stop loss – you buy a stock at Rs. 200 and decide to
use a 5% stop loss. This means that you wish to restrict your loss on the trade (if it goes against you) to 5% of your
entry price, i.e. Rs. 10. You would then place a stop loss below Rs. 190. This means that your stock will get sold if
the price of the stock falls under Rs. 190.
Next, don’t enter the market without a clear plan. Following a tip does not constitute a plan. The plan must
include your reason for picking a stock, your stop loss and your exit strategy. Picking an exit is not easy, but should
nevertheless be planned in advance. One simple strategy is to use a trailing stop on profitable trades. This means
that you keep raising your stop as the price of your share goes up.
Another element of risk reduction is diversification. Portfolio risk can be reduced substantially through
diversification, especially in stocks which behave differently from each other. Never bet everything one trade.
One sin that most traders are guilty of is overtrading. Many speculators take to day-trading as they can play with a
larger block of shares since they do not have to pay for them. Their thinking is that the more the stock you own,
the bigger the profit. While this is true for profitable trades, the losses will also be larger on the losing trades. Day
traders are invariably hurt very badly whenever an unexpected development causes a much larger movement
against them than they had originally anticipated.
These rules of risk management may make the market seem a little less exciting by limiting your position size and
forcing you take an early loss on stocks you like. However, bear in mind that the most successful traders always
use these rules, and if they need such rules, so do you.

Rules

Rules of risk management
Some principles to keep your trading risk at the minimum level
The stockmarket is a place where more investors lose rather than make money. However, losses can be reduced or
even eliminated by following some simple principles of risk management. We will discuss a few of these below.
These principles apply equally to anyone who is already trading in the market, or is thinking of doing so.
The first one goes against the mindset of most traders, as they get into a trade thinking only of the profit they
would make on it. The rule is to not think of the profits you can get out of your trades, but only of the losses. It is
much better to plan your reactions to a loss before entering into the trade. Decide on what you would do if the
stock goes against you, losing 5%, or 10%, or even 20%. It is better to assume that the market is going to go against
you when entering into a trade, as you are then prepared to face the eventuality.
The second principle is to use a stop loss. Most professional traders employ stop losses between 3 and 7% of their
entry price. A stop loss restricts your loss to an acceptable amount. Placing stop losses can now be done through
the stock exchanges’ ordering system. Stop losses are a vital part of trading. Even the world’s most successful
traders expect more than half their trades to wind up with a loss. It is therefore critical to keep losses at a
minimum on the unsuccessful trades. Here’s an example of a stop loss – you buy a stock at Rs. 200 and decide to
use a 5% stop loss. This means that you wish to restrict your loss on the trade (if it goes against you) to 5% of your
entry price, i.e. Rs. 10. You would then place a stop loss below Rs. 190. This means that your stock will get sold if
the price of the stock falls under Rs. 190.
Next, don’t enter the market without a clear plan. Following a tip does not constitute a plan. The plan must
include your reason for picking a stock, your stop loss and your exit strategy. Picking an exit is not easy, but should
nevertheless be planned in advance. One simple strategy is to use a trailing stop on profitable trades. This means
that you keep raising your stop as the price of your share goes up.
Another element of risk reduction is diversification. Portfolio risk can be reduced substantially through
diversification, especially in stocks which behave differently from each other. Never bet everything one trade.
One sin that most traders are guilty of is overtrading. Many speculators take to day-trading as they can play with a
larger block of shares since they do not have to pay for them. Their thinking is that the more the stock you own,
the bigger the profit. While this is true for profitable trades, the losses will also be larger on the losing trades. Day
traders are invariably hurt very badly whenever an unexpected development causes a much larger movement
against them than they had originally anticipated.
These rules of risk management may make the market seem a little less exciting by limiting your position size and
forcing you take an early loss on stocks you like. However, bear in mind that the most successful traders always
use these rules, and if they need such rules, so do you.

Keys to Successful Day Trading

Keys to Successful Day Trading By Toni Hansen and Brandon Fredrickson
The market is an ever-changing entity, presenting us every day with different and unique scenarios. Nevertheless, the market is more or less a reflection of people's ideas and attitudes and while it is also true that no two people are alike, each and every one of us has something in common with someone else, whether it be the way we get out of bed in the morning or the foods we prefer to eat. Additionally, we tend to repeat actions such as preferring to brush our teeth at a certain time of day or making sure we try to catch the Thursday night prime time television shows. No matter which angle you look at it from, humans are creatures of habit and this tendency gets reflected in stock movement. It's what makes technical analysis a reliable and profitable way to trade.

The ability to adjust to changing market circumstances is just one of the traits of a successful trader. In truth though, there are quite a few. Something that I've found helpful is taking the time to look at other successful traders and trying to identify characteristics that may have contributed to their success. In addition to being able to adapt there are about 8 more things I have observed which include the following:
1. They stay neutral;
2. They have a business plan;
3. They keep a journal;
4. They focus on 1 to 3 techniques that suit them well;
5. They are great money managers;
6. They are comfortable with risk and uncertainty;
7. They accept personal responsibility for all of their trading action; and
8. They use risk capital to trade.

19 Golden Trading Rules

1. Trade like a guerilla warrior. You must learn to adapt quickly to changes. If the winning side is changing, don't hesitate to join the new party and to commit all your forces to this side (capital ,mental, emotional)... until the market conditions change. Don't get married to trades.

2. Be disciplined Create a game plan then stick to it. A trade does not simply consist of a position. It consists of a position plus reasons for having the position plus a stop loss level plus profit taking levels. In the long run your discipline will save you when markets get rough.

3. Buy high -> Sell higher - Sell Low -> Buy Lower. Do not try to bottom fish or pick tops. When you think you know the trend then follow it.

4. Think big picture but trade like a technical analyst. You must understand the fundamentals behind your investment ideas but you need to understand the Technical Analysis too. When your fundamental and technical signals point to the same direction... you have a good chance to have a winning trade.

5. Do not use excessively tight stop losses. Spend more time identifying a good entry point. Be patient. Give some freedom to the market. Place your stop losses carefully.

6. Hit your stops. The first stop is the cheapest stop on a losing position. Do not follow the temptation to "hang onto" a losing position that has gone through your stop loss level. It might work a few times but one day you will be hammered if you trade without discipline.

7. In a Bull market... Be Long or Neutral - in a Bear market... Be Short or Neutral. A lot of people forget this rule and trade against the trend by calling for short term changes in market conditions. This usually causes psychological imbalance and frequently leads to losses.

8. Go for the most powerful market trend. Do not focus too much on markets where the trend is not strong enough or the market is range bound or choppy. Commit your forces to the stronger trend.

9. Accept losses they are part of the game. Prepare yourself mentally and emotionally for this eventuality. Take some time off and come back fresh if you have been hit hard. Do not fight with the trade, curse the market or make some bargain with yourself (... if the market goes to my initial level I will get out... ! ).

10. Resist the urge to trade against the trend too early. The trend is usually right (fundamentally). Be patient. Wait for the trend to turn. When the fundamentals and technicals are turning to the other direction, wait a bit longer then enter.

11. Never add to a losing position. This is a recipe for disaster. Just add to winning positions especially when the market is retracing.

12. Do not make a winning position lose. Use trailing stop losses. You must learn to take profits.

13. Bear markets are more violent than bull markets. You can trade bear markets with smaller positions. Expect violent retracements so get in the habit of taking profits.

14. Keep all your technical analysis simple. Use simple support and resistance, Fibonnaci retracement and reversal days. A good tip: When yesterday's daily trading range is the smallest of the previous last 11 days trading range...be ready for a big move and some volatility.

15. Be aware of market liquidity at all times. Assets do not just have prices. They have liquidity levels too, and just as prices change so too does liquidity. Illiquid assets do not trade in the same way as highly liquid assets. Only trade lower-liquidity assets if there is sufficient compensation for the lack of liquidity and you are a true expert in the asset class.

16. Be intellectually honest. When you are wrong admit it , learn from it and go on to the next trade. The market rewards intellectual arrogance with losses and pain. If you want to stick to your point of view no matter what the evidence may be to the contrary… become a politician.

17. Wall Street climbs on a wall of worry. Be aware that the most likely time for a bull market to end is when everyone is bullish and the bottom of a bear market occurs when everybody is bearish. When everyone is on the same bandwagon… be careful and get ready to get out.

18. Be aware of psychological biases in the markets. Bond traders tend to make most money as economies slow and dip into recession. Stock traders tend to make most money when the economy booms. So many bond market participants are always pessimistic and many stock analysts are perpetual optimists. Try to remain objective and observe which market commentators appear objective too.

19. Be patient. The more profound your ideas the longer it will take for others to see them as well and thus the longer it will take for markets to move your way. Be patient and give yourself and your trades time.

Time Tested Classic Trading Rules for the Modern Trader to Live By

Jayant's Market outlook for 12th Aug, 08 - Following the trend in US and European markets the indian markets should show moderate decline. Tech Mahindra looks good buy, with Stop loss at 700
Time Tested Classic Trading Rules for the Modern Trader to Live By
By Linda Bradford Raschke,

This is a list of classic trading rules that was given to me while on the trading floor in 1984. A senior trader collected
these rules from classic trading literature throughout the twentieth century. They obviously withstand the age-old test
of time.
1. I'm sure most everybody knows these truisms in their hearts, but this list is nicely edited and makes a good read.
2. Plan your trades. Trade your plan.
3. Keep records of your trading results.
4. Keep a positive attitude, no matter how much you lose.
5. Don't take the market home.
6. Continually set higher trading goals.
7. Successful traders buy into bad news and sell into good news.
8. Successful traders are not afraid to buy high and sell low.
9. Successful traders have a well-scheduled planned time for studying the markets.
10. Successful traders isolate themselves from the opinions of others.
11. Continually strive for patience, perseverance, determination, and rational action.
12. Limit your losses - use stops!
13. Never cancel a stop loss order after you have placed it!
14. Place the stop at the time you make your trade.
15. Never get into the market because you are anxious because of waiting.
16. Avoid getting in or out of the market too often.
17. Losses make the trader studious - not profits. Take advantage of every loss to improve your knowledge of market
action.
18. The most difficult task in speculation is not prediction but self-control. Successful trading is difficult and frustrating.
You are the most important element in the equation for success.
19. Always discipline yourself by following a pre-determined set of rules.
20. Remember that a bear market will give back in one month what a bull market has taken three months to build.
21. Don't ever allow a big winning trade to turn into a loser. Stop yourself out if the market moves against you 20%
from your peak profit point.
22. You must have a program, you must know your program, and you must follow your program.
23. Expect and accept losses gracefully. Those who brood over losses always miss the next opportunity, which more
than likely will be profitable.
24. Split your profits right down the middle and never risk more than 50% of them again in the market.
25. The key to successful trading is knowing yourself and your stress point.
26. The difference between winners and losers isn't so much native ability as it is discipline exercised in avoiding
mistakes.
27. In trading as in fencing there are the quick and the dead.
28. Speech may be silver but silence is golden. Traders with the golden touch do not talk about their success.
29. Dream big dreams and think tall. Very few people set goals too high. A man becomes what he thinks about all day
long.
30. Accept failure as a step towards victory.
31. Have you taken a loss? Forget it quickly. Have you taken a profit? Forget it even quicker! Don't let ego and greed
inhibit clear thinking and hard work.
32. One cannot do anything about yesterday. When one door closes, another door opens. The greater opportunity
always lies through the open door.
33. The deepest secret for the trader is to subordinate his will to the will of the market. The market is truth as it
reflects all forces that bear upon it. As long as he recognizes this he is safe. When he ignores this, he is lost and
doomed.
34. It's much easier to put on a trade than to take it off.
35. If a market doesn't do what you think it should do, get out.
36. Beware of large positions that can control your emotions. Don't be overly aggressive with the market. Treat it
gently by allowing your equity to grow steadily rather than in bursts.
37. Never add to a losing position.
38. Beware of trying to pick tops or bottoms.
39. You must believe in yourself and your judgment if you expect to make a living at this game.
40. In a narrow market there is no sense in trying to anticipate what the next big movement is going to be - up or
down.
41. A loss never bothers me after I take it. I forget it overnight. But being wrong and not taking the loss - that is what
does the damage to the pocket book and to the soul.
42. Never volunteer advice and never brag of your winnings.
43. Of all speculative blunders, there are few greater than selling what shows a profit and keeping what shows a loss.
44. Standing aside is a position.
45. It is better to be more interested in the market's reaction to new information than in the piece of news itself.
46. If you don't know who you are, the markets are an expensive place to find out.
47. In the world of money, which is a world shaped by human behavior, nobody has the foggiest notion of what will
happen in the future. Mark that word - Nobody! Thus the successful trader does not base moves on what
supposedly will happen but reacts instead to what does happen.
48. Except in unusual circumstances, get in the habit of taking your profit too soon. Don't torment yourself if a trade
continues winning without you. Chances are it won't continue long. If it does, console yourself by thinking of all the
times when liquidating early reserved gains that you would have otherwise lost.
49. When the ship starts to sink, don't pray - jump!
50. Lose your opinion - not your money.
51. Assimilate into your very bones a set of trading rules that works for you