ADX Indicator

At first sight, it seems like a "too complicated to follow" entity, but is actually a wonderful indicator to follow especially for short term trades.
The only book which we found to truly explain its essence was
"ADXcellence: Power Trend Strategies [Charles B. Schaap]".

ESSENTIAL ROAD MAP TO MEMORIZE FOR THE STOCK MARKET

We all know that a trend exists between two trend reversals.
It is therefore important to identify a trend reversal first, and then keep following it till the next reversal.
Any good trading strategy should thus consider three essential features:

• Change in the momentum of the price: Early indication of impending reversal
• Change of price direction: Trend Reversal
• Continuing movement of price in the new direction: Trend 

BASIC TIPS TO USE OSCILLATORS

When using the oscillators, general trend of the prices has to be considered.
One simple yet effective way to use them efficiently is:

• When prices are below moving averages, trend is bearish.......one should look for Sell Trades when oscillators are overbought.
• When prices are above moving averages, trend is bullish......look for Buy Trades when oscillators are oversold.

LEARNING FROM AN EAGLE

An eagle flies high and has a focused sight of the prey from higher grounds before it makes its move.

In the stock market also, a wider vision is always helpful, talking about a higher time frame than the one in which one trades.

Trade in your time frame only when your trade is in the direction of the higher time frame.

Another important thing to learn from the eagle is that it not only has strong wings to take it higher, but also has strong legs for foothold. Without strong legs it cannot give itself the push for the flight.

In trading, it means keep your foothold strong over your trading capital by appropriate risk management...else the flight would never come.

WHAT'S LIFE GOT TO DO WITH STOCK MARKET

There are striking similarities between life and stock market, which if realized can make a successful trader.

• Life has its ups and downs and so does the stock market. Mistakes are the best teachers.
• To be successful in life, one has to seek out opportunities and make use of available opportunities. Same is true for the stock market. One has to seek out the trades proactively. Passively buying stocks and then hoping for profits is not the path to success.
• True success comes not from having only ups in life, but from the ability to bounce back from the lows. Same is true for the stock market. Successful are not those who have all the right trades, but those who get back from the wrong trades.
• Successful people always have contingency plans for downs in life as they know that down times are a part of life. Successful traders limit their losses in wrong trades by their risk management.

HUMILITY IS THE ONLY WAY TO LEARN IN STOCK MARKET

Only the humble can accept that the market is above individual participants. It has no sympathy, no favoritism and no malice.

If you are right you are rewarded, and if you are wrong you are punished. Everyone is equal.

Once you realize this, you will appreciate the fact that only the most humble can learn how to follow the market correctly and shall be rewarded.

DESPERATION........BAD OMEN

Desperation to earn profits from stock market is nothing but a BAD OMEN for the trader.
Desperation is the next biggest enemy of a trader after Greed and Fear.
It has a remarkable and absolutely perfect track record of clouding judgement, which boils down to bad trades and obviously losses. This leads to further aggravation of the same emotion which had caused these losses, setting up a vicious self reinforcing cycle of events.

HOW TO BREAK THIS CYCLE

• When feeling desperate, do not open your trading terminal and the charts. Take an off on that day. Spend time instead doing something else to take off your mind away from the market. Go out, read a book (not the one related to stock market), listen to music....just anything to keep you busy else you will be back at your screen.
• Do not worry about missed opportunities and missed profits.......they will be back. Missed profits are healthier for your purse than suffered losses. 
• Count your blessings.....all that life has given you. It will ease the desperate feeling.
• Realize the limitations of stock market....IT IS NOT A GET RICH QUICK LOTTERY GAME.

BELIEVE US, IT WORKS. WE HAVE BEEN THERE.

Laws Of Probability...... relevance to Stock Market

We all know that every time getting Heads is not possible if a coin is flipped a hundred times. Probability always has an important role to play.
Same is true with trading in the stock market. It is not theoretically possible to never make a mistake.
However well founded the trading strategy, mistakes do happen.....losses do happen.
In the end what makes a trader successful is that how soon he gets over the emotional setback of a loss.
The overall profits are of course determined by successful trades, but all the more important is how much losses are incurred in wrong trades.
IT IS VERY IMPORTANT TO CUT DOWN LOSSES.
Once the risk management is in place, probability will always be favorable in the end.