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0c1cb94125bd-0 | turn higher, although it hasn’t quite done it yet. At point 3, I see that the S&Ps have held a test of support at the 200-period EMA. However, at point 4, the 8- period EMA is trading below the 21-period EMA, which is negative. The squeeze also doesn’t help me out because there aren’t any signals on it at this time. Okay, so now I have a | Page 3381 |
b1fc3202beba-0 | bullish monthly chart, a bearish weekly chart, and a bearish daily chart that is trying to turn bullish. Can I do anything with this? There really isn’t a clear answer here. It’s time to keep on drilling down. Let’s visit the 60-minute chart. | Page 3382 |
5d69409c3a83-0 | Figure 23.3 60-Minute Chart Analysis The 60-minute chart reveals a bullish stochastic at point 1, and when I check the MACD at point 2, I can see that the MACD is also pointing higher, which is bullish (see Figure 23.4 ). In looking at the moving averages at point 3, I can see that the 8-period EMA is trading above the | Page 3384 |
f208574b3a4f-0 | 21-period EMA, which is bullish, but the market is below its 200-period EMA, which is bearish. Is there a trade here? Take a moment before reading on and figure out what you would do in this situation. I want you to take a trade based on what we’ve just talked about. Would you go long or short? What’s your entry level? What’s your stop? What’s your target? Spend a few | Page 3385 |
e56d9b6bcb7f-0 | minutes on this before moving on to the next paragraph. Today is Tuesday, April 5, 2005. Here is what I’m going to set up for tomorrow, Wednesday, April 6, 2005. I’m going to set up a buy order at 1183.50, right above the 8-period EMA. Since this is a 60-minute chart, I’m going to use a target of ½ of 1 percent, which is 5.9175. I | Page 3386 |
ac514fe69284-0 | will round this up to 6.00, which would make the target 1189.50. This is right below the 200-period EMA, which is a good place for a target. If the 200-period EMA had been below my target, then I would not take the trade. My stop will be 2.95875 (¼ of 1 percent), which I will round up to 3.00. This makes my stop 1180.50. This is just below the 21-period EMA. If we get up ¼ of 1 percent in | Page 3387 |
2d51ed021c0f-0 | the play (three points to 1186.50), I will move my stop up to the 21-period EMA and trail it from there. If this looks familiar, this is the propulsion play described in Chapter 22 . For my swing plays, I want to play them in the direction of the path of least resistance according to the MACD. The monthly charts are higher, and the daily | Page 3388 |
f6488dc40265-0 | chart is about to turn higher. Two of the three time frames are pointing higher. Then when I drill down to the 60- minute chart, I see one of the setups that I utilize staring me right in the face, so I set it up. It’s as simple as that. | Page 3389 |
b384199d0ff3-0 | Figure 23.4 However, before we get too excited about a potential play, let’s double-check the path of least resistance by looking at two more charts. Daily RSI Chart Analysis While the previous charts give me an idea of the overall buying or selling pressure and give me an indication of | Page 3391 |
34fe46e70ae9-0 | key levels that I need to be watching out for during the next trading day, there is still a piece missing. What I want to see next is whether there are any bullish or bearish divergences in the seven- period relative strength index (RSI). These are a heads-up for a pending market reversal. In Figure 23.5 , we can see that at point 1 at the top of | Page 3392 |
725f67f00c8a-0 | the chart, the S&P made a nice rally into the end of 2004. However, if we look at point 1 at the bottom of the chart, we can see that the seven-period RSI was making lower lows, while the S&P was making higher highs. This is a massive bearish divergence; essentially, it is a heads-up that the current rally is not going to last. | Page 3393 |
fc1f937f8f92-0 | That’s great, but how does a person enter that trade? That is a great question. Think a minute before you go on to the next paragraph and decide what you would do in this situation with the tools you’ve learned so far in this book. The market is rallying, but there is a bearish divergence. I’m looking for the market to fall—how do I enter? | Page 3394 |
2f7c261f4e30-0 | There are a couple of different ways to enter. Plays described in this book that have worked well in this situation are discussed in Chapters 14 (Scalper Buys and Sells), 15 (Bricks), 19 (HOLP and LOHP), and 22 (Propulsion Plays). This comes back to the fundamental basis of my whole trading plan: even if I feel 100 percent sure that the market is going to roll over, I | Page 3395 |
da90c81b8b40-0 | will not establish a short position until one of my setups generates a short signal. | Page 3396 |
17502a3f7ffb-0 | Figure 23.5 Now if we go to point 2 in the upper right-hand portion of the chart, we can see that prices made lower lows. Then if we look at point 2 in the lower right-hand portion of the chart, we can see that the RSI made higher lows, creating a bullish divergence. This sets up a potential reversal in the markets, meaning that I want to focus | Page 3398 |
480535ad8a48-0 | on the long side. This confirms that the play we just set up in the last section with the 60-minute charts is the right way to go. 60-Minute RSI Chart Analysis On this 60-minute chart (see Figure 23.6 ), there are two bullish divergences in place within the current market action. I’ve marked one of | Page 3399 |
c7db8849b273-0 | them—can you find the other one? The one I’ve marked shows the RSI making higher highs, yet prices have not made higher highs. This is bullish. The RSI is essentially leading the market higher. The second divergence takes place when the ES made lower lows on April 1, yet the RSI made higher lows. This is a bullish | Page 3400 |
ced0fc5b49dc-0 | divergence and is also positive. After looking at both these RSI charts, we can clearly see that the long side is the path of least resistance in the short term. | Page 3401 |
3f2396431947-0 | Figure 23.6 What if I’m wrong? What if news about oil hits tomorrow, driving it higher by $5 a barrel, and that kills the stock market? Then I’m stopped out. Next trade. This is about getting the odds in your favor, not about getting guarantees. Index Radar Screen Alert | Page 3403 |
5c3c68a580dc-0 | Looking at one index in a couple of different time frames can be a handful to track. But what happens if you are looking at all these different charts and time frames for three or four different indexes, a couple of sectors, and a handful of stocks? It can get confusing. However, knowing what’s going on across multiple trading instruments and multiple time frames gives a | Page 3404 |
cd89a046251b-0 | trader a much better feel for the overall markets. To that end, I’ve put together the following table to help me keep it all straight (see Figure 23.7 ). This table gives me the opportunity to write down my chart interpretations in an easy-to-read, take-it-all-in-at- a-glance worksheet. With the key indexes that I’m viewing on the far left, I can then go | Page 3405 |
76c79ce86727-0 | through the stochastics, MACD, RSI, and the squeeze on all the different indexes in all the different time frames. For stochastics and MACD, I have M, W, and D as headings for the m onthly chart, the w eekly chart, and the d aily chart. For the RSI and the squeeze I have W, D, and S as headings for the w eekly chart, the d aily chart, and the s ixty-minute chart. I can then go through and see | Page 3406 |
b980d699c404-0 | at a glance that the monthly and daily MACDs are in buys across the board, and that the 60-minute RSIs are also in buys (as they are showing bullish divergences), as are some of the daily RSIs. For the squeezes, I have N, R, S, and B, representing n eutral, r ed dot, s ell, and b uy. Neutral just means that there currently isn’t a signal in place, nor is a squeeze even | Page 3407 |
6861ea88453b-0 | in a heads-up. The red dot (which is the black dot in this book because the charts are black and white) means that a squeeze play is setting up, but it hasn’t yet fired. Whenever I see a market that is in R mode, I start paying close attention because I want to see when it fires off. Finally, after it does fire off, if it’s a long squeeze, that is a B for buy, and if it is a short squeeze, that is an S for sell. | Page 3408 |
edb9db14f2fa-0 | Figure 23.7 This may seem like a lot of work, but it doesn’t take long to do. The monthly and weekly charts do not change very often—most of the attention is spent on the daily and 60-minute charts. I update this table each evening after the stock markets are closed, and I post the results in my daily newsletters. One of the | Page 3410 |
b1aeff0681e5-0 | reasons I started sending out newsletters in 1999 was that it forced me to keep these tables updated each and every day, no matter what else was going on in my life. By having everything in place, I can see when one index is breaking down before all the others, as the Nasdaq did in early 2005. When one index starts to buck an overall trend, that is | Page 3411 |
53c39b1ccd39-0 | a heads-up that the rest are setting up to roll over as well. Sectors and Key Stocks Radar Screen Alert This radar screen alert is the same as that for the indexes, except that it will have key sectors and key stocks that I’m watching (see Figure 23.8 ). It is set up in just the same way and works in just | Page 3412 |
6432e8d5f9de-0 | the same way. When markets turn, you can see it first in the key sectors and stocks that make up the index. Also, if I’m looking for trading ideas and I see that the semiconductors, for example, have just fired off a short squeeze, it is fairly easy to figure out where I should go looking for short plays. | Page 3413 |
44fa4c749f4d-0 | Figure 23.8 Both these radar screens are included in the daily newsletter I write. Traders who want to prepare these themselves will benefit from the exercise. Traders who simply don’t have time or who like to have a second opinion can get these daily readings from my research. The Key to Reading Daily | Page 3415 |
732017fb4ba8-0 | Volume I like to watch the daily volume in the cash indexes to see how much activity there is going on behind the moves. Each day I take the volume and key it into an Excel spreadsheet like the one shown in Figure 23.9 . | Page 3416 |
af6173ec3a42-0 | Figure 23.9 | Page 3417 |
ba9b3a516ba9-0 | What I’m looking for is the strength or lack of strength behind the move. If the markets push higher, I’ve got to see two things in order to validate the move: first, the volume has to be greater than it was the day before, and second, the volume has to be greater than the 50-day average volume. The bigger the difference in these numbers, the better the odds that the move is the real deal | Page 3418 |
af66e8a83e1a-0 | and the start of something big. Conversely, if the markets have a big day to the upside, but the volume is lighter than that of the previous day and lighter than the 50-day average volume, then I have more trouble believing in the move. The lower the actual volume in relation to these other numbers, the greater the chance that the move was a mere probe and is going to | Page 3419 |
3f9cb453fb98-0 | reverse violently at the drop of a hat. Think of it this way—a car that is going uphill on a full tank of gas has a much better shot at making it than a car that is running on fumes. High-volume days show the markets riding on a full tank of gas, while low-volume days show the markets riding on fumes. The Key Price Levels to | Page 3420 |
e11678c35f21-0 | Know Each and Every Trading Day There is a specific set of numbers that I want to be aware of every day, because these are critical in helping me to establish trades and stay on the right side of the market (see Figure 23.10 ). I like to follow most of these price levels in the S&P futures, just because it is the biggest and broadest index | Page 3421 |
1f667fd59d95-0 | and tells me a lot about what is going on in the market. However, I also like to do the same for the Dow, Nasdaq, and Russell futures. For the sake of this example, we focus mostly on the S&Ps, but we bring in the other indexes for part of it as well. The first thing I want to look at is today’s close in relation to the prior three days’ highs and lows. Did | Page 3422 |
db63847b291b-0 | today’s price eclipse either of these levels, or was it contained within these levels? If it eclipsed either of these levels, then we have a trending market. If it stayed contained within these levels, then we have a trading range. It is very important that you always understand what type of market environment you’re currently in, and this is one of the easiest and most accurate ways to tell. If today | Page 3423 |
504ddd7e670c-0 | is Thursday and the close is 1050.50, then you just look at a daily chart and review the highs and lows for Wednesday, Tuesday, and Monday. Did Thursday’s close make it past these levels, or was it contained within these levels? | Page 3424 |
540d6e3647ac-0 | Figure 23.10 I also like to note where the close was in relation to the day’s range. Did the market close at the top of its range? If so, there is a good chance for upward continuation tomorrow. Did it close near the bottom of its range? Or did it close in the middle—indicating massive indecision. Next, I want to see where | Page 3426 |
1080cbd2ea6c-0 | the highs and lows for the prior day, prior week, and prior month are located. These are all important support and resistance levels, and I want to know where they are sitting in relation to current market prices. I like to note whether we are trading above any of these levels, which is bullish, or below any of these levels, which is bearish. If we are stuck in the middle, then I | Page 3427 |
459b3baa2c40-0 | call that neutral. After this, I look at the HOLP and LOHP levels (as discussed in Chapter 19 ). Any moves above or below these key levels are a major opportunity. I also like to note whether we are trading above or below these key levels, because that is also bullish or bearish. The next number I want to know is the number of days | Page 3428 |
53f735fb777a-0 | in the current trend. The reason for this is that many trends reverse after three days, so if we are in the third day of a trend, I want to be aware of it. Also, after six to seven consecutive days, markets just lose their gas and fail to move any further. I want to know about this so that I’m not the last one jumping on the bandwagon. Finally, I want to know | Page 3429 |
829e18074b81-0 | where all the open gaps are sitting. Remember in Chapter 7 when we talked about open gaps filling within 5 to 10 trading days? It’s important to know where those gaps are located. Pivot Numbers, of Course We talked extensively about pivots in Chapter 8 , so I’m not going to explain again why I look at them. | Page 3430 |
dd1abdcbe42f-0 | However, I do like to have them handy so that I can look at them before the trading day. By placing them in this easy-to-use Excel spreadsheet (see Figure 23.11 ), I can quickly glance at these levels and see if any of them line up with the key price levels we just talked about. Is the daily pivot also lined up with an open gap? That is important because that level will be particularly | Page 3431 |
666acfea04b2-0 | strong on that trading day. In addition to the daily pivots, I’m looking for confluence with my list of key numbers among the weekly and monthly pivots (see Figure 23.12 ). | Page 3432 |
63b6f579fe45-0 | Figure 23.11 | Page 3434 |
52bde4835f7a-0 | Figure 23.12 Key Sentiment Readings We talk about the put/call ratios in Chapter 6 . I like to record where the put/call ratio closes on the day, and also note where the 10-day moving average of the put/call ratio is trading. While the daily number is good for gauging market direction on that particular | Page 3436 |
a3dbf56abe02-0 | trading day, the 10-day moving average pinpoints major market turns. The following chart ( Figure 23.13 ) from Decision Point shows the key turning points in the markets based on the reading of the 10-day moving average on the put/call ratio. You can get these data from TradeStation, but I just subscribe to www.decisionpoint.com and get it there. It’s $20 a month, | Page 3437 |
bba351d75752-0 | it provides nearly every key historical technical study on the planet, and it’s where I spend a lot of quality time each weekend. | Page 3438 |
90747ea51b1b-0 | Figure 23.13 Figure 23.14 shows that whenever the put/call ratio gets near 1.00, this excessive bearishness in the form of put buying creates a bottom in the market. All these shorts then spend the next several weeks frantically covering their positions. The opposite is also true. When the crowd gets frothy and overly bullish, driving the PC | Page 3440 |
203ef2c3d22f-0 | ratio to 0.70, the market is overloaded with bulls and either halts its advance or rolls over. | Page 3441 |
4aaeb74d1f9f-0 | Figure 23.14 I also like to look at AAII investor sentiment, because this is a good gauge of how traders are feeling about the current market. This is also a contrarian indicator. When there are too many bears, look for the markets to bottom out and reverse. When there are too many bulls, look for markets to take a breather or roll over. | Page 3443 |
026b6d8455fa-0 | Figure 23.15 Figure 23.15 is a chart from April 5, 2005, the day I’m writing this. You can see that we are at excessive bearish levels. This tells me that the market is looking to bottom out and is starting to beat up on all the shorts. The other item I have listed in Figure 23.13 is the daily Arms Index reading, which is shown in Figure | Page 3445 |
0c879608f23d-0 | 23.15 . This is the indicator we discuss in Chapter 6 , and I’m looking for readings of over 2.0 or under 0.50 as key action signals. It’s a Good Idea to Know What These People Are Doing The last key number in this series is the NYSE member net buy/sell numbers, which I get from | Page 3446 |
f782754a21e8-0 | www.decisionpoint.com . This shows whether NYSE members are net long or short. If they are net long, it is because they have very strong reasons to believe that they will be able to distribute their holdings to the public at a higher price. If they are net short, they have strong reasons to believe that they will be able to buy back their inventory at a cheaper price. These people make a lot of | Page 3447 |
a7cd32cf78c8-0 | money, and I like to follow what they are doing. Figure 23.16 shows a couple of huge readings that came into play over the past few years. The first was during the March 2003 bottom. These people loaded the boat with a record amount of longs. Lo and behold, the markets moved significantly higher shortly thereafter. They sold their | Page 3448 |
6a3b35ed2a35-0 | inventory all the way up and then reloaded the boat in October 2003, just before the next leg higher. Finally, in September 2004, they loaded the boat again with a record number of long positions. The markets chopped around for six weeks and then rocketed into 2005. If these people are loading the boat one way or the other, I want to know about it. | Page 3449 |
ccc103b37595-0 | Figure 23.16 Miscellaneous Items The final things I want to know about are any key economic and earnings reports that are coming out on the day. I’m not concerned with every company that is reporting, but I want to know if a big company like MSFT or IBM is going to be coming out | Page 3451 |
662c8924d6d1-0 | with numbers after the close. I also want to know when key economic reports are going to be hitting the tape. There are two main reasons for this. First, if traders are waiting for a key earnings number or an economic report, they will generally stand aside to see how the market reacts. This means that the markets are going to be choppy, and I don’t want to be trying to catch trends | Page 3452 |
5bc064cfc444-0 | intraday if the markets are going to be choppy. On these days, I will focus on fading pivot levels and fading extreme tick readings—these are the best plays I’ve found for days where the trading is light and choppy. The second thing I’m looking for isn’t the actual number itself, but how the markets react to it . The number, whether it is earnings or economic, has no importance. What is | Page 3453 |
15d02854bd39-0 | important is whether the market sells off on the news, rallies on the news, or ignores the news. The market is efficient at pricing in information before it ever comes out. In addition, large firms have access to the same research as the government, and they hire an army of economists to figure out what the numbers are going to be | Page 3454 |
3b57ef00a3df-0 | before they are announced. These reports mean little in the grand scheme of things because they get priced into the market well before the actual number is released. The moral of the story? Find a couple of setups and stick to them, and don’t get sucked into the “waiting for the next report” game. Just because a report is hyped on CNBC doesn’t mean that it’s | Page 3455 |
9e5d2471ce09-0 | a good idea to place a lot of importance on it. What Does Your Mother Think? My final piece of research has to do with random comments that I hear from people who are not in the industry. A classic example is a recent conversation I had with my mother, who mentioned that she had read | Page 3456 |
3bedd756b372-0 | about eBay in Business Week . Was it a good time to buy? In situations like this, I normally just run out and look for a short setup on the stock, but, because it was my mother, I told her I would hold off on buying it for now. Then I shorted it. A few weeks later, it got killed on earnings. Anything that is just now hitting the ears of the | Page 3457 |
d9103221a784-0 | nontrading public is a major signal. This typically means that the people who are usually the last to know are thinking about finally getting in. I can’t think of a better topping signal in my arsenal of trading tools. As I’m writing this, there is this same flurry of activity going on in real estate. More and more random people are talking about things like | Page 3458 |
d6f19d98c817-0 | buying parcels of land sight unseen from out of the back of magazines because “real estate is doing so well.” It’s almost at the same ferocity as when Beanie Babies topped out and crashed back to earth. Pretty soon we are going to start seeing major magazine covers talking about how everyone is making money in real estate. Shortly thereafter, prices will start to soften. And no, it’s | Page 3459 |
bb9e92276698-0 | not different this time. Summing Up the Premarket Checklist I’ve got a quote on my wall that says, “Fortune favors the prepared mind.” There is a big difference between getting lucky on one trade and being able to make money in the markets consistently. There is also a delicate balance between | Page 3460 |
84e3d6921726-0 | being prepared and overanalyzing, but the basic set of tools and numbers discussed in this chapter will give traders a huge leg up without drowning them in barrels of information. All these data are available to every trader. It’s a good practice to take the time to go through and line up this information each day. If you don’t have the time, or | Page 3461 |
2048fc14dc5b-0 | if you would like supplemental information, this is the same routine I go through each evening. I post the same daily checklist I’ve reviewed in this chapter in a newsletter that comes out five evenings per week (each night the stock market is open). In addition to this information, I also post the swing trades I’m setting up the next trading day, with the exact entry, exit, target, and | Page 3462 |
39108e22e55b-0 | stop loss levels. I typically focus on stock options, futures, and currencies, as well as some individual stocks. In addition to these key levels, I also include a nightly video that’s embedded in the newsletter and records my computer screen. With this technology, I’m able to flip through my charts and make comments, | Page 3463 |
988e6ee18c1e-0 | discussing the way the various markets are setting up and talking about what I think is going to happen during the next trading day— and the orders that I am placing. This technology is great, as it allows a person to look over my shoulder as I’m doing my research each night. I don’t rehearse—it’s all recorded live, so you get my first impressions, along with the coughs and | Page 3464 |
beb48c033167-0 | telephone interruptions. A trader can just click on the video link, turn up the speakers on her computer, and watch and listen. For information on the newsletters, you can visit the following websites: • www.tradethemarkets.com/freetrial • www.simpleroptions.com/freetrial | Page 3465 |
65faa3899231-0 | Trade The Markets focuses on futures and currencies along with the bigger-picture outlooks, while Simpler Options focuses on, of course, stocks and stock options. | Page 3466 |
61939abb64e8-0 | 24 The Trader’s Business Plan No one ever won a war by dying for his country. He won it by making the other poor dumb bastard | Page 3467 |
abaa6e829d65-0 | die for his country. —G ENERAL G EORGE S. P ATTON One thing is certain. Praying for luck in the getting of money is futile. If Lady Luck exists, she is | Page 3468 |
21e87cf3845f-0 | highly perverse, choosing to visit those who have little apparent need of her and ignoring others desperate to worship at her shrine. I’ve found the best thing is to | Page 3469 |
ae32760774f5-0 | ignore her. To “treat her mean and keep her keen.” —F ELIX D ENIS, BILLIONAIRE PUBLISHER Who Gets to the World Series—the Team with a Plan or the Team That Decides to Wing It? A two-foot-long arrowana is | Page 3470 |
e627fc670b5e-0 | a voracious predator fish. A single-minded creature, it has one basic rule of thumb that it follows each and every day: if it thinks something will fit into its mouth, it will eat it. When traders visit my office to watch me trade, they are often surprised to learn that their first assignment is to feed Martha, my two-foot-long pet arrowana. They have to take the net, dip it into the feeder | Page 3471 |
3ec50644f772-0 | tank filled with goldfish, and choose a victim. Martha is used to this routine by now, and she begins to shimmer with excitement and anticipation. The goldfish is released. The water boils and churns as the predator lunges, and a few seconds later, all that remains of Nemo is a few scales and a bit of fin. Steve Patrow, a visiting trader, summed it up succinctly when he said, | Page 3472 |
5d6718efc146-0 | “That just seems really cruel.” “Yep,” I replied. “Almost as cruel as sending a trader out into the markets without a fully developed trading plan.” A trader who is trying to make a living in the markets without a fully developed trading plan is in exactly the same position as the goldfish. Whereas one is merely a meal for an | Page 3473 |
6b2c838f8d1a-0 | arrowana, the other is routinely preyed upon by professional traders. At least for the goldfish, the pain is over quickly. Traders without a plan can stretch out their torment for years. My first trading plan was created in 1993, eight years after I started trading. It was a one-page document that has evolved over the years into the 15-page plan that I use | Page 3474 |
30ec363bc2cc-0 | today. This plan evolved out of experience and from having other traders share their plans with me. I update this plan annually. My plan expanded over the years as I realized the following truths: • A superior per-trade tracking system had to be set in place. • A specific day-to-day money management system had to be set in | Page 3475 |
e3955b18af8c-0 | place. • A methodology for holding specific trading setups accountable for performance had to be set in place. • A reward and punishment system for myself had to be set in place. • My plan had to evolve and take into account | Page 3476 |
577aa892933e-0 | the setups and markets that best fit my personality. • Not only did I have to incorporate trading into my plan, but I had to incorporate it into my whole life to really make the plan work. One reality of trading is that this is a profession that can take over a person and dominate | Page 3477 |
de93d646e870-0 | his life. It is important that you recognize this and bring a more holistic approach to your overall trading plan. This keeps a trader in the game for the longer term, helping to prevent burnout—a common occurrence in the trading world. Every trader I’ve worked with has mentioned that the | Page 3478 |
b97efda040ff-0 | comprehensive business plan that I make him write has been the deciding factor in his own performance. “It was when I turned the corner,” is a common phrase I’ve heard used to describe the results of writing out such a detailed plan. What’s in the plan? I’ll show you the questions I make myself answer every year and take you through them step by step. After I’m done with this, I’ll share a | Page 3479 |
c4c61248a612-0 | plan that was developed by one of the traders I’ve worked with. What follows are the questions and excerpts from the answers in my actual trading plan for 2005. Why Am I Trading Again This Year? The first question I ask myself each year is, why am I trading again this year? | Page 3480 |
500d98267cee-0 | Although this might seem obvious, it is important to deliberately choose this occupation over everything else that’s available out there. This applies whether you are trading part time while you’re holding down another job or are trading full time. Here is my answer: The main reason I’m going to continue trading in 2012 is that I enjoy the | Page 3481 |
88c50724a79c-0 | financial independence and freedom that trading has to offer. I also love the fact that I can do this from anywhere, because I don’t like to be tied down to any one location. I’ve never been good at taking orders, so I appreciate that I don’t have a boss whom I have to placate. I enjoy meeting other traders because they are the most random, eclectic, crazy, and interesting people on the | Page 3482 |
a2f4de35252c-0 | planet. I enjoy the mental challenge and stimulation that come from trading, and I know that if I stopped, I would miss it. As long as I’ve been doing this, I’ve yet to encounter two trading days that have been the same. Just as I get comfortable, the market reminds me who is running the show. There truly is never a dull moment. Happy Wife, Happy Life | Page 3483 |
f7aa5a8c1f05-0 | This is where I take stock of everything else that is going on in my life and how it might affect my trading. By doing this, I figured out when I needed to hire my first assistant, when I needed to bring in another partner, and whatever else needed to be done in order to streamline my life for trading. Here’s what I wrote down for 2005: I have a lot of activities | Page 3484 |
65d905c88f8c-0 | going on in my life besides trading. I’m actively involved in real estate investing, coin collecting, and traveling, and I have a lot of stuff going on with my website and other financial market–related programs. I also have a lovely wife who expects me to notice that she is a living and breathing human being, and I’ve realized how important it is to include her in my plans | Page 3485 |
806ccce4e4ec-0 | and keep her involved in the process, as well as being able to “leave trading at the door” and spend quality time with her. It’s good for her, it’s good for me, and it’s good for us. Happy wife, happy life. My wife and I are expecting our first child, and we are considering moving from Boston to Austin, Texas, where most of our | Page 3486 |
041718cdf5ea-0 | family is located. I know that trading is my main occupation, and that the only way I can continue with these other things is if I’m making profits from my trading. It is possible that I will drop some of these other activities if they become a distraction. I will compartmentalize and focus on trading during trading hours. To help with this, I have someone who runs the | Page 3487 |
cb362bc2409c-0 | day-to-day operations of the website, I have a cook and a maid to handle all routine daily chores around the house and the office, and I have someone else who helps manage my other investments. I will focus on writing newsletters that pertain only to my own trading, instead of writing about what I think other people want to know about. These newsletters are mostly | Page 3488 |
64af4ff89a25-0 | for me to help force myself to clarify my own research and continue to find new trading ideas. I will not try to please all the people all the time. I won’t try to day-trade if I am traveling or on vacation. It’s okay to have swing trades on and manage existing positions, as long as I have a stop and a target in place and I don’t try to | Page 3489 |
9e6f326c5da9-0 | “outthink” the position intraday. If I have distractions going on, I will not trade. I will get rid of the distractions first. Examples include having uninvited guests over, morning phone calls, people instant messaging me in the morning asking about a trade, and so forth. I will take care of the distractions. I will ignore phone calls and instant messages until after 11:00 | Page 3490 |
b812bfe80924-0 | a.m. eastern or, better yet, turn them off. I will not be accommodating just to be nice. The path to hell is paved with good intentions. Fast-forward to 2012, and things are busier, with three kids in the mix and a growing website business and trading operation. This year has been particularly busy, and I’m consciously trying to get things in place | Page 3491 |
3ee0bb8b9d09-0 | to “simplify.” This means getting key people in place to help out, and focusing on what is important. The truth is, I could always check out and just trade, but the business aspect is also interesting. The key is setting things up so that I don’t have to work a 16-hour day to get everything done. This means asking for help, and recharging. And saying no, which isn’t easy. For me, | Page 3492 |
b14a20fa8be4-0 | I’ve found that being able to get away on the weekends has been invaluable in terms of being able to spend quality time with my family and rejuvenate. We have a place in the country where we can head out on Friday, hang out with our goats and llama (in no particular order), and unplug for 48 hours. To me, this was an important enough goal to find a way to make it work. As an added bonus, the | Page 3493 |
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