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f5e0c3541985-0 | perfect. Only perfect practice makes perfect. —V INCE L OMBARDI | Page 3797 |
54bcb3f88dbd-0 | 26 Mastering the Trade Amateurs Hope; Professionals Steal Professionals steal money from amateurs because amateurs hope, close their eyes, and unwittingly allow professionals to drain their accounts. | Page 3798 |
0ec098882bc0-0 | The sum of my trading experience is this: I’ve learned that being a professional is all about maintaining a specific state of mind while trading, and traders are never going to make consistent money until they achieve that frame of reference from which to operate. All the successful traders I know blew out their account at least once before they became consistently | Page 3799 |
55b6b358883f-0 | profitable. Along these lines, I’ve composed a list of 40 “trading tips” for staying in this professional state of mind. These “tips” are not meant to make a trader conservative or hesitant. On the contrary, trading takes guts, and by following these tips, traders will be given the key that will allow them to embrace risk and take the necessary chances required in the pursuit of capital gain. | Page 3800 |
35b0a021fb3c-0 | That is, traders will feel more compelled to take a chance because they know they are also going to fight to protect their capital. They won’t freeze and lie helpless as it is whittled away. This is a list I’ve developed specifically for myself. When I use the term you , I’m referring to “me.” Feel free to add to these tips or modify them to fit your | Page 3801 |
f7479c82cf33-0 | own personality and trading style. At home, we have a llama named Shim. (We called the animal “Shim” because when we got it, the beast had so much hair that we couldn’t tell whether it was a “she” or a “him.” We later discovered that Shim was a she.) I have a photo of myself with Shim up in my office as a reminder about the markets. Shim may | Page 3802 |
a832c18652bb-0 | seem nice and docile, but if you stare in her eyes too long or make any sudden movements, she will spit up the nastiest, most vile liquid right into your face. Her aim is deadly accurate. In the markets, never let your guard down. Otherwise Shim (is the market a he or a she?) will get you right between the eyes. 40 Trading Tips for | Page 3803 |
152693f60060-0 | Maintaining a Professional State of Mind 1. Trading is simple, but it’s not easy. If you want to stay in this business, leave hope at the door, focus on specific setups, and stick to your stops. 2. When you get into a day trade, watch for an 800 reading in the | Page 3804 |
adb5b1d55838-0 | opposite direction from your trade for signs that you are wrong. This might allow you to get out of your trade before your stop is hit. 3. Trading should be boring, like factory work. If there is one guarantee in trading, it is that thrill seekers and impulse traders | Page 3805 |
301e0e59c80b-0 | get their accounts ground into parking meter money. 4. Amateur traders turn into professional traders once they stop looking for the “next great technical indicator” and start controlling their risk on each trade. 5. You are trading other traders, not the actual | Page 3806 |
fbce07ad4b13-0 | stock or futures contract. Who is taking the other side of your trade? Is it an amateur who is chasing or a professional who has been patiently waiting for this entry all day? You have to be aware of the psychology and emotions on both sides of the trade. | Page 3807 |
0005497eb260-0 | 6. Be very aware of your own emotions. Irrational behavior is every trader’s downfall. If you are yelling at your computer screen, imploring your stocks to move in your direction, you have to ask yourself, “Is this rational?” Ease in. Ease out. Keep your stops. No yelling. | Page 3808 |
34a10ce4adff-0 | The person who is screaming should be the one on the other side of your trade. 7. Watch yourself if you get too excited— excitement increases risk because it clouds judgment. If you are feeling peak excitement, it probably means that the move is just about | Page 3809 |
da6ea583ffdf-0 | over. Tighten your stop and look to reverse. 8. Don’t overtrade—be patient and wait for three to five good trades. 9. If you come into trading with the idea of making big money, you are doomed. When accounts are blown | Page 3810 |
6c6f1647ceaf-0 | out, this mindset is responsible most of the time. 10. Don’t focus on the money. Focus on executing trades well. If you are getting into and out of trades rationally, the money will take care of itself. 11. If you focus on the money, you will start | Page 3811 |
b5c8a84e3119-0 | trying to impose your will upon the market in order to meet your financial needs. There is only one outcome for this scenario: you will hand over all your money to traders who are focused on protecting their risk and letting their winners run. | Page 3812 |
588ab17e927d-0 | 12. The best way to minimize risk is not to trade. This is especially true during the doldrums, between 11:30 a.m. and 2:30 p.m. eastern. If your stocks or other markets aren’t acting right, then don’t trade them. Just sit and watch them and try to learn something. By | Page 3813 |
01cf192f4a63-0 | doing this, you are being proactive in reducing your risk and protecting your capital. The most common problem with losing traders is that they feel that they always have to be in a trade. 13. There is no need to trade five days a week. Trade four | Page 3814 |
bb9e30734953-0 | days a week, and you will be sharper during the actual time you are trading. 14. Refuse to damage your capital. This means sticking to your stops and sometimes staying out of the market. 15. Stay relaxed. Place a trade and set a stop. If you get stopped | Page 3815 |
834fec342b46-0 | out, that means that you are doing your job. You are actively protecting your capital. Professional traders actively take small losses. Amateurs resort to hope and sometimes prayer to save their trade. In life, hope is a powerful and positive thing. In trading, resorting to | Page 3816 |
cb16a5f51de9-0 | hope is like placing acid on your skin— the longer you leave it there, the worse the situation will get. 16. Never let a day trade turn into an overnight trade. An overnight trade should be planned as an overnight trade before the trade is ever entered. | Page 3817 |
ce4e83f24f08-0 | 17. Keep winners as long as they are moving your way. Let the market take you out at your target or with a trailing stop. Don’t use impulse exits. Every exit is taken for a specific reason based on parameters that have been clearly defined. 18. Don’t overweight | Page 3818 |
158be33d0e15-0 | your trades. The more you overweight a trade, the more hope comes into play when the trade goes against you. Remember, hope in trading is like acid on skin. 19. There is no logical reason to hesitate in taking a stop. Reentry is only a commission | Page 3819 |
a2980c848948-0 | away. 20. Professional traders take losses. Being wrong and not taking a loss damages your own belief in yourself and your abilities. If you can’t trust yourself to stick to your stops, whom can you trust? 21. Once you take a loss, you naturally forget | Page 3820 |
4bdc031bfbe3-0 | about the trade and move on. Do yourself a favor and take advantage of any opportunity to clear your head by taking a small loss. 22. In general, you should never let one position go against you by more than 2 percent of your account equity. Many setups | Page 3821 |
c32dfd8dc5c9-0 | work out better if you can use a larger stop. Instead of trading 20 E-mini contracts with a 1-point stop, trade 10 contracts with a 2- point stop or 5 contracts with a 4- point stop. The monetary loss is exactly the same, but one set of these parameters will work better on a particular | Page 3822 |
9bb3d104a90a-0 | setup than all the others. Find out what works best for your setup and adjust your parameters accordingly. 23. Get a feel for market direction by “drilling down.” Look at the monthly charts, then the weekly, daily, 60- minute, 15-minute, and 5-minute charts | Page 3823 |
d84bea6c7a65-0 | to get the best idea of what the market is going to do in the short term. Always start with the larger time frames and drill down to the smaller. 24. If you are hesitating to get into a position when you have a clear signal, that indicates that you don’t trust yourself, | Page 3824 |
d0f6dd064a07-0 | and that deep inside, you feel that you may let this trade get away from you. Just get into the position and set your parameters. Traders lose money in positions every day. Keep them small. The confidence you need is not in whether or not you are right; the confidence you need | Page 3825 |
e4c0d7cabc27-0 | comes from knowing that you execute your setups the same way each and every time and do not deviate from your plan. The more you stick to your parameters, the more confidence you will have as a trader. 25. Averaging down on a position is like a sinking ship | Page 3826 |
cdd0f8335510-0 | deliberately taking on more water. This is ridiculous and stupid. Don’t be ridiculous and stupid. 26. Try to enter in full size right away. If you pick up a half position first, don’t add to it and create a full-sized position unless the trade is going your way. | Page 3827 |
552b6a508fb3-0 | 27. Ring the register and scale out of your position. Have modest, mechanical targets for the first half of your position. Give the second half more room to run. 28. Adrenaline is a sign that your ego and your emotions have reached a point where they are clouding | Page 3828 |
f78a7ad10791-0 | your judgment. If you are not in a trade, do not enter a new trade when you are in this state of mind. If you are in a trade, stick to your parameters and walk away. If you are in a losing trade that has gone through your stop, exit your trade immediately and walk away from the markets. | Page 3829 |
9dc3b382cc8c-0 | 29. You want to own the stock before it breaks out, then sell it to the momentum players after it breaks out. If you buy breakouts, realize that professional traders are handing off their positions to you in order to test the strength of the trend. They will typically buy them back below | Page 3830 |
dd3715d9d47b-0 | the breakout point— which is typically where you will set your stop when you buy a breakout. Use this information to make money off of amateur traders who buy breakouts. 30. Embracing your opinion leads to financial ruin. When you find yourself | Page 3831 |
00e8f6d7a155-0 | rationalizing or justifying a decline by saying things like, “They are just shaking out weak hands here,” or, “The market makers are just dropping the bid here,” then you are embracing your opinion. Don’t hang on to a loser. You can always get back in. | Page 3832 |
6b4db25fb001-0 | 31. Unfortunately, you will not learn discipline until you have wiped out a trading account. Until you have wiped out an account, you typically think that it cannot happen to you. It is precisely that attitude that makes you hold on to losers and rationalize them all the way into | Page 3833 |
87c5b8f0537a-0 | the ground. If you find yourself saying things like, “My stock in EXDS is still a good investment,” then it is time to rethink your trading career. 32. Siphon off your trading profits each month and stick them into a money market account. This action | Page 3834 |
87088e768544-0 | helps you to focus your attitude and reminds you that this is a business, not a place to seek thrills. If you want thrills, go to Disneyland. 33. Professional traders risk a small amount of their equity on one trade. Amateurs typically risk a large amount of equity on | Page 3835 |
2ac99309219f-0 | one trade. This type of situation creates emotions that ruin amateurs’ accounts. 34. Professional traders focus on limiting their risk and protecting their capital. Amateur traders focus on how much money they can make on each trade. Professionals | Page 3836 |
929f2a374c6b-0 | always take money away from amateurs. 35. In the financial markets, heroes get crushed. Averaging down on a losing position is a “heroic move” that is akin to Superman taking a spoonful of Kryptonite to prove his manhood. The stock market is not | Page 3837 |
8fc29fefbb4c-0 | about blind courage. Nobody hands out any awards to traders who picked the dead high or the dead low. Wait for a setup. This is about finesse. Don’t be a hero. 36. Traders never believe that they will blow out their account. Always realize that you will become a | Page 3838 |
bed79b681464-0 | candidate for this if you don’t stick to your trading rules. 37. The market reinforces bad habits. If early on you held on to a loser that went against you by 20 percent, but you were able to get out at breakeven, you are doomed. The market has reinforced a bad habit. The next | Page 3839 |
66d4fc0e6877-0 | time you let a stock go against you by 20 percent, you will hang on because you have been taught that you can get out at breakeven if you are patient and hang on long enough. 38. The true mark of an amateur trader who is never going to make it in this business is | Page 3840 |
a67067dfa9f5-0 | continually blaming everything but himself for the outcome of a bad trade. This includes, but is not limited to, saying things like: • The analysts are crooks. • The market makers were fishing for stops. | Page 3841 |
ecbcabe6ea63-0 | • I was on the phone, and it collapsed on me. • My neighbor gave me a bad tip. • The message boards caused this one to pump and dump. • The specialists are playing games. The mark of a professional, | Page 3842 |
109d08f1e203-0 | however, sounds like this: • It is my fault. I traded this position too large for my account size. • It is my fault. I didn’t stick to my own risk parameters. • It is my fault. I allowed my | Page 3843 |
82a1938c6066-0 | emotions to dictate my trades. • It is my fault. I was not disciplined in my trades. • It is my fault. I knew there was a risk in holding this trade into earnings, but I didn’t fully comprehend it when I took the trade. | Page 3844 |
e82790cffbf4-0 | The obvious difference here is accountability. For amateurs, everything having to do with the market is “outside their control.” That is not reasonable thinking and really just points to individuals who have, probably for | Page 3845 |
1db69bd19981-0 | the first time, had to confront their “real self” as opposed to the perfect self or idealized self that they have constructed in their mind. This is also known as “living in a fog.” People can drift through life in their own private world, where they are pretty special and | Page 3846 |
76f191d8d504-0 | can do no wrong. Unfortunately, trading rips off this mask, because you cannot dispute what has happened to your account. This is also known as “confronting reality.” For many people, when they start trading, they are suddenly confronting reality for the first | Page 3847 |
4fbad08e7568-0 | time in their lives. Just to see the world as it really is requires a lifetime of training, and for many people, trading the stock market is their first real step on this journey. Some people say that traders are born, not made. Not so. If you choose to see the world as it is, then | Page 3848 |
9823e4c1e78a-0 | you can start trading successfully tomorrow. 39. Amateur traders always think, “How much money can I make on this trade?” Professional traders always think, “How much money can I lose on this trade?” Traders who control their risk take money | Page 3849 |
aade8dde97ce-0 | from the traders who are thinking about the red BMW they are going to buy. 40. At some point traders realize that no one can tell them exactly what is going to happen next in the market, and that they can never know how much they are going to make on a trade. | Page 3850 |
1df4b366e2e7-0 | Thus the only thing left to do is to determine how much risk they are willing to take in order to find out if they are right or not. The key to trading success is to focus on how much money is at risk, not on how much you can make. The longer I do this, the | Page 3851 |
15d460023999-0 | more protective I get of my trading capital, and the more surprised I am when things actually work out exactly as planned. And that is what keeps it so interesting each and every day. Surviving the Trader’s Journey Strategies fail because traders have to have only a couple of losing trades in a | Page 3852 |
b116bd7cab5e-0 | row before they throw out the whole system and go back to relying on their gut. Once traders are in this situation, they head into a downward spiral very quickly. Human emotions get people in at the dead highs, and then human emotions get people out at the dead lows, as they continually buy at the top out of greed and then sell the lows out of fear. Or, in the case of shorts, they sell at | Page 3853 |
2543158d20e2-0 | the lows out of greed and cover at the highs because of fear. And this is a cycle that happens over and over and over again. And it’s never going to stop. The financial markets naturally take advantage of and prey upon human nature, especially when it comes to greed, hope, and fear. The key is to remember that the biggest movements in the | Page 3854 |
0e8f7401bb70-0 | markets do not occur when traders in general “feel like buying.” They occur because groups of traders are all getting skewered at the same time and are being forced out of a position. In reality, traders are not trading stocks, futures, or options. They are trading other traders. The profitable traders learn to be aware of the psychology and emotions behind the person who is taking the opposite | Page 3855 |
e9052fffc555-0 | side of their trade. Average traders understand only their side of the trade. Superior traders understand what’s happening on both sides of a trade and know how to take advantage of situations that will hurt most traders. They know how to take advantage of human weakness, and, therefore, they are able to grind most traders into the ground like so much raw meat. In essence, winning | Page 3856 |
aa4a4d6f1af7-0 | traders steal money from losing traders. My partners and I jokingly refer to the financial markets as the “Goddess of Temptation.” The goal, of course, is for traders to develop a professional trading mindset that prevents them from succumbing to these temptations. Instead of being the cause of the ebbs and flows of the markets, | Page 3857 |
9691f0e925c9-0 | traders need to jump the chasm that allows them to ride out these ebbs and flows on a course toward profitability. Good skiers rarely worry about a route. They just go, confident that they’ll react to changes in the trail as they come upon them. It’s the same thing in trading: traders have to have confidence in their technique. That is the | Page 3858 |
b6e4c6a0c2fb-0 | beauty of mustering the right mindset before a trader starts the day—it enables the trader to feel like a good skier, nice and relaxed for the next unexpected turn. Before He Trades In some marriages, a wife might get upset when her husband stumbles home drunk at 4 in the morning after going to a rock concert | Page 3859 |
2fbce8e3995f-0 | with another woman. My marriage would qualify as falling into that category. Although this mishap can partly be blamed on the false sense of energy and confidence one gets from combining too much Tito’s Vodka with Red Bull, I did have what I thought was a valid trading-related excuse for this behavior. The excuse: “I want to help other traders.” I’ll discuss this | Page 3860 |
2aab714248bf-0 | knowingly dubious statement in more detail shortly. More pressing is the question, “Why in the world am I sharing this story?” After all, there is a reason it’s called a personal life—it’s personal. Traders live hectic lives, with outside influences jerking their senses around on a daily basis. These external forces can drive traders to distraction, and | Page 3861 |
479c99047737-0 | once that happens, the traders start adding to losing positions and start pulling stops. This takes a trader down the dark path where she sets herself up for a catastrophic loss. There are few guarantees in life, but I guarantee this: if traders allow outside circumstances to influence their level of discipline, they will get whacked with a catastrophic loss. Maybe not today and | Page 3862 |
7362318c1010-0 | maybe not next week, but it only has to happen once. And it will occur much more quickly with leveraged instruments such as futures and options, where gun- slinging traders can rack up a monster loss in the time it takes them to return from the bathroom. Once this disaster hits a trader’s account, a new reality emerges that is even more horrible to imagine— having to go out and get a | Page 3863 |
0a4aa144fe76-0 | job. Block Out Distractions To succeed as a trader, the daily distractions have to be managed. Life marches on, despite a trader’s need for quiet and solitude. To be able to make a consistent living at this incredible occupation, a trader must maintain discipline no matter what is going on around him. And | Page 3864 |
073507286f03-0 | that’s why I’m sharing this story. Today is the first trading day after my 4-in-the- morning escapade. I did have the weekend to recover, so I’m feeling semi-human again. On this day, with figurative plates being thrown against the wall, I still have to focus on my setups. I have been doing this long enough to know that a | Page 3865 |
18f1d7f1948e-0 | catastrophic loss can happen to anyone. The market could not care less that I wrote a book on trading—it’s certainly not going to show me any courtesy (or mercy, for that matter). Since I truly do not want to go out and get a real job, I take a deep breath and start the “hurry- up-and-wait” process that I have done thousands of times before, where I kill time waiting for a specific setup to | Page 3866 |
4e6942571c45-0 | take shape. This is despite my strong inclination this morning to just throw on a trade to give my mind something else to occupy itself with. While I’m lingering, I do have a few song lyrics to rewrite, so I work on that while waiting for one of my alerts to fire off. Yes, I did say song lyrics, and that’s part of the reason I was out | Page 3867 |
8af62ea37642-0 | so late. Trading the Squeeze The S&P futures were down more than 20 points yesterday, and this morning they are trading in a volatile, yet narrow range. On the 377-tick chart I’m watching (see Figure 26.1 ), I see that a squeeze sets up at point 1, but the C wave at this point was wishy-washy, with part | Page 3868 |
579b7ef3e1b2-0 | of it still below zero. I pass on the trade, though I really want to pull the trigger. Half an hour later, another squeeze sets up at point 2. This time the C wave is clearly above zero, and I take a long trade. I get in at 1193.50. For this small a time frame, I’m willing to risk no more than 10 ticks, so I set my stop at 1191.00. Once I’m up 8 ticks (at point 4), I sell half my position, | Page 3869 |
ede0f240a1aa-0 | and move my stop to my entry level at 1193.50. Now I’ll just wait for the TTM trend to turn black two bars in a row, or I’ll get stopped out. The ES pushes as high as 1198.50. By the time the bars turn black at point 5 and I’m able to sell, I’m out at 1196.50. | Page 3870 |
9bf1dff12090-0 | Figure 26.1 The Subtleties Trading truly is an art form, with the canvas being not the screen but the profit and loss (P&L). The art of trading comes into play once a predefined setup has occurred. At this point, it is time to finesse an entry. And once that entry is finessed, it is then time to manage the | Page 3872 |
3a029e18a3f5-0 | position in such a way as to continually reduce one’s risk while allowing the trade, if it so desires, to stretch its legs and run. Surprisingly, trailing stops on a full position are some of the worst ways to do this. With this style, traders set themselves up for getting stopped out of the entire position on a wiggle, while the market then resumes its original move. | Page 3873 |
4b774036c17b-0 | For a finessed entry, my main goal is to avoid going into a position using a market order. That opens the door to too many bad habits; I prefer to keep that door closed. In looking at Figure 26.1 , I see that the ES pulled back into moving average support at point 3, just as the squeeze had started to form. I placed a bid at 1191.50 to try to pick up any additional slight weakness. I couldn’t get | Page 3874 |
f1547747be73-0 | filled. Once the TTM trend turned back to gray and popped back up above its moving averages (also at point 3), I got more aggressive and moved my bid to 1193.50. This time the market eased back and I got filled, and a few moments later the squeeze fired off long and we were off and running. This is where the rubber | Page 3875 |
0535406e1a02-0 | meets the road—any trader can get into a position, and frankly entries are a dime a dozen. It’s the exits that make or break a trader, and this is where one has to stay focused and not do anything stupid. I’m not going to add to this position and load the boat because the market looks like it is going to take off. Part of me is thinking, “Maybe I should make a big trade, generate some quick | Page 3876 |
623b0fd09e5b-0 | cash, and buy something for my wife to make her happy.” That thought passes quickly —I am lucky enough to have already experienced how brainless a trading idea that would be. Keep Those Stops in Place I’m also not going to hold on to this position without a stop in place. That’s the tough part about outside | Page 3877 |
ad4f240d3525-0 | distractions—in a normal situation, professional traders don’t worry about getting stopped out of a trade. Small losses are simply a part of the trading lifestyle. However, if there are crazy events swirling around a trader’s life, getting stopped out can be frustrating and can instigate foolish behavior— such as removing the stop so as not to have to deal with the annoyance of getting | Page 3878 |
8d5649ec8f82-0 | stopped out. All traders have done it, and its makes as much sense as not going to the hospital after getting a gunshot wound to the abdomen so as not to increase one’s insurance premiums. In this case, I start with an initial stop at 2.5 ES points (10 ticks). If and when the trade goes my way, I like to start reducing risk as soon as | Page 3879 |
277ce0fa2f00-0 | possible. Once I’m up 2 full ES points (8 ticks), I cover one-half of my position and move my stop from 2.5 points to breakeven. My next target is essentially “open,” and I’m willing to hang on as long as the TTM trend stays in my direction. This could mean that it runs out of gas quickly and I get stopped out at my new breakeven stop, or it could mean that economic data are released, the market | Page 3880 |
4f7b505db071-0 | rallies 15 handles, and I catch every point. You just never know what is going to happen next. Once I see the two black bars, it’s the signal for me to close out the rest of the position. I do this and net 3.00 points on the last half of the trade. The whole idea of this exit strategy is to reduce risk on the trade to the point where a | Page 3881 |
9b7b6dc2280b-0 | trader has a breakeven stop, and then to be patient and sit on one’s hands for a potential runner. When I’m sitting on my last half, I do not trail my stop—I just wait for an exit signal. I’m either going to get stopped at breakeven on my last half or get a runner. For the ES, typical runners are 2 to 5 points, with an occasional 10-point (or more) run thrown into the mix. In other markets, such | Page 3882 |
93665c3ba30f-0 | as soybeans, oil, and gold, typical runners can be much more sustained. Soybeans can easily run 15 to 20 cents, which P&L-wise is identical to 15 to 20 ES points or $750 to $1,000 per contract. The Other Woman We are now at a logical place to revisit my 4-in-the- morning juvenile adventure, and how that event unfolded. | Page 3883 |
e46df7ddb90c-0 | To make a long story short, I had been trying to think of an entertaining way to remind traders of the critical importance of following their trading plans. It is just so crucial to follow the basic rules of trading each and every day and on each and every trade. Deviation is not an option—not even for one trade. And for some reason I thought, “Why not a music video?” | Page 3884 |
e87f0fa0df26-0 | Carrie Underwood’s song “Before He Cheats” kept playing in my mind. It’s a song about a guy who is cheating on his girlfriend. The girlfriend finds out and proceeds to destroy his car with a baseball bat. I thought, “Why not rewrite the song? Have a girl who gave her man all her money to trade. He, of course, doesn’t follow the trading rules and loses all her money. She finds out and | Page 3885 |
ded88fb80ede-0 | proceeds to destroy his computers and monitors with a baseball bat. And I could call it ‘Before He Trades.’” (In case you are wondering, it’s considered a parody and is 100 percent legal.) Of course, if one writes a song, one has to have a singer. I found one—a gospel singer. We agreed to meet up at a My Chemical Romance concert at Stubb’s Barbecue | Page 3886 |
debc00ad566a-0 | in Austin, Texas. I had to hear her sing, and I needed to see if she would be right for the video. (For the record, I did invite my wife along, but at the last minute she declined because she had a cold.) If you have never seen My Chemical Romance live, it is a great band with a ton of energy and presence. Many Tito’s with Red Bull later, | Page 3887 |
de89fc8fdd65-0 | we followed the crowd out to Sixth Street, drifted into a bar, and before I knew it, the hours flew by, and— bam!— I got home late. I was in B-I- G trouble. (Any readers who have been to Sixth Street in Austin might understand how that could happen.) In the end, my wife saw that I really did just want to shoot a music video—I wasn’t going through a | Page 3888 |
db62ccda4fe5-0 | midlife crisis or anything. She got enthusiastic about the project and even helped me rewrite some of the lyrics. We interviewed a couple of production companies and felt that Ray Schlogel at Underground Planet would be a good fit. The singer, Gloria Cadena, recorded the song. I played the trader in the video, of course. Schlogel shot and edited the footage, and | Page 3889 |
6b5748f91f2c-0 | presto, I had a music video. You Just Never Know … The longer I trade, the more I have come to understand that no matter what a trader does —no matter how many indicators or time frames she meticulously studies— a trader can never, never, never predict with 100 percent certainty what the market is going to do next. As | Page 3890 |
837a304264c2-0 | someone who trades during the day and who is also involved in running other trading-related businesses, I realize that this is a statement some people would call blasphemous. Surely, through all my years of trading, I have found a way to wait patiently for the perfect setup that works nearly all the time. But really one never knows what’s going to happen—that’s the | Page 3891 |
cf4f52a77bae-0 | plain and simple truth. Once I realized that, a funny thing happened to me during the trading day. I stopped getting stressed out. Instead of being tired and exhausted at the end of the day, I was relaxed enough to enjoy time with my kids and generally hang out. This is in contrast to the stressed-out days when I would painstakingly watch every | Page 3892 |
c00d95bf4553-0 | tick, willing the market to go my way. Afterwards, I was so tired that I had to grab a few beers and look for escape in movies and one- person shooter games to unwind. The market is going to do what it damn well pleases, regardless of any hopes and dreams the trader has pinned to a particular trade, and completely regardless of how | Page 3893 |
c4a58663e291-0 | much confirmation a trader has on a particular trade that may normally have a high probability of working out. The only thing a trader can do is control his risk—on each and every trade. Stay disciplined. Be patient. Remind yourself of this before every trade. If there is a secret to trading, it is this: take the next trade not to make money, but to improve | Page 3894 |
a3a8e0d9cce8-0 | one’s skills as a trader. This is how a trader is able to make a living at the game. This is how a trader is able to avoid a catastrophic loss. And did I learn any additional lessons about the trading lifestyle while shooting the video? Yes—the next time I’m out until 4 a.m. with another woman, I’m taking my wife along. To see the video, go to | Page 3895 |
7d307cd5a016-0 | www.youtube.com/user/tradethemarkets and click play. The Easier Path: Swing Trading One thing that I have learned during years of trading is that it is often easier to make money swing and position trading. Day trading still has its place—but overtrading is a guaranteed path to losing money, as is overreacting | Page 3896 |
77e8b51cceea-0 | and over-staring-at-the- charts. For me, day trading is about being patient for a few select setups each day, with the aim of creating monthly cash flow to pay the bills. Swing and position trading, on the other hand, are about creating wealth. I will swing and position trade just about anything, and I trade the same patterns whether what I’m trading is | Page 3897 |
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