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I spent 40 min yesterday watching this great video. I recommend taking the time to do the same.
But in case you don't have the time, I have noted his 20, er.. um... 31points!
1. Cut losers quickly:
2. Making $ is more important that being right. If the market says "you are wrong" then switch directions!
3. See charts as zones/areas/levels where the traders are lining up to buy and sell.
4. Before entering any trade, know exactly where you will exit for a gain OR loss.
5. Approach each trade with a winning mindset, regardless of the previous losing trades. Trust your stats to know that you will have losers and your winners will compensate you sufficiently.
6. Use "naked charts" and focus on zones. Fewer indicators is better. Wealthy traders keep it SIMPLE. Most importantly watch price. Focus on one instrument and just one or two indicators.
7. Realize that "being uncomfortable" is okay. Being "on edge" is the norm when you have a trade on.
8. Consider the markets YOUR WORKPLACE. You have a right to be in the market, and not just be an on-looker.
9. Stop trying to pick tops and bottoms. Only 5% of the market is tops and bottoms. Stay with the trend, the other 95% of the market, for the easiest money.
10. STOP thinking about the market (stock or future) as being "cheap" or "expensive." Instead, BUY higher highs, and SELL lower lows.
11. Be willing to change sides if the market tells you to. Change your bias quickly. Better yet, reduce or eliminate your bias and GO WITH the market as a responsive trader.
12. Trade aggressively when you are doing well, and modestly when you are not. Go to one micro when not doing well (or just walk away).
13. Realize the market will be open again tomorrow! No FOMO allowed. There will always be another trade!
14. NEVER add to a losing trade . . . EVER.
15. Remember that Cash is the goal, but never the measure of success. "Did I follow my rules on entries and exits?" must be the goal. "Discipline" is the goal.
16. Read about MOBS and RIOTS. (LOL)
21. Calculate your position size exactly based on risk tolerance. (i.e. 2% max loss per trade on a $1000 account is $20 max loss) Make sure you are factoring in the average range for the period you are trading.
22. Set your Profit Targets based on Average Range or something objective.
23. Most wealthy traders: One or two trades per month make their month.
24. Be a confident decision maker in the face of incomplete information.
25. Don't take losing trades personally.
26. Buy higher highs and sell lower lows.
27. Your business is NOT trading. It's finding the right trades.
28. Write down or record every trade - price, thoughts, news, attitude. Journal....
29. Your conviction remains unless something changes. Stay with the move.
30. If you have a winner, don't take on extra risk on the next trade because you are now "awesome"
31. Trade the reaction to the news, not the news.
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Great stuff! I don't follow all of these observations of what wealthy traders do, but I do a lot of them. Next item on my list is to read those three books about Mobs and Riots. That one really got me laughing. The fear and greed in the market is alive and well...
Today was another fun and wild ride for all - beating the pants off of any amusement park roller coaster:
1) The bears got 50 ES points of follow-through selling last night and this morning.
2) The bulls took a turn back up for 30 points.
3) The bears got another 50 points down.
4) The bulls recovered the same 50 points.
It's just another day in the world of trading.
That is - if you were on the right side of things.
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I did okay today. I got about $230 on micros after commissions.
I got some shorts and some longs, but mostly I got longs.
I guessed that after two big legs down that some BuyTheFreakingDip buyers would step up to the plate, and I was right.
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So how do you stay on the "right side" of things?
1) Trade scared. Assume the big boys are out to get you and stay out of their reach. You do NOT trust any trend. You do NOT trust any range condition. Things change. You have to be on your toes. Trading the micros can allow you to be nimble and dodge the bullies' fists...
I know I have talked about being a Zen Master in the markets, but you have to face reality too. You have no power to move the market and no clue what is going to happen in the next 3 minutes! So don't be an idiot. Be responsive to the market, and do it quickly.
Seriously, you shouldn't be as scared as Captain Jack being chased by cannibals, but you need to be quick in your decision making when the market moves:
Be Jack Sparrow (1 min long)
2) Identify ranges correctly and trade the edges back toward the middle of the range. "Sideways" is subjective. But figure out what is is for YOU and go with it.
3) Identify trends correctly and go with the trend. I like to use a 20 ema for my short term trend detector.
4) Take your profits off the table fairly quickly (but not too fast!). Remember what Yogi Berra said? "When you come to a fork in the road... take it." I think about profits the same way. See a profit? Pick it up!
5) Take your losses quickly. How fast can you lose $1000? I know I can lose it faster than almost anyone in the whole world. We have to stay alive! Don't wait until your account is down 5%+ to cut your losses.
My best day ever with micros turned sour yesterday.
I was up almost $500 and then lost it all again in the HUGE selloff. I kept trying to go long when the market had other ideas.
Perhaps my confidence got to dangerous levels. That hasn't happened for a long time!
Time for some introspection. Why write a journal? To remind MYSELF of a lot of things:
1) I am still human and the emotions will always be there, no matter how much I try to ignore them when trading. I need to recognize them and STEP AWAY when I feel out of control.
2) Just because I say a move has gone "far enough" doesn't mean the market has heard me! It will go where it wants to go.
3) Just because the fed seems to bail everything out doesn't mean it will keep doing it!
4) If I had not been trading the micros, I would have blown my account for sure yesterday. But I am still very much alive and (trying) to be in control.
5) This is NOT a sprint. It is a marathon. This is not just one at-bat in a ball game. It is the whole season of many many innings, and many games.
6) The market can stay irrational longer than we can stay solvent. Must get out FAST when wrong.
7) The time you feel the most confident in your next trade is probably going to be your worst trade of the week. Don't "load up!" Always keep it "Light and Tight."
I can do this.
Going back now and reading my whole journal....
I hope you all survived yesterday, and maybe even killed it!
My consistency has vastly improved over the past year, thanks - at least enough to publicly post on FIO... (I am not yet perfectly disciplined, as Wednesday proved to me. I should have walked away when I was out of sync with the market.) I routinely get about 1% per day. If I can just keep the drawdowns at bay, my initial $12,000 will become $100k by next spring.
Addressed to all readers:
I agree that all the funding companies are BS. They are drug pushers, preying on the "free money" Greed Gland inside all of us.
When Homer wrote the epic poem "The Odyssey" around 1000 BC, he must have known about TST and the rest!
We are each upon our own Trader's Odyssey, and these companies are sexy sirens, singing seductive songs, and almost securing our demise upon the rocks. Odysseus had his men tie him to the mast so he would not succumb to the wild temptations.
In this bewitching scene from "O Brother, Where Art Thou?" the sirens sing "Go to sleep, you little baby" and that is exactly what TST, OneUp, Leeloo, E2T and others want us to do as we open our wallets wide. (3:30 min, but worth every second)
I interviewed many traders and found the average they spent was $7,000 on combine fees and resets, before they either succeeded or failed for the last time and walked away dejected.
Newbies have NO BUSINESS frequenting this type of establishment! They need to be tied to the mast and then have the cords be drawn even tighter - as the soft lullabies tempt certain death.
On the other hand, truly experienced traders should be okay. But even then, there is the 9% gain per day requirement on the evals and the 20% profit sharing when live. These should make any rational, prudent, far-thinking and patient market participant flee with his bank account unadulterated.
Instead, all traders should start with micros and build, build, build. If you want to make a career out of trading, yet you can't profit with ONE MICRO contract, why do you think you can trade with 15 Emini's????
Starting with just $1000 and trading one micro per $500 in the account and earning an average of 2% per day gives you $116,000 in 12 months.
Starting with the $7,000 you would save by not doing the evals and doing an average of just 1% per day gives you $76,000 in 12 months.
That same $7,000 in 24 months at 1% per day becomes $830,000+.
I just looked again, and the trend is still UP. So no shorts yet. I may never get them. That is okay.
I only want "high probability" trades.
The most important lesson I have learned in the past year has been to stop trying to fade every bull run. That is what I used to do. I would scalp every supposed top and get gored by lots of big bad bull horns most days. I don't do this any more. If I miss the move up, I say "Okay, it will run out of steam eventually, and THEN I can try shorts."
Now the real trick would be to figure out how to fit the bull horns on my own fat head and actually get on board the bull train out the gate and chug along to nirvana profits.
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End of Day update.
Down $33 as I finally tried a few shorts near the highs - but it went even higher. Wow, what a day to not be long.
No, I missed something! Looking at the wrong column. You are correct. I am fixing it now on the original post. I am using just 240 trading days and I get $830,000. Thanks for the good eyes.
I just checked my stats since March 1st, and it looks like I have reached one of my big process goals:
I have been trying really hard to look for LONG setups as well as my "easier to see" short setups.
For the past 15 years I have traded about 80% shorts and 20% longs.
But I wanted to get this to 50% longs and 50% shorts.
(Don't freak out when you see these numbers. Remember I am a scalper. I average about 15 to 20 trades per day, sometimes many more.)
420 longs and 440 shorts since March 1.
Good enough to say 50/50!
Goal reached...
Knowing that the market tends to RISE over time, I may eventually get to 80% longs, but 50% is a great milestone, and I will hang around here for awhile and rest.
