Search Results for 'traders'
Focus on the Process Now, Results Later (Part 2)
In recently looking through some archived posts, one that caught my eye was Dave Mabe’s from last summer. In that post, Dave covered some very important aspects to sticking with your trading plan.
Then in catching up on some reading, I saw where David from Trade-Ideas was just discussing this yesterday over on the Trade-Ideas blog. He brings forth some very good points, and I’d encourage you to check it out.
All of this got me thinking about where should our focus be as traders?
I’ve discussed this subject before (in Part 1), but it’s certainly worth revisiting and expanding on.
The Game vs. The Score
One of the ideas that I’m continually reminding myself of is that how you play the game is absolutely crucial to success. It’s about the process. Today’s trading platforms tell us the “score” at any point in time as measured by our P&L, and while that’s pretty nifty, it isn’t always beneficial. I feel it’s generally more important to focus on the process rather than purely the results. Here’s why.
“There’ll be time enough for countin’
When the dealin’s done.”
With those lyrics, Kenny Rogers said it about as good as it can be stated, but I’m still going to try to build on it! I’ve had a Kenny poster on my office wall for several years, and while he may have been talking cards (or life), the same lesson applies to trading!
I’m sure you’d agree that the trader who is focused more on his method than on his P&L has a distinct advantage over the trader who lives and dies by the red and green numbers flickering in his position window. If you can get to the point as a trader where you’re confident enough in your approach to stick with it for even a single session without relapse, you’ll be in a great position to build on that as a habit. And good habits pay off.
Driven By Numbers
The market dishes out regular lessons on this topic to me, so it’s something I’m continually working to improve on. It’s not uncommon to start reacting to the P&L as the day progresses, backing off when mental thresholds for a “good” or “bad” day are approached. That can be a 2-way street though. It can allow you to retain profits or prevent additional losses, but how can you add to your bottom line if you’re in a constant dilemma of whether or not to take that next signal?
You’ve got to play in order to win.
Anytime I get too focused on the results (P&L) during the process (in the middle of trading), my decisions tend to be adversely affected, which in turn has led to a plethora of mistakes. It happens when my attention is fixated on my P&L – when it begins to cloud my thinking and skew my view.
Sometimes striving to achieve some set level of profits for the day can result in overstaying my welcome in trades. At other times, that desire to secure a good day has caused me to exit prematurely from good trades which were giving no reason to bail. Both are cases in which my P&L was the driving force behind my decisions. But the tape should serve that purpose.
Maybe you’ve been there too.
The Buzzer
Flexibility and a willingness to adjust your plan when conditions deem it necessary doesn’t have to mean going into shut-down mode. If there’s clearly a reason to call it a day or a week, then don’t force the issue. Whether that means a lack of setups to play or just poor risk/reward conditions, submit to it. And if you’ve hit a drawdown level that tells you it’s time to stop losing, then do it.
But barring that max-loss situation, when it comes to trading vs. not trading, the deciding factor shouldn’t solely be your P&L. Commit to deciding on a per-trade basis, and see where it gets you. Take the good entries which come your way if you know they are suitable for your method and the overall conditions are in favor for your approach. Otherwise, pass and continue waiting.
At the end of the day, add it all up. Some days will be mediocre, some will be excellent, and some you’ll be eager to forget about. But as long as you keep doing the things which you know will deliver success over time, there’s no reason to let the scoreboard distract you. That’s just one of many ways to get beaten.
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]
SEC Fees Set to Quadruple on April 1
This is no April Fool’s joke. I wish it were – it’d save me a lot of money! But the SEC is making a mid-year adjustment to transaction fees, effective April 1, and it’s a significant one.
Right now, traders pay $5.60 per million dollars in sales, which granted, doesn’t sound like much. It’s a cost of doing business for traders, and not a very steep one at that when added to commissions.
However, in 2 weeks when the SEC fees change, it will go to $25.70 per million – more than 4 1/2 times higher. That’s not quite as bad as the proposed Trader Tax which was recently making so many headlines, but it’s more real and it’s going to happen.
Putting the Pen to Paper
If you’re actively day trading, here’s what this translates into. Depending upon your level of activity and the size you tend to trade, this could translate into several thousand dollars more per year in fees for you.
For example, let’s say you sell an average of $1M in stock each day. That’s a very feasible number considering you could sell 20,000 shares (buy + sell = 40,000 total) over the course of the day at an average price of $50 (20,000 X $50 = $1M). For that activity level right now, that would basically cost you $5.60 in SEC fees on top of whatever your commission is. With the new structure, you’d pay $25.70.
Do that 5 days a week, and it’s $100 more per week. Trade every week at that level, and you’re looking at a hike of $5,200 over the course of the year.
Here’s a link to the SEC Mid-Year Adjustment to Fee Rates document itself for more intricate details if you want to check it out.
Bottom line: keep improving as a trader and it’ll be fine!
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]
TheStockBandit University Has Launched!
There is a lot to be thankful for right now if you’re a trader. But if you’ve been part of the buy-and-hope crowd throughout the past 16 months, it’s been a tough ride – and might not be over yet.
Ignoring account statements sure isn’t the most responsible way to react right now, and yet it’s probably incredibly common. Those familiar with that mentality are quite likely rethinking their approach, especially given the fact that the S&P 500 has actually lost 40% over the past decade.
Index funds, schmindex funds.
As a trader for the past 11 years, I’ve come to appreciate the flexibility that trading offers. I wasn’t full-time initially, and yet I still recognized the aspect of defense which trading offers – a luxury that the buy-and-hope crowd knows nothing about.
During that time, I’ve run across many people who know a little about “the market” but very little about trading. Things like hardware, software, lingo, order types, psychology, money management and much more are just not the kinds of things that automatic investment plan types are familiar with. So when the market takes an all-out beating like it has since the 2007 top, many in the longer-term crowd would consider becoming short-term but simply don’t know how.
Learning About Trading
All along, I’ve been providing a premium service for those who are swing trading and day trading, but those who don’t understand trading to begin with are not going to benefit from it. They need a trading education.
There’s a huge information gap between investors and traders, so I set out to bridge that gap with the creation of TheStockBandit University.
TheStockBandit University is a 4-week course set up in an on-demand video format to teach those with the desire to learn about trading.
To clarify…
This is not a what-to-trade course.
This is a course for the aspiring trader seeking some trading education. It is designed to take you from 0 to 60 in the trading realm in just 4 short weeks. It’s there to equip you to start taking control and stop getting shredded in this (or any other) bear market.
Stop by the homepage and check out the intro video for more information on how to learn trading if you fall into that category. Because remember, the idea isn’t to invest but to Trade Like A Bandit!
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]
Thanksgiving in March (For Some of Us)
The market was only down a few points Monday, and yet to many that probably feels like a gain. That marks the 13th session of the past 16 in which the S&P 500 lost ground. Can you say hammered?
With every benchmark index having undercut important milestones (read: 52-week lows) and the habitual selling pressure of late, the mood has been sour to say the least. And bold claims are being made by some about just how low this market might go. Dow 4000, Dow 1000.
Give me a break. I’m not saying those levels won’t be seen – they might. But the predictions are pointless and there just is no magic formula to determine where this decline will ultimately carry. What is important is that the trend is down, and it must be respected.
The conditions right now epitomize the old adage that “bear markets don’t scare you out – they wear you out.”
No Pain, No Gain?
Although the real spooky capitulation kind of fear has yet to be seen, disgust and disinterest are the dominating emotions right now. Stocks are in the dumps and investors have found it beyond difficult to locate a good place to put cash – if they still have any.
It’s at times like this, among others, that it’s sure nice to be a trader. Stocks are on the move daily, and we as traders have the flexibility to go either direction in search of profits.
The one-dimensional mindset of buy-and-hold simply doesn’t afford the advantages which traders enjoy, especially during times like this. So while it may not be real thrilling to go home in cash every night as we’ve been doing for such a long time now, the alternative is to be “invested” and feel the pain of a bear market day after day.
A Sigh of Relief
The day will come when stocks move higher once again (for more than just a bounce), but right now it’s imperative that you and I protect our capital while the Street weathers the storm. Patience pays in this game, and right now there’s just no technical reason to be making big bold bets for anything beyond the near term. The uncertainty gauge is pegged, and that means we’ve got to stay cautious and selective for now.
So I’m very thankful to be a trader right now. Hopefully you are too.
And if you’re of the longer-term mindset and you have some cash on hand, you might be thankful for the fire sale prices you now have access to. But just don’t fall in love – there is not yet a technical reason to trust that the correction is over.
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]
Trading Attitude Goes a Long Way
Recently I spoke with a trader who was really struggling. Not only were his results not up to his standards, but more importantly, his attitude was pitiful.
One comment he made really stood out to me about how he was approaching his trading – and how he could alter it for better results. After taking a couple of small hits in failed trades, he remarked:
Accuracy is important to me. It means everything to how i look at the market the next day and how i look at myself in the mirror at night.
I think we all deal with that to a degree as traders, and especially us guys tend to equate recent trading results with how we think of ourselves. Not deep down inside – I don’t mean that, because many of us have values rooted elsewhere – but our day-to-day mood is often impacted by our trading results.
That’s common across many professions, but full-time traders probably have it even worse since we can keep score every second of the day and know where we are and where we want to be, and often times there’s that discrepancy which causes some frustration.
That’s where huge mistakes can creep in if we let them, as we increase size or trade frequency based on our desire for quick gains rather than when the charts necessitate it.
Two Solutions
I think zooming out on the timeframe of self-evaluation is key. Instead of responding to every tick with an “I’m a genius” or “I’m an idiot” mentality (which can be so exhausting), why not look at your results from a week to week or month to month basis? The daily swings, particularly in this market, can just be too much of a roller coaster sometimes – both in an account and emotionally.
Another way to keep your attitude in check is to accept that you’ll be wrong, sometimes often. That’s not to say that you need to expect failure at all. However, as a trader, your job is to manage risk effectively first and foremost, and that means when you find yourself on the wrong side of a trade, it’s often wise to return to the sidelines to reevaluate it. Getting back in is fast and inexpensive – if you deem it necessary. Taking a string of small losses might reduce your accuracy percentage, yes, but the goal of trading is to be profitable. Too many traders tend to quickly forget that.
Check It
The aforementioned trader has already come a very long way from when we first met, ridding himself of his former style of operating primarily on hunches. Moving toward a more methodical approach has already shown him a huge improvement in his results, and it’s been fun to watch. But as with most Type-A personalities, he’s in a hurry to reach lofty goals – and I can’t blame him. He’ll get there if he will stay on track.
What’s most important at this juncture for him is that he checks his attitude on a regular basis. Just as he defers to the charts when making decisions and periodically monitors his P&L, he’s got to get into the habit of objectively gauging his mentality. When he’s patient and prepared, he’ll be far less-likely to allow his short-term results to dictate his mood. But if he falls back into the mindset of living and dying by every trade he makes, the road will get a lot longer and much more difficult.
As with so many other things, in trading it’s your attitude which can make the biggest difference between success and failure. When your attitude is in the right place is when you’re going to see the most growth – both personally and in your account.
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]
Know Your Method
For nearly a year and a half, I’ve been blessed to be a dad. It’s been an awesome experience, and I have really learned a lot (though I still have a long way to go).
During the same time, I’ve been able to observe my wife in her role as a mother, and it’s really amazing how quickly a mother knows what their child needs! I had heard of a mother’s intuition, but witnessing it first hand really puts it into perspective.
I think mothers start out with an innate ability, a talent, to determine their child’s needs. And yet there are still the elements of practice and experience which enhance the natural talent that was there to begin with. It takes work, but the combination of talent and effort produces quite a skill.
Similarities Abound
Trading isn’t any different in that regard.
As traders, each of us start out with some kind of talent. It may be that we take quickly to reading the tape and gauging momentum, or it might be that we realize very quickly just where the boundaries of our comfort zones are when it comes to risk tolerance. Whatever it happens to be, generally it isn’t long before we start to build a method around our needs.
And what’s so nice about trading is that’s entirely possible in the market – since there are so many ways to seek out profits. We truly can custom-build a method which is fully-suited to us.
Once we get to that point, and if we want to trade responsibly, then one of our biggest obligations is to understand our method backwards and forwards. We don’t have to know everything about the market or be able to predict what’s going to happen next. Anyone who tells you otherwise just hasn’t traded much. All we need to do is keep our eye on the ball and continue to monitor and adjust the way we’re trading in order to achieve better results.
Worthwhile Effort
Just like a mother’s watchful eye on her child, our ongoing effort to remain aware of everything that’s taking place can lead to a great understanding of our method. As a result, we quickly learn when to adjust and how to go about modifying our approach whenever necessary.
What would it mean to you if you understood your method well enough that you could make small adjustments on the fly and right away improve your results? It would be huge, wouldn’t it?
As the newness of the year begins to fade and early resolutions fall by the wayside, take a stand for your trading. Make a commitment – a goal – right now to become sharp enough that you pick up on subtle changes in the trading landscape which warrant your attention.
Learn to detect when the environment is not ideal for your trading, so that you will know when to adapt or back down. And then when you see opportunities to do so, make those small adjustments so that you can stay on top rather than falling behind.
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]
Market View Video January 4, 2009
Although 2008 brought about one of the worst bear markets in history, it ended on an upbeat note with the indexes climbing higher in the final sessions. That paved the way for some additional upside as 2009 got underway with a solid rally last Friday.
That rally produced an important breakout from multi-week trading ranges which had prevented the major averages from making any meaningful headway. With resistance now broken, on a technical basis this market should be free to continue north for a little while before the next important levels are approached.
The biggest key will be volume, as we’ve seen considerably light trading activity around the holidays (which is typical and expected). This week as traders return to their desks en masse, we should see some marked improvement in participation, which could also shed some light on whether or not this breakout will prove trustworthy.
So as you start to build your trading plan for this week, be sure to stop by and check out this week’s Market View video over at the main site for a close look at the levels to keep an eye on.
(Click image to view video)
Trade well this week!
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]
