Search Results for 'traders'
Personal Inventory
As we begin this Great Expectations Series, I think it’s important to start out with a look at your own trading resources. At first glance, we think only of money available for trading, but it goes far deeper than that.
All traders can benefit by taking a personal inventory of not just their capital available for trading, but their time, their personality, and their tolerance for risk. Even veteran traders are wise to periodically check their situation to confirm that their current methodology is best for them. After all, it’s difficult to set (or adjust) expectations for yourself unless you’ve examined your resources closely.
Great Expectations Series – Introduction
Welcome to my Great Expectations Series on trading!
Whether you’re a beginning trader or a veteran, there’s something every trader has in common – an expectation of where we are headed. Yes, goals are certainly part of our expectations, but there is much more to it than merely goals. Working toward meeting your expectations will require that you take stock of where you are right now, structure the proper trading plan of attack for you, and then setting up the details and goals as you navigate your way down the path toward profits.
So in the coming days, we’ll take a closer look at topics that relate to our expectations when it comes to trading. We’ll do more than scratch the surface of each one, hopefully, without getting so deep that we lose our focus,
Great Expectations Series
Welcome to the Great Expectations Series for Traders!
Every one of us has expectations we place on our trading, but how often do we really stop to examine them? I think our goals are paramount to good trading, but it’s our expectations which help to define those goals.
Over the course of the next several posts, I’ll be taking some pit stops along the way to see just what items are on the checklist when it comes to building our expectations. Some of them are external, and some are internal and completely within our control. I hope you’ll join me! Maybe you’ll have some things you’d like to add, and I welcome your comments in the proper area for each post, so please feel free to participate! The market continues to teach me lessons, and I know you have some insights which will help us all.
Series Posts:
Great Expectations Series – Introduction
Great Expectations Series – Personal Inventory
Great Expectations Series – Blending Your Style with the Current Environment
Great Expectations Series – The Edge of Greatness
Great Expectations Series – The Road Map
Great Expectations Series – Eyes on the Prize
Great Expectations Series – The Chameleon Trader
Great Expectations Series – Conclusion
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Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com
CyberTrader Pro
Bar none, it is the most important thing when it actually comes down to placing and monitoring your trades – the trading platform.
Trading is my job, and I want to be using the best tools available for my specific needs. Having said that, I’ve tried out plenty of trading platforms along the way, and the platform of choice for me is CyberTrader Pro. I’m asked frequently which broker I trade through. Here are a few reasons why I am with CyberTrader:
How Much?
Compounding money has been called the 8th Wonder of the World. It truly is amazing what can be done when you make regular incremental gains. It is no wonder then that successful active trading should include an understanding of the best ways to size positions properly according to your trading method in order to maximize profitability. I’ve known plenty of brand new investors who had just a small amount of money which they piled into one idea all at once. However, the experienced trader knows better than to do this with his entire trading account, so let’s explore this topic a little further!
Check Your Rolex
There are traders and there are investors. To me, the primary difference is the timeframe you operate on.
One of Stephen Covey’s 7 Habits of Highly Successful People is to “begin with the end in mind.” This is a key element of planning a trade (or investment), as only knowing your timeframe will allow you to accurately evaluate your position. Covey goes on to provide some great advice, which can certainly be applied to trading…
“To begin with the end in mind means to start with a clear understanding of your destination. It means to know where you’re going so that you better understand where you are now so that the steps you take are always in the right direction.”
Deciding what kind of trader you should be depends on your timeframe as much as it does your personality. What kinds of trades do you prefer to take? Have you determined which trading strategies are right for you? Buying pullbacks within an uptrend? Short selling stocks on low-volume rallies right up to resistance? Or are you a buy-and-hope hold investor looking to be the next Warren Buffett? Your timeframe is the deciding factor.
Investors will often include fundamental data in their trading strategy and execution plan, knowing that the performance of the business behind the stock they own can have an impact on how the stock moves over time. Such an impact is not usually very quick (unless it’s earnings season), and as a result, investors know that their timeframe must be long enough to allow their fundamental thesis to pan out.
I’m a trader, and to me, short-term price action is more about supply and demand than the fundamentals of a company whose stock I’m trading. Business doesn’t usually pick up or fall off overnight…it takes many weeks and months and years. My trading timeframe ranges between several hours up to a couple of weeks. This normally excludes almost any fundamental impact on the stocks, because I’m swing trading the supply and demand shifts.
So whether you’re just starting out in the market and selecting a trading style that suits your needs, or if you’re already a trader or investor who is evaluating what to do next, be sure to examine your operating timeframe. If you have long-term ideas based on company-specific data, your investment timeframe should allow your fundamental ideas to prove themselves. On the other hand, if you’re looking to compound your money quickly and eliminate as much risk as possible, then a swing trading strategy may be better for you. The most important thing is to know your timeframe before you put cash to work, because only then will you be able to fairly evaluate if your stock should be kept or sold.
Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com
The Flip Side
You’ve probably heard the phrase, “you’re not trading the stock, you’re trading the people on the other side of the stock.” It’s a valid point that I can agree with to an extent.
As much as you might follow a trading strategy, there will likely be emotions to battle while you’re in the middle of a trade. Almost every trade will have some fear and greed associated with it, but the memorable trades are really packed with emotion on both sides. Keeping close tabs on your emotions while maintaining some awareness of what your competition is facing can greatly help you improve your exit timing as well as your P&L.
Meet paranoid trader Rich Quick
As traders, it’s certainly important to understand which emotions are impacting those on the other sides of our trades. For example, If I’m long XYZ stock and I’m losing money, the trader who’s short XYZ may well be getting greedy. As a result, he’s probably in no hurry to buy back the stock (which would help to support price and help out my trade). Knowing this and staying aware of it during the trade would remind me that I am probably better off taking the small loss and moving on to the next trade rather than making matters worse. I can always wait for a better spot and re-enter if I still like the trade.
In another example, say I buy ABC stock on a reversal play off of support. The trader who sold it to me is likely short the stock, and once ABC catches a bid, I know he’s in trouble. As momentum picks up steam, I might offer some out into the strength, but I’ll be looking to ride that stock further just knowing the emotions and disbelief that those on the other side of my trade are dealing with. Ultimately, they’ll capitulate and drive my trade higher, allowing me to capture greater gains.
Consider your own emotions during a trade, but also the emotions of those on the other side of the trade. Even a quick rundown of what the guy on the other side of your trade must be feeling could prevent further losses or help you maximize an already successful trade.
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Jeff White
The Stock Bandit, Inc.
www.TheStockBandit.com
