All Entries Tagged With: "Confidence"
Selective Memory
May 26, 2010 at 10:40 am
Trading is one of those things that really requires a selective memory.
The same kind of selective memory that I needed when I was on the dating scene. I chose to ignore the bad experiences I’d had with certain girls, and I stayed in the game long enough to find the wife of my dreams.
It’s the same kind of selective memory needed on the golf course. That bad shot from a few holes ago needs to be suppressed for this next one across the water hazard. Otherwise, you’re toast.
Some traders never develop this skill, unfortunately. They cling to the past, unwilling and unable to let it go for the sake of making that next trade. Getting faked out of a good trade last week prevents them from taking a similar setup this week, afraid it will hurt their account once again, or worse, their ego.
They have a good memory, yes, but they’re not using it in a good way.
That’s no way to trade. Clinging to memories which don’t empower you is a form of recency bias, and it can really prove costly in this game.
The Petrified Don’t Profit
Take last week, for example. The downdraft in the market left many trying to step in and get long near what they thought was the low of the dip. They were early on Wednesday and Thursday. Those who threw in the towel never took a swing at it on Friday, which provided the best rally of the week with the morning gap fill and continued climb into positive territory.
Sound familiar to you? Is this starting to ring a bell?
In a recent conversation with my friend Charles Kirk, he was telling me about some newer traders he had been working with. His delight came not only from helping them discover more about trading, but also from their attitudes in taking trades during difficult market conditions. He mentioned how the newer traders see a setup and just go for it, rather than hesitate the way some experienced traders do who are dealing with recency bias.
Love is a Choice
Love is commonly described as a feeling, but true love is really a choice. It’s a commitment to look beyond one’s faults and accept the entire person. It’s a decision. Marriages which last 40, 50, or even 60 years are based on that decision, long after superficial beauty has faded.
Having a selective memory in your trading is also a decision. It takes commitment and practice to make it a routine, but it’s worth it. Expect the best from yourself, but along the way, know that you’re going to make some mistakes. There will be headfake moves which shake you out. They aren’t fun, but they don’t have to sideline you and damage your confidence forever.
Mistakes cost money, so they’re worth learning from. However, they can also cost us opportunity if we allow the memory of them to stand in the way of taking new trades which suit our plan and which offer great potential rewards.
Look for some mistakes you made this week, learn from them, and then choose to look beyond them so they don’t cost you any opportunity.
Trade Like a Bandit!
Jeff White
Swing Trading & Day Trading Service
www.TheStockBandit.com
Are you following me on Twitter yet?
Every Day’s a Monday in Trading
May 17, 2010 at 9:06 pm
We all love a fresh start, am I right? Sometimes we just need that new beginning. Like a Monday morning diet when we’ve pigged out all weekend.
Or the opening bell after a tough stretch of trading. Both the Monday morning (for the dieter) and the opening bell (for the struggling trader) bring hope for change, so they’re quite similar. The big difference is that as a trader, we don’t have excuses to wait until next week to start taking control.
In my own personal trading, I’ve learned to make some adjustments when conditions call for it, because that’s what’s needed for different results than the frustration that only trading a single style can bring. Building your skill set takes time, but you can improve every day and experience the fresh start of a Monday whenever you want it.
This clip was also posted over on the Trading Videos site (as always), and perhaps you’ve seen it there – but in case you didn’t, I wanted to put it here on the blog for you.
Let me highly suggest clicking the “HD” on the video player and then going full-screen for best quality.
Thanks for stopping by and I’ll see you here soon with more.
Until then… Trade Like a Bandit!
Jeff White
Are you following me on Twitter yet?
It’s Go Time!
May 13, 2010 at 10:12 am
Earlier this week, I apologized for my absence and explained why I’ve been so quiet on the blog for the past few months.
Today is the Day
It’s here and it’s ready for you right now.
The Advanced Trading Course I have been so hard at work creating is now up and running.
Here’s the shortcut link to learn more for those of you who are in a hurry:Â Advanced Trading Course.
For those of you who are curious what it involves, let me give you a quick rundown right here.
The Basic Trading Course brings beginners up to speed on all things trading, moving them beyond the buy-and-hope investor mentality and into the modern age of being a self-directed trader.
The Advanced Trading Course takes things well beyond the basics, covering all the specifics that today’s trader needs to have a handle on to compete in today’s environment.
Key timeframes like day trading, swing trading, and position trading are all covered in the course, including which conditions are ideal for each style, and a host of strategies which can be used for each of them.
For example, in the day trading segment, I show you my most profitable trading method for the past year, when and where to find those setups, and how I manage them.
That method alone was responsible for big profits I made in last week’s market mess, as I posted my best trading day in almost 2 years.
And that’s just one of the many which are covered. Here are some others…
- What my trading routine looks like
- When I employ various styles of trading
- How I track my progress
- When I know it’s time to back down my size or build it up
- Execution tactics
- How to locate trades
- Managing risk properly
- Adding to winning trades the right way
- Protecting profits
- Much more…
I’ve put everything I know into this course, so that you can access my experience and expertise.
As a full-time trader now for more than a decade, I’ve seen it all, and I’ve been fortunate enough to survive and thrive as a trader. All of the adjustments I’ve made, all the learning I’ve done, and all the mistakes I’ve endured have made me the trader I am today…and I’ve put all of it into this video-on-demand course. I literally left nothing out.
So… if you’re seeing a disconnect between your level of passion for trading and the results you’ve been getting, head over and check out the Advanced Trading Course at TheStockBanditUniversity.com.
It’ll help you understand how to approach any market conditions you face, put together the right plan of attack, and execute it like a pro.
(Around here, we refer to that as knowing how to ‘Trade Like A Bandit.’ You’ll see what I mean in the course).
Jeff White
Relative Volume On Demand
February 23, 2010 at 11:01 am
I’ve long been a user of the real-time scanner and filter Trade-Ideas Pro – since 2003. It has a ton of features for locating stocks on the move during the trading day, which is huge for a full-time trader like me.
My favorite feature is a pretty simple one though, which is called Relative Volume. This compares current volume to normal volume for the same time of day, and it’s displayed as a ratio. So for example, a stock trading 5 1/2 times its normal volume would have a Relative Volume display of 5.5.
Until now, I’ve thought that to get Relative Volume readings within Trade Ideas Pro, some other specific alert would need to be triggered (new high, new low, etc.). But today, I did something weird…I asked for help!
The CEO of Trade Ideas, Dan Mirkin, gave me the work-around for getting on-demand Relative Volume, which I want to pass along to you. Here are the steps to take:
Open a New Alert Window from within the program. No alert or filter settings are needed.
This window can stay minimized and just pulled up when needed. Just right-click on it and go to Configure, and then Symbol Lists. Select ‘Single Symbol’ and type in the stock you’re after.
Click ‘OK’ once done, and it’ll then display the symbol and Relative Volume for you, like this:
I understand Trade Ideas Pro is undergoing some changes to include even more features going forward. Should make an already great product even better!
Trade Like a Bandit!
Jeff White
Are you following me on Twitter yet?
Prepare for Anything
January 21, 2010 at 7:00 am
On several occasions in recent years, I’ve taken a spring trip with my dad and some friends to Arizona to play golf for a few days. I love the desert, and it’s fun to spend some time with the guys and make a few birdies (let’s not talk about the bogeys!).
Around Scottsdale, and particularly to the north of town, it’s quite common to see single-engine planes buzzing around the skies. Maybe it’s the great weather and silence of being on the golf course that made me notice them, but they seem to be everywhere. They’re pilots in training, and they’re starting small before they work their way up to something larger (like perhaps, something with more than 1 engine!). I respect that approach, and we’ll touch on that shortly.
But one thing that really caught my attention is that they actually shut off their engines – on purpose – over and over. What? It’s one thing to hop in that little thing with what sounds like a lawnmower motor on it, but hey, it’s no glider. Why would they do this intentionally?
They’re creating stall conditions and learning to recover. Learning to purposely manage a malfunction in a controlled environment (well, partially) helps them avoid panic should it ever happen unannounced. Eventually, they’ll become the kind of pilot I wouldn’t mind flying with.
From One Cockpit to Another
As a trader, sometimes that malfunction happens without warning. Sometimes right after an entry is made, the position rips right against you, perhaps even before you’ve had time to place a stop. Sometimes it’s an overnight trade which has unexpected or unscheduled news hit which causes the stock to gap against you, perhaps even beyond where you had intended to exit in the event of a failed trade. It’s painful and shocking, and more often than not, it results in panic for the untrained trader.
So how do you deal?
It’s almost impossible to mimic the emotions that go along with such a situation, but here are a few simple things you and I can do in order to avoid panic.
1. Expect it to happen. That doesn’t make us negative thinkers, mind you, but rather traders who are mentally prepared for anything – including the worst-case scenario. After all, if we’re prepared to face the worst, what could possibly cause us to panic? The point here is that through logical thinking as well as visualization, unexpected events and adverse moves can be mentally rehearsed to the point that when it does happen, we’re focused on the solution rather than the problem.
2. Keep a level head. By doing #1, we’re freed up to maintain our wits. Throwing a temper tantrum or freezing up entirely is only going to make it worse. The deer in the headlights stands motionless (at least here in south Texas), which means it’s up to the car to change course if something awful is to be avoided. Don’t be the deer – you can’t base your protection on hope that the stock will change course for you. Cooler heads will always prevail, so exercise self-control when you find yourself in a sticky situation and your mind will be available to strategize.
3. Expect to survive. Trusting that you’ll be alright in the long haul will help keep things in perspective, just as they should be. What might feel like a catastrophe to the inexperienced trader might be a little unsettling to you, which is something you can absolutely recover from. At the worst, it’s one bad trade out of your next 1000 trades, so consider it a spot on the windshield to look beyond rather than something worthy of doing more damage to you than it already has.
4. Never allow one trade to be too important. This of course takes into account position sizing and position risk, because the financial hit is the one that comes first. Putting on trades which are larger than they should be is nice when they work, but when they don’t, look out. Staring at a loss which is bigger than you’ve faced before will bring instant regret. Similarly, trading within one’s limits also means that no trade is ever emotionally too important. The aftermath which follows a big loss can be more emotional than financial, so walk the line carefully when choosing position size, and you’ll avoid a tailspin.
The market will dish out surprises from time to time, no doubt about it. Train yourself to expect it, and mentally rehearse some ways you’ll respond when it happens. You’ll ultimately feel as though you’ve been there, and your second reaction (following ‘oops’) will be a remedy rather than crippling anxiety and fear.
Trade Like a Bandit!
Jeff White
Are you following me on Twitter yet?
Keys From a 6-Month Streak
January 13, 2010 at 3:18 pm
Anytime you find yourself in the midst of a streak in your trading, it’s worth paying attention to. When you’re winning, you need to find out why.
A few years ago, I was fortunate to put together a 13-month streak of consecutive net profits (profits every month for 13 months). The longer the streak continued, the more I thought about it, and the better it made me to sort of ‘observe myself’ during that run. I made note of not only my routine and the kinds of plays which were working, but I also included my thought process and the mentality I was bringing to the table. I still occasionally reflect on those notes to stay sharp.
For the past 6 consecutive months, we’ve put together net profits in each month over at TheStockBandit.com (July, August, September, October, November, December). Results can be found here.
Although I am trading confidently, I’m not telling you this in order to boast. I’ve been at this long enough to know the market will serve up a healthy dose of humility when it’s needed!
Rather, I want to share with you some of the things I’ve been focused on in recent months that have brought consistent success, hoping it can improve your own process.
Here are 5 Keys I’ve taken from the past 6 months:
* Be Patient. I have not forced trades. When setups were plentiful, I would get more aggressive. Hence the reason some months had more trades than others. When the setups were harder to come by, I was willing to wait. The year is long, and there will be an abundance of opportunities, so there’s no need to try to make something happen. Watching and waiting for the must-take setups to come along pays off.
* Picky is Good. Before committing capital, I have been requiring high-quality chart patterns and situations which carry a nice potential payout. Lowering your standards to second-rate setups will result in overtrading and a higher barrier to success, and trading is already hard enough without that. You deserve the best, so require it if you’re putting money into it.
* Take the Conservative Route. The occasional home run is nice, but they don’t always happen on purpose. In fact, swinging for the fences will send you right back to the dugout more often than it’s likely to put you on base. My approach has been to hit singles and ring the register more often, paying myself when I catch a nice move, but now wearing out my welcome. The conservative route brings with it consistency and confidence, two things I strive for.
* Have Directional Flexibility. A willingness to trade both the long and short sides has led to my booking winning trades on the short side in every month during this run, despite the fact that the market has pushed relentlessly higher. This was extremely helpful during July, September and October when we saw some brief market pullbacks as well. Looking for outlier stocks can pay off, both in terms of winning trades and the occasional hedge to long positions.
* Monitor the Behavior of Positions. Never trust a skinny chef, or any stock you hold a position in. I don’t mind giving trades some wiggle room, but I do keep a close eye on the price action and how volume corresponds with it. During this run, whenever I started to notice a discrepancy between what I expected to happen and what was actually happening, it was a clue that an adjustment may be necessary. Every stock has some personality associated with it, so if that begins to change, give it your attention and be willing to modify your trade parameters.
The next time you find yourself in the midst of a nice run, take a little time to see what you can learn from it. Take note of what’s working and what isn’t, do more of that which is working, and keep plugging along. It will help you not only perpetuate the process you’re already in, but it’ll help you return to the same mode later on.
Trade Like a Bandit!
Jeff White
Are you following me on Twitter yet?
The Importance of Off-the-Screen Goals
December 17, 2009 at 7:54 am
Ah, the end of the year! A time for pigging out, hanging with relatives, and reflecting on the previous 12 months.
For some, it’s a rewarding time. Looking back on achievements and areas of growth brings some satisfaction and motivation for the year to come. But for others, disappointment and disgust dominate their thoughts as they wonder how they could have set such lofty expectations just 1 year ago.
Goals can be great. They can drive us to achieve more, reach higher, and to get clear on what it is we really want.
But goals can also hinder us when we find ourselves in a rut. They can be a psychological burden, annoying us – no, pressuring us when we stop to think how far away from them we are. In those times, we need no additional motivation – our own frustration is plenty. And in the trading realm, there are times when that is definitely the case.
I’ve realized over time something of great value:Â I really need off-the-screen goals.
The reason why is so that trading isn’t everything. I don’t want it to be everything. I do love it, but it isn’t my life.
When trading is going well, it’s great. But when it isn’t, I’ve found that mentally I get a huge boost to be achieving in other areas of my life. It’s just part of my personality that I need to be achieving somewhere in my life, so if I rely solely on trading to provide that, I’m setting myself up for some disappointment during those challenging stretches. I don’t want that – life is too short!
Let me encourage you to first make the time to set some goals for 2010, but furthermore, to include some off-the-screen goals to strive for. Maybe they pertain to relationships, health, travel or a hobby. What matters is that you’ll have them, because trading isn’t always fun – at times you’ll need those diversions away from the screens.
Remember, trading isn’t everything, so don’t treat it like it is. Give it your very best day in and day out, and be passionate about it, but don’t let it dictate your happiness. Bring some balance into your life, and it’ll help your trading in 2010.
Trade Like a Bandit!
Jeff White
Are you following me on Twitter yet?
Other Goals-Related Posts:
