Weekend trading food for thought:
If I was ever to write a trading book, it would probably be at least 500 pages long and maybe much longer.
There are just so many critical topics to cover and even more secondary topics to consider.
This weekend I decided to offer very brief general thoughts on 2 particular topics: overall game plan and size.
Perhaps some of you might find some value in this drivel.
Nobody knows you as well as yourself, but it is crucial to look in the mirror and see both your strengths and weaknesses.
Once these are realized, only then can you implement a strong game plan.
Every business needs a niche and every trader need to find his to become very successful.
This niche has to be your total comfort zone, it has to be your bread and butter play/setup. It also needs to focus on your strengths while avoiding your weaknesses as a person.
It is also important to step outside of your niche and gain very valuable experience and lessons in other setups to expand the battle field and your army.
But the focus has always got to be your niche, where you generally have a very large advantage.
You also always need to think BIG if you want to become a huge success in trading.
Being satisfied with yearly gains of 50k, 100k, 200k, 300k or even 500k will only lead to a comfortable life and mostly mediocrity in your trading business and nothing more.
Your overall game plan and niche need to take this into account.
Think BIG and you will become BIG !!!
The most common mistake traders make (outside of risk management):
They get into a comfort zone of always trading the same size regardless of the situation and setup.
This keeps them from ever achieving their full potential as traders and money earners.
This small time thinking mentality will almost always lead to nothing more than mediocrity and that might be a best case scenario.
With my personal trading >>> 80% of my yearly gains occur in 15-20% of my yearly trades and the rest of the time I just keep hitting singles and patiently wait and pass time.
My niche has always been shorting small cap stocks, but at the same time I have very extensive knowledge and experience in trading anything long or short.
When a niche setup presents itself, I ATTACK !!! Especially ones where I have a very clear understanding of the financials (especially if they are ugly), news moving the stock (which is very much misunderstood) and the chart offers an excellent initial entry.
The perfect ones don’t come around that often, so I make sure to take full advantage when they do.
I have zero fear of losses, in fact my only fear in trading niche plays is not making enough gains.
Often times I simply wear out the short button, it is not uncommon for me to trade 20, 30, 50 or even over 100 times my average size on perfect niche trades.
Obviously this type of aggression is NOT suggested for the readers of this article, but the point is you need to grow a pair and step up to the plate on perfect setups/niche plays.
My niche and size strategy has always fit perfectly with my personality and background:
Gambler, risk taker, fearless, very calculated, professional poker/backgammon/hearts/gin player, very mathematical, statistics oriented, financially emotionless, accounting major, CEO, skeptic, extremely confident, very logical, detail oriented, open minded, etc.
Interestingly being a skeptic is part of being a great short trader, but yet can be a real hindrance when trading on the long side and maximizing gains on the long side.
Point is:
A long time ago I grasped and came to terms with my personality and my background and found a trading niche that fits this perfectly and it has been an enormous success for me the past 15 years.
Find yours and adapt to it and you will give yourself a great chance to succeed big in trading.
Happy Trading,
Michail
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