I would not be the least bit offended if you determined that my method of trading was not for you--I am sure that Patrick would not care either.
I know Patrick does not care as he frequently takes the other side of my trades! <<gg>>
Seriously though, your post details what I was trying to say, only more eloquently and precisely.
I think the hardest part is determining what is of value and what is not of value. The biggest thing is that when you have something that works for you, stick with it. Add to it if it appears something will make it better, but don't add simply for the sake of adding.
I would hope that there is a day when I can not only do short term trading, but that I would also have a longer term positional trading system in place and my short term trading would simply be gravy. I believe that is what you are trying to accomplish right now in your day trading activities.
I do know when I decide to examine something, I am a voracious reader. This is good and bad. The hard part is as you state, separating the wheat from the chaff. It is good to know that there are many very experienced traders on SI that are willing to help me make those distinctions at this point in my trading. I hope that someday down the road I can be the one to help others, but for now, it is my place to learn.
As always, all thoughts and comments are appreciated.
Before posting this I just re-read your post and found this comment especially important.
First, ones trading approach is a function of temperament. experience, and success.
Many of you know that I read Pit Bull by Martin Schwartz. In it he makes the case that in order to be a successful trader you have to know your strengths and weaknesses. He details his in his book and it was the strengths and weaknesses that led to his style of trading. If your strengths and weaknesses do not support the style of trading you do, then you will be in trouble. His strengths and weaknesses I find to a large degree are the same as mine.
As a simple example, initially when he started trading he had very limited capital. So instead of taking longer term positions he traded very short term positions. He was in and out. A scalper. His reasoning was that he had to do it that way in order to preserve and grow his capital. Otherwise one mistake could take him out. He found that that method of trading was best suited to his particular make-up due to his other strengths and weaknesses that I won't detail here.
I believe I fall into that same category and that is in part why I scalp. If I have a point and a half I take it, usually. If the market looks like it will continue I let it run, but if it looks weak, I am gone. You start adding up nickels and after a while it is a pretty good week. It so happens that this form of trading also works well for someone who is fearful of losses. If you fear a loss and want to bag a winner, take the short term winners. If a loss will start to cause you trouble mentally and you then let it go thinking the market will come back, you will be in trouble if you try to position trade or longer term trade.
The point is, to be a successful trader I think you need to have a full understanding of your strengths and weaknesses and then build a system around them that will emphasize the strengths and minimize the weaknesses. It does not matter what the trading vehicle is.
Anyway, it is an excellent book. It is high on entertainment value and for the discriminating reader high on solid advice within the content.
I think my first two rules are for a successful trader:
1. You need to know your individual make-up. What makes you tick. You have to know your strengths and weaknesses and build a system of trading around them. You must get yourself in the right mental framework.
2. You must have a solid money management system in place that is followed 100% of the time. Without it, you probably won't make it, in my opinion.
-Scott |
