Sun Tzu,
Thank you for your kind invitation to discuss my trading style. I took formal training from a securities firm in Cincinnati. They offer classes to any individual who may want to learn the basics. These classes are offered for a flat fee and are not inclusive with whether the individual wants to trade with the institution or not. They are a separate program. (For anyone who wishes the link to their web site, please PM me and I will give you that link. I do not think it is appropriate to advertise that here.)
To begin with, charting techniques and recognizing patterns and trends is essential to making a living in this field (yes, this is a job like any other). Please follow this link and review some of the examples offered:
(Sorry Sun Tzu but the only examples I could find of chart patterns were from a sight selling the books. Although, that may be a good thing for anyone who wishes to learn more about charting. Even the classes I received were only of the basics and advanced techniques were not offered in the classes. Only a reading list for further education.)
traders.com
Once the basic charting techniques are learned, it is appropriate to study your trading style and what best fits with the current market conditions and your personal beliefs and tolerances.
The styles are defined as:
1) POSITION TRADER: Picks a trend (up or down) and makes a trade according to the conditions in the market, conditions in the company's industry, and conditions specific to that company. No time limit (but let's not get carried away). A specific entry point, a satisfactory stop loss (fixed if NYSE, or mental if NASD), and a specific exit point should be a requisite before taking a position.
2) SCALPER: Could care less about the company or the financials of the company. This trader only wants to trade for 1/4, 1/2, or above in quick succession trading. A majority of the trades for this trader are break even or a touch over but the 1/4 and 1/2 point scalps add up to a lot at the end of the day and should negate the break even trades (or you should review your trades and see what you are doing wrong). The scalper never holds anything overnight and has cleared all trades by the end of the day.
3) HEDGER: This trader offsets a position taken in one security with another in the opposite direction. For instance if you are long on one trade, short another which you believe may go down. Indexes are the best choice to hedge a long trade. You do not need an uptick to short the DIA or SPY indexes for instance.
(Day traders are a combination of scalper and /or position trader but the day trader, like the scalper is usually out of the market at the end of each trading day, except for rare occasions with overnight or weekend trades. Usually no more than a two day trade regimen.)
TRADING PSYCHOLOGY
* Leave your emotional baggage for your personal time not during trading or do not trade that day.
* Keep a trading diary and document why you entered a trade and exited a trade. Evaluate what trading patterns are a success for you and what patterns to avoid.
* Blame yourself for everything that happens.
* Blaming others for a bad trade prevents you from analyzing what went wrong and finding out how to fix it.
INFORMATION
Informational sources are the most crucial tools for any good trader (except Scalpers). Find free internet sites. Sign-up with sites, newsletters, and trading groups, that have a good reputations. Socialize with other traders that have proven themselves as reliable good traders (you will learn a lot from others but always be sceptical of what news is passed to you - confirm it!)
Thanks and good trading to you Sun Tzu,
JEB (Now and then I will post more on this subject) |
