Saturday, April 10, 2010

More Gems from Elite Trader

* Successful traders adjust their trading style, trading system, holding Period, and exit strategies based on the current market conditions. This is a process I refer to as market adaptive trading. It is better to Learn how to adapt to the market rather than running from one trading idea to the next looking for the next super system. Being frustrated that the market is not doing not what you want often leads to losses. The market does what it wants, we just need to adapt to it. This will take time to learn, be patient. Read this paragraph again.

* As a trader I do not care which way the market moves, I can make money either way. It is important to be able to quickly react to whatever the market does and not be emotionally attached to any particular choice.

* I cannot control what the market does, so I have a plan for whichever path it picks and then trade the plan.

* Successful trading is not about predicting what the market is going to do. It is about knowing how to react to whatever it actually does.

* Always be thinking about taking and protecting profits.

* If you are not sure what to do, exit the position. There will be other good setups.

* You do not need to trade every day. Let the setups come to you and take the best ones. When the market is moving there lots of good setups to trade. If there are few setups, or most are failing, then listen to the message of the market.

* Do not rush in, there is plenty of time to get into a tradable move when the market changes. If a trend is worth trading, then by definition you do not have to be in on the first day (minute).

* Never enter a position without a plan for exiting.

* Do not count your chickens before they hatch. You do not have a profit until you are back in cash.

* Never trade with money you cannot afford to lose.

* Trading is not a team sport. Stay away from chat rooms and financial TV. Seek the truth, not support from others with your point of view.

Will Oil & Natural Gas Prices Reconnect?

Not sure how I gravitated there but I conducted most of my simulated trading on crude oil using the Chicago Mercantile Exchange's Crude and Crude mini contracts.  More on this later, but I really hit it well in my system with crude (more on that larer.)

I had always heard that natural gas prices bore a natural correllation to oil prices as industries could just switch between the two and supply was tied between the two as they are often recovered from the earth in tandem.

But not recently ..... taking a closer look at nat gas on dull oil days ... gas would be rocking and rolling, with no correllation to the dollar either.

Wall Street pit looks at the issue.

(image from wallstreetpit)

Interesting Insight

Since trading is the chief activity I engage in from an economic perspective and speculating about macroeconomic is beyong my ken ... this blog is going to evolve a little into some really nitty gritty stuff about trading the markets.

I had been running a detailed about trading in an investor community that I will be leaving soon (I think) so much of tht content will be coming over here.

This is an interesting tidbit that someone posted over at . There's a lot of a-holes over there who claim to be hotshot traders while they are really blowhards who've never placed a trade in their life. But every once in a while someone chimes in and I just know they are real deal.

I am sure the mindset of a newbie has not changed since I started 29 years ago, trying to make methods that have the greatest profits. Greatest profits equal huge drawdowns much more risk. I spent years trying to make this tougher than it is, forget about redesigning the wheel. I now concentrate on lowest weekly losing percentages, how to get to a breakeven stop as quickly as possible. I trade for breakeven all day long, then it is a risk free trade and the market will say when I get money. I don't try to beat the market, I let the market give me what it feels like.

Controlling losers as a focal point and letting the market provide the winners from a risk free position .... I could get better at that.
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