Obviously the thing to do was to be bullish in a bull market and bearish in a bear market.-Jesse Livermore
We make such a ridiculous big deal about New Year resolutions, we want to lose weight, quit smoking, be happier, be less cynical (me), have more patience..the list goes on. Well, Tuesday starts the last week of the second month of the trading year for stocks or whatever other derivative you may like to trade. We all made mistakes last year in our trading and most of us swore on a bible that we wouldn’t make those same mistakes again. I think resolutions to improve any aspect of our lives is great, but I think picking a day like January 1 is silly. I picked today to write this because it’s just any day, it’s random and arbitrary. It’s not as if you failed on Jan 1, the resolution fairy comes down from the heavens and hits you with a stun gun, calls you a loser and flies away. You are only a complete loser in trading if you keep making the same mistakes again and again. If you put your pinky finger in a wood chipper, become a bloody mess, but come back to the wood chipper tomorrow to see what would happen if you put your index finger in the wood chipper, your a freaking idiot. I see many traders put their finger in the wood chipper again and again. Sad and scary, but true. As in life and in trading if your not learning something everyday, you may as well stay in bed.
This is a good weekend to think about how and where you may have made a mess of things. Personally, I’m doing chart work, looking at some of the missteps I’ve made. I may be a freak because it’s not work for me , I love it. Loving this game is the key to success at the game by the way. Loving this madness and letting it continuously challenge your thinking and approach is all part of the dynamic. Many of you think I make most of my money from the Calvin Klein billboard ads I do, as well as my Abercrombie modeling gigs, but that isn’t true. Most of my bills get paid via trading this beast on a daily basis.
So did you keep with your new year resolutions in your trading? Admit it, you know you made them, you know you did.
Here are some “tips” that will help:
If your not sure and don’t have an edge, cash IS a strategy.
If you are on a cold streak, reduce size by 70% and tighten stops for a week.
Stocks aren’t people, they cant be trusted, an algorithm doesn’t care that you think you know the story or the chart.
Don’t be “all in” in any name, you will blow up your account.
It’s totally cool to change your mind right after a trade, the market changes by the minute, so should you.
Pick one strategy and stick to it. This may take time if you are a beginner.
You have to break a few eggs to make an omelet, so take losses but keep them very small.
I haven’t taken someone else s idea in a long time, you have just as good a chance of being right or wrong as some other putz.
Don’t have 15 technical indicators on your screen, that’s and EKG not a chart. Less is more.
Don’t trade pissed off, it will crush your P&L
Guess who wins when you “revenge” trade?
Take partial profits on the way up and raise your stops.
When you have three losing trades in a row, take a walk around the block. You may get an epiphany, at the very least it’s therapeutic.
Realize early that the market will always be smarter than you.
For information on my, or to request my monthly performance, email me at [email protected]
Related: My 2011 Trader Playbook